On appeal from the Tax Court of New Jersey, Docket No. 010743-2007.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: February 16, 2011
Before Judges Fisher and Fasciale.
Plaintiff, General Motors Acceptance Corporation (GMAC), a subsidiary of General Motors (GM), appeals from the Tax Court's dismissal of GMAC's complaint seeking a refund of a Corporate Business Tax (CBT) GMAC paid. GMAC filed its claim untimely and the doctrine of equitable recoupment does not apply. We affirm.
When GMAC filed its CBT return for the year 2000 it included 50% of dividends generated from its foreign subsidiary as taxable income. GMAC reported the dividends because it understood mistakenly that it owned less than 80% of the subsidiary.
The Internal Revenue Service (IRS) then audited GM's 1998, 1999 and 2000 consolidated returns. As a result, GMAC owed more taxes for the 2000 tax year. After the audit, GMAC prepared a revenue agent report (RAR) and learned that its 2000 CBT return incorrectly characterized its ownership interest in the foreign subsidiary as less than 80%. GMAC's actual ownership interest was 100%.
On November 10, 2005, GMAC filed an amended CBT return for the tax year 2000 reflecting that it owed additional CBT. GMAC understood that because it had owned 100% interest in the subsidiary, it should have paid less CBT because it could have excluded the taxable income from the subsidiary for the 2000 CBT tax year. To correct its mistake, GMAC offset the 2000 CBT it owed and withheld $992,280. GMAC therefore attempted to refund itself the CBT it paid mistakenly rather than pay all the additional CBT it owed.
On January 26, 2006, the Division issued a Notice of Assessment to GMAC that disallowed the offset. GMAC protested and the Division issued a final determination upholding the notice. GMAC then filed a complaint in the Tax Court.
The Division filed a motion to dismiss GMAC's complaint because it was filed beyond the four-year statute of limitations of N.J.S.A. 54:49-14(a). In dismissing GMAC's complaint, the Tax judge concluded that GMAC's refund claim was filed untimely, that GMAC was not entitled to an extension because its claim was not attributable to the federal adjustment as expressly required by N.J.S.A. 54:10A-13, and that the doctrine of equitable recoupment was inapplicable because GMAC's claim and the federal adjustment did not arise from a single transaction.
On appeal, GMAC argues that: (1) it properly sought an offset pursuant to N.J.S.A. 54:49-16(b); (2) the doctrine of recoupment entitles GMAC to an offset; and (3) equity and justice permit an offset to GMAC.
Generally, the Tax Court is afforded discretion due to its familiarity with such matters. Metromedia, Inc. v. Director, Div. of Taxation, 97 N.J. 313, 327 (1984); Reck v. Director, Div. of Taxation, 345 N.J. Super. 443, 446 (App. Div. 2001), aff'd o.b., 175 N.J. 54 (2002). The Division's summary judgment motion*fn1 called for the disposition of a legal questions that is subject to de novo review. Pressler & Verniero, Current N.J. Court Rules, Comment 3.2.1 on R. 2:10-2; see also Am. Fire & Cas. Co. v. Director, Div. of Taxation, 189 N.J. 65, 79 (2006).
We begin by addressing GMAC's argument that it properly sought an offset pursuant to N.J.S.A. 54:49-16(b). We conclude that GMAC's complaint is barred by the four-year statute of limitations, the four year period may not be extended, and GMAC ...