On January 25, 2012, the New Jersey Tax Court decided Estate of Sadie Wishnick By Its Executrix, Doris Schulsinger v. Director, Division of Taxation, Docket No. 000185-2011, wherein Plaintiff requested that the Court charge the Division of Taxation with damages, compensatory and punitive, for taking an unreasonable time to determine that an Estate Tax was owed. The Court rejected the request.
By way of background, the decedent died on October 23, 2007. The Estate Tax is due at the date of death. N.J.S.A. 54:38-5. The tax must be paid within nine (9) months of the date of death. N.J.A.C. 18:26-3A.8(d). On May 19, 2008, the Executor filed a tax return but made no payment at the time of filing. The tax return listed an incorrect year of death. In September 2008, the Division requested additional information concerning real estate owned by the decedent and a copy of the decedent’s Will and Letters Testamentary. The Division’s request was sent to the Executor’s son. The Division made subsequent requests in December 2008 and April 2009. Plaintiff alleged that the information had been sent to the Division; however, there was no evidence to support this position. Finally, a fourth request was sent for information in July 2009.
Ultimately, in January 2010, the Division assigned a value to the real estate which was accepted by the Executor in April 2010. In July 2010, the Division sent a notice of assessment including an interest calculation which was based on the incorrect year noted in the original return. A new assessment was sent in September correcting the interest calculation based on the incorrect year and adding a penalty. A week later a second revised assessment was issued followed by a third assessment filed two (2) months later. The last one issued a refund based upon an overpayment made because of the earlier revisions.
Here, Plaintiff filed suit over the delay in the processing of the return. N.J.S.A. 54:49-6(a) requires the Division to examine returns. Additionally, any added assessment has to be made within four (4) years of the filing of an initial return. N.J.S.A. 54:49-6(b). Here, the Wishnick estate tax return was filed on May 19, 2008. By law, the Director was authorized to assess additional tax on that estate up to and including May 19, 2012. The Director’s initial assessment on the estate was entered on July 15, 2010 and the final revised assessment was entered on November 16, 2010, well within the four-year statutory time frame for the review, audit and assessment of tax on the Wishnick estate. By finalizing the Wishnick estate’s tax liability within four years of the filing of the estate’s tax return, the Director acted reasonably and entirely within the law. Plaintiff’s claim to the contrary is not supported by law. As such, the Court held that the assessment was within the four-year period and, thus, not out of time.