On appeal from the Tax Court of New Jersey, Docket No. 011066-2008, whose opinion is reported at 25 N.J. Tax 333 (Tax 2010).
The opinion of the court was delivered by: Reisner, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 6, 2011
Before Judges Reisner, Simonelli and Hayden.
The opinion of the court was delivered by REISNER, J.A.D.
In a published opinion, Telebright v. Director, Division of Taxation, 25 N.J. Tax 333 (Tax 2010), the Tax Court held as follows: a foreign corporation that regularly and consistently permits one of its employees to telecommute full-time from her New Jersey residence is doing business in New Jersey, is subject to the New Jersey Corporation Business Tax Act (CBT Act), N.J.S.A. 54:10A-1 to -41, and must file New Jersey Corporation Business Tax returns. We affirm, substantially for the reasons set forth in Judge DeAlmeida's opinion. We add the following discussion.
The facts, derived from the parties' summary judgment motions, are undisputed. Telebright Corp., Inc. (Telebright or the company) is incorporated in Delaware and has its offices in Maryland. The employee in question*fn1 develops and writes software code from a laptop computer in New Jersey. The work she produces becomes an integral part of the "ManageRight" web application, a product that Telebright provides to its customers.*fn2 As described in her deposition, instead of making physical objects for the company to sell, she creates intellectual property that will become part of the web application the company's customers will pay to use. She programs computer code to be added to a "chunk" of the company's software. When she finishes a project, instead of postal-mailing it to the company headquarters, she uploads it to a "repository" on the company's computer server. Once in the repository, her work becomes accessible to her co-employees, who "deploy" it to the company's web application.
The employee began working for Telebright in Maryland in 2001, but in 2004 her husband obtained employment in New Jersey and the couple moved here. To retain the employee's services, Telebright allowed her to telecommute full-time from New Jersey and initially provided her with a laptop computer for that purpose. She later replaced that computer using her own funds. Since 2004, when the employee began telecommuting, Telebright has withheld New Jersey income tax from her salary and remitted it to the New Jersey Division of Taxation. She submits her timesheets by computer from New Jersey.
The employee is supervised by and reports to a project manager, who telecommutes full-time from Boston. She communicates with the manager by email and telephone calls, and she occasionally participates in conference calls with company clients. She attends company-wide meetings in Maryland once or twice a year but otherwise works entirely from her home in New Jersey.
When the employee began working for Telebright, she signed an employment contract that restricts her future employment elsewhere and prohibits her from disclosing the company's proprietary information. While the contract requires arbitration of disputes, it permits the company to seek injunctive relief if the employee violates those provisions.
The CBT Act requires every foreign corporation that is not exempt to pay an annual franchise tax "for the privilege of having or exercising its corporate franchise in this State, or . . . for the privilege of doing business, employing or owning capital or property, or maintaining an office, in this State." N.J.S.A. 54:10A-2.*fn3 The Legislature has ...