**009002**

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**1 Alternatively,**  **defendant moves pursuant**  **to R.**  **8:4**

**- 3(c) for**  **leave to**  **file an**  **Answer out of time.** 

NOT FOR PUBLICATION WITHOUT APPROVAL OF

THE TAX COURT COMMITTEE ON OPINIONS

TAX COURT OF NEW JERSEY

**495 Dr.**  **Martin Luther King, Jr.**  **Blvd. Floor**  **4**

MARY SIOBHAN BRENNAN **Newark, New**  **Jersey 07102** 

JUDGE **609 815** 

**- 2922,**  **Ext. 54560** 

**Fax: 609**  **815**

**- 3079** 

**February 2,**  **2024**

**Maegan Stallings** 

**Self**

**- Representing**  **Plaintiff**

**18 Park View Ave. Apt.**  **606 Jersey**  **City, NJ**  **07302**

**Thomas J.**  **Swan, Deputy Attorney**  **General Attorney**  **for Defendant,**  **Director, Division**  **of Taxation** 

**25 Market Street**

**PO Box 106** 
**Trenton, New**  **Jersey 08625-0106** 

**Via ECourts**

RE: MAEGAN STALLINGS V DIRECTOR, DIVISION OF TAXATION

Docket Nos.: 009002- 2023

**Dear Ms. Stallings**  **and DAG Swan:** 

**This letter opinion sets forth the court’s findings of fact and conclusions of law on Direc tor,** 

**Division of**  **Tax ation’s**  **(“Defendant” or “Division”)**  **R. 4:25-8**  **motion for**  **an Order**  **dismissing the** 

**Complaint as moot because Ms. Stallings (“Plaintiff”) has been paid her requested r efund plus** 

**interest. 1**  **Plaintiff**

**opposes the motion, and**  **alleges that**  **the issues**  **of attorney fees,**  **accounting fees,** 

**punitive damages,**  **and**

**emotional distress**  **damages remain**  **to be**  **decided. For the**  **reasons explained** **009002**

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**2 below, the court grants**  **Defendant’s motion**  **and dismisses Plaintiff’s**  **Complaint with an**  **award of** 

**$250.00 for the filing fee.**

**Background and**  **Procedural History** 

**In 2017,**  **Meagan Stallings**  **was a**  **full time**  **New Jersey**  **resident employed by a payroll company** 

**in New York State. In April 2018, Plaintiff filed her New Jersey Gross Income T ax return (“NJ** 

****

**GIT”), and inadvertently failed to claim credit for taxes paid to New York.**  **This error resulted in** 

**an overpayment of her New Jersey taxes in the amount of $13,779.**

**On September 30, 2021, Plaintiff filed a 2017 NJ-1040X amended NJ-GIT tax return that**

**reported the overpayment. Plaintiff requested a $13,779 (“2017 refund”) through the amended** 

**return. Almost one year later, on August 29, 2022, the Division denied Plaintiff’s 2017 refund** 

**claim as untimely filed.**

**The Division’s**  **erred in**  **its denial**  **for untimeliness.**  **Pursuant to**  **N.J.S.A. 54A:9-4(b) and**  **54A:9-**

**8, the Plaintiff’s deadline to claim a 2017 NJ-GIT refund with respect to a timely ori ginal return** 

**filed fo**  **r tax**  **year**

**2017 would have been**  **April 15, 2021;**  **however, with**  **the onset of Covid-19, the** 

**New Jersey Legislature enacted a temporary extension of tax deadlines. This le gislation, known** 

**as the Covid-19**  **Fiscal Mitigation**  **Act 2** 

**, was**  **signed into**  **law and**  **took effect**  **April 14, 2020.**  **If the** 

**original statutory**  **deadline was**  **on or after**  **March 9,**  **2020, and**  **before April**  **1, 2022, the legislation** 

**extended the statutory deadlines for filing a claim for refund under the Gross Incom e Tax Act to** 

**April 1, 2022.**

**On October 19, 2022, Plaintiff filed an administrative protest with the Division’s**  **Conference**

**and Appeals Branch. On April 20, 2023, the Division’s Conference and Appeals Branch held a** 

**hearing. Upon review**  **of Plaintiff’s**  **administrative protest, the**  **Division d**  **eemed Plaintiff’s**  **request**

**2 Covid-19**  **Fiscal Mitigation**  **Act, P.L.**  **2020, c.**  **19. 009002** 

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**3 for**  **refund as filed** 

**on time**  **under the extension provided by the COVID** 

**- 19 Fiscal**  **Mitigation Act.** 

**On June 6, 2023, the Division issued its Final Determination reversing the initial dete rmination** 

**that Plaintiff’s refund claim was untimely.**

**However, this**  **did not resolve the matter.**  **The Division now**  **denied the 2017**  **refund**

**on the basis** 

**that Plaintiff failed to properly document the claimed credit for taxes paid to anoth er jurisdiction** 

**in accordance with N.J.S.A. 54A:4-1 and N.J.A.C. 18:35-4.1(a)11(i).**

**N.J.A.C. 18:35-4.1(a)(11)(i), states “When claiming a credit for the taxes paid to another** 

**jurisdiction and/or political subdivision, the taxpayer must retain a signed copy of the tax r eturn** 

**filed with the other jurisdiction ... showing the amount of the tax paid and must make it available** 

**at the Division’s request.”**  **Plaintiff did not provide the**  **Division with**  **a filed**  **New York**  **tax return,** 

**and Plaintiff**  **also admitted**  **that she did not**  **file a**  **New York**  **State Nonresident Income**  **Tax Return** 

**for tax year 2017. 3** 

**On August 23, 2023, Plaintiff filed a timely Complaint 4**  **in the Tax Court of New Jersey**

**requesting a refund of**  **her $13,779**  **NJ**

**- GIT**  **overpayment plus interest.**  **Additionally, Plaintiff**  **also**

**requested $15,000 to cover legal fees, a $1,200 accountant fee, and $50,000,000 in punitive**

**damages based on the Taxpayer Bill of Rights.**

**Plaintiff served her Complaint on the Division and the Office of the New Jersey A ttorney** 

**General on August 23, 2023. Pursuant**  **to R.**  **8:4-3(b) and**  **R. 1:3-1, the Division’s**  **Answer was**  **due**

**by October** 

**22, 2023.** 

**3 At oral argument, Plaintiff indicated that upon receipt of the Final Determination letter**  **, she contacted an accountant for the purpose of filing a New York State Nonresident Income**  **Tax**

**Return for**  **tax year**  **2017, however the accountant did not do the work**  **p rior**  **to Plaintiff’s**  **receipt**

**of the 2017 refund.**

**4 Pursuant**  **to N.J.S.A. 54:51A-13., the complaint**  **to the**  **Tax Court**  **is required**  **to be**  **filed within**  **90 days of the date of the Final Determination. 009002** 

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**4 On September 4, 2023, the Division issued Plaintiff a refund in the amount of $15,694.01,** 

**which was comprised of $14,250.00 in 2017 NJ-GIT tax overpayment, and $1,444.01 accrued**

**statutory interest.**

**On January**  **17, 2024, the Division filed**  **the instant motion to**  **dismiss Plaintiff’s**  **Complaint as**

**moot.**

**On January 25, 2024, Plaintiff filed opposition to this motion. In her opposition papers, she**

**requested “...$22,851, 660 in damages for the amplified emotional distress during a pandemic,** 

**lost time, lost wages and opportunity for investment, inconvenience, and legal costs associa ted** 

**with fighting to recover what was rightfully hers for two years.”**

**Exhibit H of Plaintiff’s**  **Opposition papers**  **is an**  **email chain**  **that begins on August 8, 2023**  **with**

**the following email from Plaintiff to an individual identified as Council E – James Solomon:** 

**Hello James,** 

**Hope you're having a great summer.** 

**Your most recent newsletter hit my inbox as I'm in the midst of a frustrating tax situation with the state of NJ. While your email was**  **about property taxes, it was an interesting coincidence to receive a tax related email so I figured it was worth emailing**  **you with a question.** 

**The short story is that I OVERPAID NJ states taxes in 2017. I realized the error just before Covid lockdown. At the time, it was**  **impossible to**  **get anyone**  **from NJ**  **state treasury**  **on the phone to**  **help me. And while I was dealing with the overall stress of life in a**  **pandemic, I ended up filing the request for my money back "too late". There is a 3 year limit.** 

**I received a final determination in June that denied my request. However it still leaves the door open to go to tax court (which i**  **s what I'm trying to figure out right now). I've reached out to tax**  **attorneys & CPA's.**  **They all**  **feel for**  **me, but do not**  **want to**  **take my**  **case as the rules are strict and they don't think I have much chance of getting my money back.** **009002**

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**5 I cannot accept this. The state has $13,000 of mine (yes, $13K!) at**  **this point and it seems incredibly unjust. I made a mistake and**

**OVERPAID. The**  **punishment doesn't fit**  **the crime**  **at all**  **and I don't** 

**know who**  **can help**  **with this. People**  **with DUI's**  **and assault**  **charges pay less for far worse! I don't understand how the state will settle**  **with people who intentionally evade taxes, yet I have no chance of getting ANY of my money back due to a technicality. This seems**  **like a rule that needs to be fixed...(take a percentage for the late paperwork, but NJ keeping everything is downright theft).** 

**Do you have any idea who can help me with this? One CPA suggested**  **that I try to find free legal services since no one would want to take my money knowing the chances of getting my money** 

**back are slim.**

**Any guidance**  **is greatly**  **appreciated.**

**Many thanks,**

**Maegan**

**On August 9, 2023,**  **Mr. Solomon responded**  **to Plaintiff:** 

**Hi Maegan,**

**Wow**

**- I am sorry you are dealing with that. We will see what we** 

**can do -**  **has anyone you spoken**  **to looked**  **to see**  **if Covid**  **waived the**  **3 year statute of limitations?**

**- James** 

**That same**  **day Plaintiff** 

**responded back**  **to Mr.**  **Solomon:**

**Hi James,** 

**Thank you so**  **much for** 

**the quick reply. I was**  **actually going**  **to write**  **you back this morning. After further review of the recent determination, I actually think I did qualify within the time frame.**  **The way this was handled by the NJ division of taxation is very confusing and feels deceptive. My original request was denied**  **"because too much time had passed for a claim to be filed".**

**I requested a conference based on that reason, so I could basically beg for my money back with the hopes they could make a**  **n exception to their timeline. Two months after the conference, I** 

**received the**  **FINAL DETERMINATION,**  **which confusingly** **009002**

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**6 explains that I actually DID file within the statute of limitations**  **because of the Covid extension, BUT it was denied because my NYS tax return was not included in my original request. A copy of** 

**my NYS**  **tax return**  **is not**  **required, nor was**  **it mentioned**  **that it**  **was needed**  **when I**  **received my**  **first rejection.**  **This feels**  **retaliatory and**  **deceptive and**  **they moved the goal posts**  **in order**  **to keep**  **money that**  **doesn't belong to them.**

**As this was happening, I also received an audit notice for my 2019** 

**taxe s due to an error on my W-2 (which I promptly corrected and**  **returned). The**  **timing of the audit**  **is very**  **strange and feels**  **as if**  **they**

**were going**  **back and** 

**looking to**  **find**

**anything they**  **could to**  **keep any**  **money they could from me.**

**If this was a minor amount of money I may have given up, which**  **seems to be the goal here. And I wonder how many residents NJ takes money from this way.** 

**I'm going to continue my search for an attorney today and I think my case might be something one might take with this new** 

**i nformation. And if you find anyone who can help me sue NJ**  **Division of taxation, please send them my way!**

**Thanks again,** 

**Maegan**

**On August 23, 2023, Mr. Solomon emailed an individual in the governor’s office advising of**

**Plaintiff’s predicament**  **and requesting assistance.**  **Following receipt**  **of Mr.**  **Solomon’s email,**  **that**

**individual sent an email to the Treasury**  **Department and Division of Taxation.**  **The final internal** 

**emails from**  **Treasury indicate**  **that the refund should have**  **been paid,**  **and that**  **“it appears**  **our folks**

**messed up.”**

**The Division filed a**  **reply to Plaintiff’s opposition on January**  **29, 2024. The**  **Division argues**

**that Plaintiff** 

**cannot be**  **compensated for**  **damages pursuant**  **to the**  **Taxpayer Bill**  **of Rights because** 

**no evidence exists**  **in the**  **record of a knowing**  **disregard**

**of any**  **tax law**  **by any Division**  **employee.**

**Furthermore, the**  **Division argues**  **that the**  **circumstances of the Covid-19**  **Pandemic is**  **a mitigating** 

**factor in its error in denying the 2017 refund. 009002** 

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**7 The**  **court heard** 

**oral argument on February**  **2, 2024.** 

**Legal Analysis** 

**An issue**  **is ‘moot’**  **when the**  **decision sought**  **in a**  **matter, when**  **rendered, can**  **have no**

**practical effect**  **on the existing**  **controversy.” Greenfield**  **v. N.J.**  **Dep’t of**  **Corr. , 382**  **N.J. Super.** 

**254, 257 (App. Div.**  **2006) (quoting N.Y.**  **Susquehanna & W.**  **Ry. Corp. v. State**  **Dep't of Treasury,** 

**Div. of**  **Taxation , 6**  **N.J. Tax**  **575, 582 (Tax**  **1984). Additionally,**  **“[a] case**  **is technically**  **moot**

**when the original issue presented has been resolved, at least concerning the partie s who initiated** 

**the litigation.”**  **Betancourt v.**  **Trinitas Hosp., 415**  **N.J. Super 301, 311**  **(App Div.**  **2010) (quoting** 

**DeVesa v.**  **Dorsey , 134**  **N.J. 420, 428**  **(1993)).**

**The Division’s payment in full of Plaintiff’s 2017 refund with statutory interest rende rs** 

**that issue moot; however, the issue of Plaintiff’s request for damages in the conte xt of attorney** 

**fees, accountant fees, punitive damages, and emotional dis tress remains.** 

1. Plaintiff’s Request

for Costs

**The New Jersey Legislature has provided a statutory mechanism for the recovery of costs** 

**to a prevailing taxpayer.**

**N.J.S.A. 54:51A-22 states:** 

**a. A prevailing taxpayer in a court proceeding in connection with** 

**the d etermination,**  **collection or**  **refund of**  **any tax,**  **penalty or**  **interest may be awarded a judgment or settlement for the reasonable**  **litigation costs, not to exceed $15,000, incurred in the proceeding, based upon:** 

**(1) the**  **reasonable expenses of**  **expert witnesses,** 

**(2) the**  **reasonable costs**  **of studies, reports or tests,**  **and**

**(3) the reasonable fees of attorneys, not to exceed $75 per**  **hour unless by special determination of the court of the existence of a special factor.** **009002**

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**8 b.**  **An award under subsection a. shall be made only for the costs allocable to the State, and not to any other party.** 

**c. No award under subsection a. shall be made with respect to**  **any portion of the proceedings during**  **which the prevailing**  **taxpayer has**  **unreasonably protracted the proceedings.**

**d. Whenever it appears to the court that proceedings have been** 

**instituted or**  **maintained by**  **the taxpayer**  **primarily for**  **delay, that**  **the taxpayer’s**  **position in**  **the proceedings is**  **without grounds, or that**  **the**

**taxpayer unreasonably**  **failed to**  **pursue administrative**  **remedies, the**  **State may be awarded a judgment or settlement for its reasonable litigation costs,**  **not to**  **exceed $15,000,**  **incurred in**  **the proceedings.**

**e. For the purposes of this section, “prevailing taxpayer” means a**  **taxpayer that establishes that the position of the State was without**

**reasonable basis in fact or law. The determination of whether a taxpayer is a prevailing taxpayer is to be determined by the court.** 

**[N.J.S.A. 54:51A- 22]** 

**Plaintiff requests**  **that the court**  **award her both**  **attorney fees**  **and accounting**  **fees; however,** 

**the documents submitted indicate that neither an attorney nor an accountant were re tained or** 

**involved in Plaintiff’s dispute with the Division.**  **Furthermore, Plaintiff’s own emails clearly**

**indicate that she was not being represented by either an attorney or an accountant. Accordingly,** 

**since the**  **Plaintiff represented**  **herself in**  **this dispute,**  **and was**  **not represe**  **nted by an**  **attorney or**  **an**

**accountant at any point during this dispute, no legal basis exists for the recovery of these cost s.** 

**The court notes that Plaintiff incurred a $250.00 filing fee with the Tax Court. To the** 

**extent that the Division’s own employees h ave admitted to making a mistake or as was stated,** 

**“messed up,” the court finds there is a sufficient basis to award Plaintiff rei mbursement of her** 

**filing fee pursuant to N.J.S.A. 54:51A-22. 5** 

2. Plaintiff’s Request

for Punitive Damages and Economic Damages

**5 See**  **also R.**  **4:42- 8.** **009002**

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**9 When**  **a claim**  **is made**  **for damages**  **against a government**  **entity based**  **upon negligent conduct,**

**the Torts Claims Act, N.J.S.A. 59:1-1 to 12-3, governs the claim.**  **The Tort Claims Act provides**

**specific exceptions to the doctrine of sovereign immunity. Except when it specifically imposes** 

**liability, public**  **entities remain**  **immune from**  **negligence suits.**  **N.J.S.A. 59:1-2. Accordingly,**  **the**

**Tort Claims Act must be strictly construed to permit lawsuits only where specifically de lineated.** 

**Within the Tort Claims Act, N.J.S.A. 59:9-2(c) provides that “[n]o punitive or exemplary**

**damages shall be awarded against a public entity.”**  **Additionally, the Tort Claims Act contains a**

**specific section with respect to immunity for taxing mistakes.**

**N.J.S.A. 59:7-2 provides:** 

**Neither a public entity nor a public employee is liable for an injury caused by:** 

**a. Instituting any judicial or administrative proceeding or** 

**action for**  **or incidental**  **to the**  **assessment of**  **collection of** 

**a tax.**



### b. **An act**  **or omission**  **in the**  **interpretation or application**  **of any law relating to a tax** 



### .

[ **N.J.S.A. 59:7- 2]** 

**Thus, the Tort Claims Act specifically bars any claims Plaintiff brings for punitive damages or** 

**emotional distress damages.**

**With respect to N.J.S.A. 54:51A-23, the legislature has provided for the recovery of**

**economic damages in tax matters in certain situations. Specifically, that**  **statute states:**

**If an employee of the Division of Taxation knowingly disregards any tax law, any provision of this subtitle, or any regulation**  **promulgated thereunder, in the collection of any tax; or if an employee of the Division of Taxation knowingly, r**  **ecklessly or negligently fails to release a lien against or bond on a taxpayer’s** 

**property, then**  **the taxpayer**  **may, within**  **two years**  **from the**  **date the**  **taxpayer could reasonably discover the actions of the employee or director,**  **bring an**  **action for**  **damages against**  **the State**  **in the**  **tax 009002** 

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**10 court, provided**  **that the**  **damages shall**  **be limited**  **to the**  **actual direct** 

**economic damages**  **suffered by the**  **taxpayer as**  **a proximate**  **result of**  **the actions of the employee or director, plus costs, reduced by the amount of such damages and costs as could reasonably have been**  **mitigated by the taxpayer. Such civil action shall be the exclusive remedy**  **for recovering damages resulting from such actions.**

**[N.J.S.A. 54:51A- 23]** 

**Pursuant to this statute, assuming a taxpayer can prove actual economic damage s, the Division’s** 

**employee’s action**  **alleged to**  **have caused**  **harm must have**  **occurred from**  **a “knowing disregard**  **of**

**a tax**  **law or regulation.” Richardson v.**  **Dir., Div.**  **of Taxation, 14 N.J.**  **Tax 356, 366**  **(Tax 1994)** 

**(citing N.J.S.A. 54:51A-23).**  **A person acts**  **knowingly with**  **respect to**  **the nature of his conduct or** 

**the attendant circumstances, if he is aware that his conduct is of that nature, or that such** 

**circumstances exist,**  **or he**  **is aware**  **of a high probability of their**  **existence. See**  **State v.**  **Rhett**

**, 127** 

**N.J. 3, 6 (1992)**  **(citing N.J.S.A. 2C:2-2b**  **(2)). A person**  **acts knowingly**  **with respect**  **to a**  **result of** 

**his conduct if** 

**he is**  **aware that**  **it is**  **practically certain**  **that his conduct**  **will cause**  **such a**  **result. Id.** 

**Applying the above, there**  **is no**  **evidence of**  **economic damages**  **suffered by Plaintiff other** 

**than the inability to use the 2017 refund during the relevant period, which is rectified by the**

**statuary interest the Division has paid. Also, although irrelevant in the absence of evidence of** 

**actual economic damages, there is additionally no evidence that the decision of the Divis ion** 

**employee(s) to**  **withhold payment of Plaintiff’s**  **2017 tax**  **refund was**  **made with**  **knowing disregard**

**of any tax law or regulation. It was quite simply a mistake.** 

**The Division**  **reversed its**  **initial determination**  **based on**  **untimeliness upon the**  **realization that** 

**the statutory deadline had been extended. The Division’s second denial was based on Plaintiff’s** 

**failure to**  **provide a New**  **York tax**  **return when**  **requested by the**  **Division as**  **authorized by N.J.A.C.** 

**18:35- 4.1(a)(11)(i).**  **Wh ile**  **the Division**  **may have**  **emphasized form**  **over substance in**  **this regard,** 

**this position does not disregard tax regulations, but rather adheres to them. 009002** 

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**11 For**  **these reasons, the court**  **rejects Plaintiff’s**  **request for**  **punitive and** 

**emotional distress** 

**damages, and any other damages except for the $250 filing fee.**

**Conclusion**

**The court grants the Division’s motion to dismiss Plaintiff’s Complaint, subject to the** 

**reimbursement of Plaintiff’s $250 filing fee. The Division has issued the 2017 tax refund, along** 

**with the**  **statutory accrued**  **interest. All**  **other claims**  **for relief**  **are either**  **not recoverable**  **by law,**  **or**

**unsubstantiated by the undisputed facts shown by the documents filed with this motion, with the** 

**opposing papers, and with the admissions and acknowledgments on the record during oral**

**argument.**

**/s/ Mary Siobhan Brennan Hon. Mary Siobhan Brennan, J.T.C.**