December 8, 2009
LAWRENCE KAGAN, PLAINTIFF-RESPONDENT,
DIRECTOR, DIVISION OF TAXATION, DEFENDANT-APPELLANT.
On appeal from the Tax Court of New Jersey, Docket No. 7000-2007.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: October 21, 2009
Before Judges Cuff and Payne.
Defendant Director, Division of Taxation (Division) appeals from an order reversing a decision by the Director that the taxpayer failed to demonstrate good cause to accept a late filing of his application for the 2005 homestead rebate and granting the rebate to the taxpayer.*fn1 We affirm.
On June 11, 2005, Sondra Kagan, wife of plaintiff Lawrence Kagan, suffered a stroke. She returned home but needed assistance with virtually all basic events of daily life, such as bathing and dressing. In addition, plaintiff assumed most of his wife's former duties, such as meal preparation. He also assisted his wife with her daily therapy regimen.
In October 2005, a few months after Sondra Kagan suffered her stroke, plaintiff filed the couple's 2004 joint state and federal income tax returns and timely filed the 2004 homestead rebate application. Plaintiff also timely filed their 2005 state and federal income tax returns; yet he failed to file a timely 2005 homestead rebate application. Plaintiff surmised that his wife may have thrown out the application rather than place it with their other financial records.
In December 2006, plaintiff contacted the Division to inquire about the status of his rebate. The Division informed him that it had not received his application, and it would send him another one. Plaintiff received it on December 27, 2006; he completed and mailed it on December 29, 2006; and the Division received the application on January 5, 2007. The Division sent a notice of denial on February 7, 2007, and also advised plaintiff that he could submit additional documentation, if he wished to contest the denial. Plaintiff submitted a doctor's letter that described his wife's medical condition and his deep involvement in her care. On March 1, 2007, the Division notified plaintiff that his application was not timely and denied his application.
Plaintiff filed a complaint in the Tax Court on June 6, 2007. The trial of the matter occurred on September 23, 2008, at which time plaintiff testified he "spent 90 percent or more of [his] time with [Sondra], helping her, taking her to therapy, helping her with home exercises . . . ." He also stated that he "was deeply involved in her care" from the time of her June 2005 stroke until her death in Summer 2008 following a second stroke. He denied that he did not timely file his 2005 rebate application because he did not have the form. Rather he stated that his immersion in his wife's care prevented him from realizing that he neither had the form nor had filed it with his 2005 income tax returns.
Judge Menyuk concluded that this taxpayer should have received his 2005 homestead rebate. She found that plaintiff met the statutory good cause standard. She found that he could take care of his usual financial affairs, but his wife's medical condition and incapacity made it difficult to address non-recurring items, such as applying for the annual homestead rebate. She also interpreted the statutory good cause standard to encompass situations when "it becomes too difficult because of medical situations, . . . ." In other words, she held that the medical good cause exception to the obligation to file a timely application does not "mean that you have to be flat on your back and tied to tubes in order to be excused."
On appeal, the Director argues that the medical evidence submitted by plaintiff is insufficient to satisfy the statutory standard, particularly because plaintiff himself was not medically incapacitated. The Director notes that plaintiff was able to discharge other financial obligations, including payment of bills. The Director also argues that plaintiff failed to file a timely application because he lacked the form, a reason specifically barred by statute to excuse a late filing.
An application for a homestead rebate must be filed annually and for 2005 was due by the extended filing deadline of October 31, 2006. Prior to 2004, the statute governing homestead rebates recognized a good cause exception to the timely filing requirement but it was strictly construed. In Hovland v. Director, Division of Taxation, 6 N.J. Tax 473 (TaX 1984), aff'd, 204 N.J. Super. 595 (App. Div. 1985), certif. denied, 102 N.J. 400 (1986), the Tax Court allowed a taxpayer who had not filed a timely application due to medical reasons to receive a homestead rebate. There, the taxpayer had spent several months in the hospital following diagnosis and treatment of a serious spinal cancer condition. Id. at 475. The taxpayer filed the application when he returned home and it arrived just four days after expiration of the filing deadline. Ibid. In overturning the agency decision to deny a rebate, the Tax Court rejected the agency position that a taxpayer must be totally disabled and without anyone to assist him to fulfill his obligations. Id. at 480-81. On appeal, this court held that the taxpayer's "severe and incapacitating illness" coupled with his good faith attempt to file a timely application excused his failure to comply with the strict terms of the program. Hovland, supra, 204 N.J. Super. at 600.
In 2004, the Legislature amended the statutory good cause exception. As amended, the statute provides that a taxpayer must submit medical evidence that the taxpayer was unable to file an application as prescribed due to a hospitalization or illness or evidence that the taxpayer attempted to file a timely application. N.J.S.A. 54:4-8.62a provides in pertinent part:
For the purposes of this subsection, in order to establish good cause to extend the time of any applicant to file a claim for a homestead rebate or credit the applicant shall provide to the director either medical evidence, such as a doctor's certification, that the claimant was unable to file the claim by the date prescribed by the director because of illness or hospitalization, or evidence that the applicant attempted to file a timely application. Except as may be established by medical evidence of inability to file a claim, good cause shall not be established due to a claimant not having received an application from the director.
The only reported opinion following adoption of this amendment, Bonda v. Director, Division of Taxation, 22 N.J. Tax 77 (Tax 2004), held that the taxpayer did not establish that her numerous and serious medical conditions excused her untimely filing of her rebate application. Notably, other than listing her various medical conditions, the taxpayer submitted no evidence from a treating physician that she was medically unable to file the application in a timely manner. Id. at 82.
Here, like Bonda, plaintiff did not submit a certification from his wife's physician that she required his assistance for the events of daily life. Plaintiff did testify, however, that he had a doctor's note that his wife required his daily assistance. Moreover, the Division did not contest the medical condition of plaintiff's wife. Rather, the Division argued that his wife's medical condition did not prevent plaintiff from attending to the couple's basic needs, such as paying recurring bills and filing their tax returns.
A "good cause" standard requires a case-by-case assessment. Hovland, supra, 204 N.J. Super. at 598. Here, it is undisputed that plaintiff's wife was so incapacitated by a stroke in June 2005 that he assisted her in virtually all of her activities, including bathing and dressing. We are not prepared to accept the implicit argument advanced by the Division that a taxpayer cannot satisfy the good cause exception unless the taxpayer himself is incapacitated. Rather, like Judge Menyuk, we hold that the medical good cause exception may be satisfied when one spouse is incapacitated and the other attends to the daily needs of the incapacitated spouse, or as stated by Judge Menyuk, they are "an elderly couple who are doing the best they can."
We, therefore, affirm the September 30, 2008 order granting to plaintiff a 2005 homestead rebate.