April 28, 2008
BRIDGESTONE/FIRESTONE RESEARCH, INC., PLAINTIFF-APPELLANT,
DIRECTOR, DIVISION OF TAXATION, DEFENDANT-RESPONDENT.
On appeal from the Tax Court of New Jersey, Docket No. 000149-2005.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 6, 2008
Before Judges Parker, R. B. Coleman and Lyons.
In this Tax Court appeal, plaintiff Bridgestone/Firestone Research, Inc. (Bridgestone) appeals from an order entered on February 16, 2007 granting summary judgment in favor of defendant dismissing the complaint on the ground that the tax appeal was not timely filed. We affirm.
The facts giving rise to this appeal are as follows. Bridgestone, a Delaware corporation doing business in New Jersey, converted to a limited liability company (LLC) on November 28, 2001. The new entity was then included in Bridgestone Americas Holding, Inc. (Bridgestone Americas) and was treated as a division of the parent company for federal and state tax purposes. Bridgestone filed its final tax return in New Jersey on May 8, 2002 for the 2001 tax year. The return address on the May 8, 2002 tax return was 50 Century Boulevard, Nashville, Tennessee, the address for Bridgestone Americas. In January 2003, Bridgestone Americas moved to 535 Marriott Drive, Nashville, Tennessee.
On March 17, 2004, the New Jersey Division of Taxation (Division) Auditor, Michael McSloy, sent a letter to Bridgestone indicating that its corporate tax returns would be audited for 1999, 2000, 2001 and 2002. The letter, requesting detailed information for those tax years, was sent to the address on the last tax return filed in New Jersey: 50 Century Boulevard, Nashville, Tennessee.
When the Division received no response to the March 17, 2004 letter, McSloy sent another letter to the same address on May 3, 2004. This letter was returned unopened with a post office stamp stating "ATTEMPTED UNKNOWN" on the front of the envelope. On May 12, 2004, McSloy sent another letter, enclosing the March 17 letter, to Bridgestone Americas at the new address, 535 Marriott Drive, Nashville, Tennessee.
In response to the May 12 letter, Bridgestone sent to the Division a copy of the March 17 letter and copies of the tax returns for the years to be audited. There was no cover letter or any contact information included in the envelope, which was postmarked May 24, 2004. The return address on the envelope was BFS Diversified Products, LLC, 535 Marriott Drive, P.O. Box 140990, Nashville, Tennessee.
On June 1, 2004, McSloy called the phone numbers listed on Bridgestone's May 8, 2001 tax return, but was unable to reach anyone. Consequently, on that date, McSloy sent a Notice of Estimated Tax Assessment to Bridgestone at 535 Marriott Drive, demanding payment within fifteen days of the total estimated amount of $816,954 for the 1999 through 2002 tax years. The Notice stated that "[t]he above assessment is levied by reason of the taxpayer's failure to furnish previously requested information," and advised the taxpayer that the tax, penalty and/or interest would be "irrevocably fix[ed] . . . unless you shall apply to the Director of the Division of Taxation for a hearing within ninety (90) days from the date of this notice." The notice then set forth the procedure for filing a protest and requesting a hearing. The ninety-day time for appeal expired on September 2, 2004. Bridgestone claims, however, that it did not learn of the New Jersey tax audit until it received a Certificate of Debt from an independent source, after the ninety-day appeal period had expired.
Bridgestone finally contacted the Division,*fn1 indicating that it would provide the information requested in the initial audit letter dated March 17, 2004. The Division, however, declined to review the information until Bridgestone Americas signed a formal "Taxpayer's Agreement Waiving Appeals from Possible Adjustment of Taxpayer's Liability by Division of Taxation" (Agreement). The Agreement expressly stated that the ninety-day time to appeal had expired and that "the taxpayer has no right to appeal the assessment determination because of the lapse of the statute of limitations." The Agreement further stated:
Whereas the Division of Taxation may, in its discretion, examine the appropriate books of accounts and records of the taxpayer in order to determine the propriety of the assessment, but only to [sic] express condition that any revision that may be made of that assessment not constitute a decision of determination for purposes of filing appeal with the New Jersey Tax Court or any other administrative or judicial body.
It is, therefore, hereby agreed that any revision or other changes made by the Division of Taxation with respect to the taxes, interest and penalties due and owing to the Division of Taxation by the taxpayer resulting from the December 2, 2004 assessment will not constitute a decision, action or determination that will form the basis on the part of the taxpayer or its representatives for filing an appeal with the New Jersey Tax Court or any other administrative or judicial body; and
It is further agreed that in consideration of the Division of Taxation agreeing to reopen the audit for the periods in question, the taxpayer will agree to pay the statutory costs of collection as set forth at N.J.S.A. 54:49-12.1; and
It is further agreed that any undisputed tax, penalty and interest shall also be paid at the time of execution of this agreement. If any such payments are made, the Division of Taxation will waive any costs and attorney's fees assessed on the undisputed portion of said tax; and
It is further agreed that the taxpayer will pay the revised assessment including penalty and interest to the State upon completion of any revision.
Bridgestone declined to enter the Agreement, claiming "it would violate the Corporation's rights to a hearing regarding its potential tax obligation to the State of New Jersey."
Notwithstanding expiration of the statute of limitations on September 2, 2004, Bridgestone filed its complaint on February 2, 2005, seeking to appeal the estimated tax assessment. The Division initially moved to dismiss the complaint in July 2006. The motion was denied without prejudice. The Division renewed the motion in December 2006 and the Tax Court granted it on February 16, 2007. It is from the order entered on that date that Bridgestone appeals.
POINT ONE PLAINTIFF BRIDGESTONE/FIRESTONE RESEARCH, INC. FILED ITS TAX RETURNS AND PAID ITS CORPORATE TAXES, AND THE PROBLEMS REGARDING DELIVERY OF AUDIT NOTICES WERE SUFFICIENT TO PERMIT THE TOLLING OF ANY DEADLINE FOR A RESPONSE FROM THE FORMER TAXPAYER WHICH HAD CEASED DOING BUSINESS
Bridgestone characterizes the appeal as a question of whether we "should toll the ninety-day statute of limitations set forth [in] N.J.S.A. 54:51A-14, because the taxpayer Bridgestone/Firestone Research, Inc. never received the notice that caused the ninety-day clock to start running." There is insufficient merit in this argument to warrant a lengthy discussion in a written decision. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons set forth by Judge Harold Kuskin in his decisions rendered on the record of September 8, 2006 and February 16, 2007. Nevertheless, we add the following comments.
Bridgestone's statement that it never received the audit notice until after the ninety-day appeal period had run, is belied by its response to the Division's May 12 letter, which enclosed a copy of the March 17 audit notice and copies of the tax returns the Division sought to audit.
Bridgestone does not deny that the notices sent between May 12 and June 1, 2004, were properly addressed to 535 Marriott Drive, Nashville, Tennessee. Nevertheless, Bridgestone claims that the notices were never received by its tax department. Indeed, Bridgestone argues that it "has a professional tax department which has never had this kind of problem despite of dealing with thousands of taxing jurisdictions annually," and blames the Division's practices. Interestingly, however, Bridgestone submitted the certification of Marian Wren, Bridgestone's Supervisor of Office Services, detailing the deficiencies in Bridgestone's mail services at 535 Marriott Drive, Nashville, Tennessee.
Bridgestone submitted the certification of David Seele, the Controller-Tax of Bridgestone Americas, setting forth in detail, the problems of Bridgestone's mail department. He stated:
There are 850 Bridgestone employees located in our headquarters building. The Bridgestone company headquarters mailroom also receives incorrectly delivered mail for un-related companies located in our general geographic area virtually every day and this practice increases when the post office employees are on vacation or on sick leave.
There were 4 people working full-time in the mailroom in 2004. Each day the mailroom processes 8 to 10 post office bins of mail.
The Tax Department receives on average up to several thousand pieces of mail on a weekly basis. In the mailroom, there are separate envelopes for each separate company associated with Bridgestone, such as BFS Diversified Products, LLC. It was the normal practice for employees to use the return envelopes in connection with responses from those specific companies. I believe our mail system does as good a job as can be expected given the volume of mail we receive. It may be that documents not specifically addressed to the Tax Department are not necessarily forwarded to our tax office.
Seele's description of Bridgestone's mail department does not explain how Bridgestone did not receive the June 1, 2004 notice within the ninety-day appeal period -- even if it was not addressed to an individual in the tax department. Moreover, Bridgestone had the opportunity to contest the Assessment by entering the Taxpayer's Agreement. Since its time to appeal had already expired, Bridgestone had no further legal rights to protect. If Bridgestone had entered the Taxpayer's Agreement, the subsequent audit would have indicated that Bridgestone had no further tax liability.
We agree with Judge Kuskin's conclusion that even . . . viewing the facts most favorably to the plaintiff and according the plaintiff all reasonable, favorable inferences from the facts[,] the only conclusion I can reach is that if there was any problem with the receipt of the notice of estimated tax assessment sent on June 1, 2004[,] that problem was internal to Bridgestone and not in any way the result of some inappropriate action by the Director, Division of Taxation.