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Praxair Technology, Inc. v. Director

September 1, 2010

PRAXAIR TECHNOLOGY, INC., A DELAWARE CORPORATION, PLAINTIFF-APPELLANT,
v.
DIRECTOR, DIVISION OF TAXATION, DEFENDANT-RESPONDENT.



On appeal from the Tax Court of New Jersey, Docket No. 7445-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 24, 2008

Decided December 15, 2008

Remanded by Supreme Court December 15, 2009

Resubmitted June 7, 2010

Before Judges A. A. Rodríguez, Kestin and Newman.

This matter is now before us on remand from the Supreme Court. See Praxair Tech., Inc. v. Director, Div. of Taxation, 201 N.J. 126 (2009), rev'g 404 N.J. Super. 287 (App. Div. 2008). The Supreme Court has held that plaintiff was subject to the Corporation Business Tax (CBT), N.J.S.A. 54:10A-1 to -41, for the 1994-96 tax years. The issues and the factual and procedural background are set out in the Supreme Court's decision and ours, and need not be rehearsed here.

By reason of our decision that plaintiff was not subject to the tax, we concluded that it "cannot be liable for the penalties associated with those years." Praxair, supra, 404 N.J. Super. at 295. The Supreme Court, in reversing, has directed us to engage in "plenary consideration of plaintiff's challenges to the imposition of the late filing and post-tax amnesty penalties under N.J.S.A. 54:49-4 and N.J.S.A. 54:53-18(b), respectively." Praxair, supra, 201 N.J. at 140-41.

In addressing the late filing penalty, the Tax Court judge quoted N.J.S.A. 54:49-4, which mandates that the Director impose penalties of up to twenty-five percent of the tax liability due upon a taxpayer who fails to file a tax return on a timely basis, as well as an additional five percent per month "[u]nless any part of any underpayment... is shown to be due to reasonable cause[.]" Ibid. The judge noted that

The Director may abate, waive, or remit the late filing penalty. N.J.S.A. 54:49-11(a). "If the failure to pay any such tax when due is explained to the satisfaction of the director, he may remit or waive the payment of the whole or any part of any penalty...." Id. The standard for such a waiver or remittance requires "a reasonable cause for delay and... absence of willful neglect determined to be reasonable cause." N.J.A.C. 18:2-2.7.

The language of this statutory section is clearly permissive. The director "may" waive or remit a penalty if there is a showing of reasonable cause. The statute does not require the director to waive or remit a penalty under any and all circumstances. The director has the discretion to take such action as is reasonabl[y] required under the fact[s] of the particular case.

[Plaintiff] argues that it had reasonable cause not to file tax returns for the years 1994-1999. This argument is based on [its]... contention that [plaintiff] had no nexus with the [S]tate that would require taxation. At the very least, [plaintiff] feels it had reasonable cause not to pay taxes prior to the ...


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