Tax Court: New Jersey State Firemen’s Association v. Dir., Div. of Taxation, Philadelphia Contributionship Ins. Co., Germantown Insurance Co., Greater New York Mutual Ins. Co., and Strathmore Ins. Co., Docket No. 000151-2019, opinion by Sundar, P.J.T.C., decided January 30, 2023. For plaintiff - Michael E. Sullivan (Parker McCay, P.A., attorney); for defendant, Dir., Div. of Taxation - Michael J. Duffy (Matthew J. Platkin, Attorney General of New Jersey, attorney), for remaining defendants and intervenor Strathmore Ins. Co. - Michael A. Guariglia and Jamie Zug (McCarter & English, LLP, attorney).
Held: Defendant, Division of Taxation’s (“Taxation”) decision via its web-published Notice in 2016, to extend the statutory cap on premiums applied when computing the insurance premium tax (IPT) for domestic and foreign companies, in calculating the fire insurance premium tax (FIPT) paid to plaintiff by foreign insurers, is contrary to the plain language and intent of the FIPT statute, N.J.S.A 54:18-1, thus is not entitled to any deference. Its interpretation of the provision in N.J.S.A. 54:18A-2(a) that the FIPT is considered “a part of” the “payable” IPT as requiring the cap to apply in computing the FIPT is unreasonable because, (a) since 1945, this provision has been interpreted to simply mean that the IPT statute requires a credit for the FIPT paid so that a foreign insurer does not pay a tax on fire insurance premiums twice, and (b) it results in plaintiff receiving less than the mandated 2% FIPT on “all of the” fire insurance premiums earned in New Jersey. The cap on premiums for purposes of computing the IPT need not, and should not, be extended in computing the FIPT unless the Legislature acts to amend the respective statutes.
Due to this holding, the court did not need to consider plaintiff’s arguments that Taxation’s decision violated the Administrative Procedures Act, or Taxation’s arguments that its Notice, as a public guidance document should be upheld under the temporary validity doctrine until it formally promulgates and finalizes regulations reflecting its changed position as to FIPT computation.
The court granted NJSFA’s motion for partial summary judgment, invalidated the Notice, and denied Taxation’s motion for summary judgment.