On appeal from a Final Agency Decision of the Division of Taxation.
The opinion of the court was delivered by: Sabatino, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, A. A. Rodríguez and Sabatino.
The transitional issue presented in this appeal is whether the Division of Taxation ("the Division") is compelled by Lewis v. Harris, 188 N.J. 415 (2006), and the subsequent enactment of New Jersey's Civil Union Act, L. 2006, c. 103 ("the Civil Union Act"), N.J.S.A. 37:1-28 to -36, to permit a same-sex couple, married in another jurisdiction before that statute's February 19, 2007 effective date, to file a joint New Jersey gross income tax return for income they earned in calendar year 2006. Appellants, who are New Jersey residents, were united in a same-sex marriage in Canada in 2003. The Acting Director of the Division denied their request to file a joint New Jersey tax return for their 2006 earnings.
Although appellants are entitled to declaratory relief concerning future tax years, which is unopposed by the State respondents, we hold that the Division is not required to treat appellants' 2006 income as joint income. We are satisfied that the Acting Director's determination was justifiable, and that the Division may utilize a reasonable transition period to conform its forms and procedures to the constitutional and statutory principles espoused in Lewis v. Harris, supra, and in the Civil Union Act. We also note that the Acting Director's determination comports with established administrative practices of looking to the familial status of wage earners, for taxation purposes, during the calendar year that their income was earned.
Appellants, Roslyn Quarto and Judith Prichason, are a same-sex couple who reside with one another in New Jersey. They exchanged vows in a marriage ceremony in North Vancouver, British Columbia, Canada on July 28, 2003.*fn1 Appellants thereafter registered as a domestic partnership in New Jersey on July 10, 2004, the day that the Domestic Partnership Act, N.J.S.A. 26:8A-1 to -13, took effect. Both appellants worked and earned income during the course of calendar year 2006.
As residents of New Jersey, appellants are each obligated to file a New Jersey gross income tax return for earnings above the minimum amounts prescribed by statute. See N.J.S.A. 54A:8-3.1. Unless the filing deadline is extended, such State tax returns for persons who are in a calendar-year tax cycle are to be filed on or before April 15 of the year following the calendar year in which the income was earned.*fn2 N.J.S.A. 54:8-1(a).
Appellants desire to file a joint New Jersey gross income tax return for their 2006 earnings. In anticipation of the April 17, 2007 filing deadline, they sought advice from the American Civil Liberties Union of New Jersey ("ACLU-NJ"). On December 21, 2006, the Legal Director of the ACLU-NJ wrote the Attorney General and the Governor's Chief Counsel, on behalf of appellants and other similarly-situated same-sex couples who had been married in Canada or Massachusetts, requesting clarification of the legal status of such couples in New Jersey.
Subsequently, on February 16, 2007, the Attorney General issued Formal Opinion No. 3-2007.*fn3 The Formal Opinion addresses how the Civil Union Act, which was adopted following the Supreme Court's opinion in Lewis v. Harris, supra, 188 N.J. 415, would affect same-sex marriages, civil unions, or the equivalent relationships previously formed under the laws of other states and foreign jurisdictions. Noting that the Civil Union Act would become effective on February 19, 2007, the Attorney General advised that "government-sanctioned, same-sex relationships validly established under the laws of other States and foreign nations will be valid in New Jersey beginning on February 19, 2007, either as civil unions or domestic partnerships." Id. at 1. However, "[t]he name of the relationship selected by other jurisdictions . . . will not control its treatment under New Jersey law. Rather, it is the nature of the rights conferred by another jurisdiction that will determine how a relationship will be treated under New Jersey law." Ibid.
Consequently, Formal Opinion No. 3-2007 observed that "same-sex relationships from other jurisdictions that most closely approximate a New Jersey civil union . . . will be treated as civil unions under our law[,]" and that "relationships . . . that most closely approximate New Jersey domestic partnerships" would likewise be treated in our State as domestic partnerships. Id. at 2. The Formal Opinion specifically recognizes "that same-sex marriages established under the current laws of . . . Canada," among other jurisdictions, "will be valid in New Jersey and treated as civil unions in our State." Ibid.
The same day that Formal Opinion No. 3-2007 was released, the Legal Director of the ACLU-NJ again sought guidance from the State on the specific question of whether same-sex couples such as appellants, previously united in another jurisdiction, could file joint state income tax returns for their 2006 income. The inquiry was referred to the Acting Director of the Division.
The Acting Director then spoke with the Legal Director of the ACLU-NJ on February 21, 2006. Guided by Formal Opinion No. 3-2007, she informed him that same-sex couples such as appellants could not file joint New Jersey tax returns for their 2006 income, because their legal status was not recognized in our State until February 19, 2007, which was after their 2006 income had already been earned. Following that conversation, appellants presented an application for emergent relief with our court, seeking an emergent stay of the Acting Director's oral determination. We initially deferred action on the emergent application while appellants sought an emergent administrative stay from the Acting Director.
The stay was denied by the Acting Director in a written decision on March 30, 2007. In denying that administrative stay, the Acting Director observed:
[b]ecause a couple's eligibility to file a joint New Jersey gross income tax return depends on their marital status during the tax year for which the return is filed, and not on the couple's marital status at the time that they file the return . . . [appellants] were not eligible to file a joint New Jersey gross income tax return for tax year 2006.
The Acting Director informed appellants that they were free to file a 2006 joint return, but that such a return was likely to be audited in light of the Division's contrary legal position and the Attorney General's guidance in Formal Opinion No. 3-2007. However, in her letter and thereafter through her counsel, the Acting Director assured appellants and other similarly-situated same-sex couples ...