                                NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.




                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-4452-16T4

JOHN M. PAZ,

          Plaintiff-Appellant,

v.

DIRECTOR, DIVISION
OF TAXATION,

     Defendant-Respondent.
_______________________________

                    Argued January 14, 2019 – Decided January 31, 2019

                    Before Judges Sabatino, Haas and Mitterhoff.
                    (Judge Sabatino concurring).

                    On appeal from the Tax Court of New Jersey, Docket
                    No. 0057-2016, whose opinion is reported at 30 N.J.
                    Tax 41 (Tax 2017).

                    David J. Shipley argued the cause for appellant
                    (McCarter & English, LLP, attorneys; David J. Shipley,
                    of counsel and on the briefs; Aliza Sherman and
                    Michael A. Guariglia, on the briefs).

                    Michael J. Duffy, Deputy Attorney General, argued the
                    cause for respondent (Gurbir S. Grewal, Attorney
                    General, attorney; Melissa H. Raksa, Assistant
            Attorney General, of counsel; Michael J. Duffy, on the
            brief).

PER CURIAM

      The May 23, 2017 judgment is affirmed substantially for the reasons

expressed in the Tax Court judge's April 7, 2017 opinion reported at 30 N.J. Tax

41 (Tax Ct. 2017). 1

      We add the following brief comments concerning the argument raised by

plaintiff in Point I.D. of his appellate brief, where he asserts that the Tax Court

judge "improperly deferred" to the Division of Taxation's (the Division's) legal

arguments regarding the construction of the Gross Income Tax statute. This

argument lacks merit.

      In the "Standard of Review" section of the opinion, the judge stated that

"[t]he review of this matter begins with the presumption that determinations

made by the Director [of the Division] are valid[,]" and later wrote that

"[d]eterminations of the Director are afforded a presumption of correctness[.]"

Xylem, 30 N.J. Tax at 50. We agree with appellant that by using the terms

"presumption of correctness" and "presumption of validity," the judge seems to

have overstated the deference the Tax Court should apply to the Division's


1
  Xylem Dewatering Sols., Inc. v. Director, Div. of Taxation, 30 N.J. Tax 41
(Tax Ct. 2017).
                                                                           A-4452-16T4
                                        2
interpretation and application of tax statutes following its review of the facts

and the law governing a particular issue. Having canvassed the judge's entire

decision, however, we detect no instance where the judge failed to fully and

fairly review the record developed by the parties before properly making her

own independent determinations on the questions of law involved in this matter.

In addition, we have applied our own de novo standard of review in considering

all of plaintiff's contentions on appeal. Waksal v. Director, Div. of Taxation,

215 N.J. 224, 232 (2013). Therefore, we reject plaintiff's argument on this point.

      Affirmed.




                                                                          A-4452-16T4
                                        3
__________________________________________

SABATINO, P.J.A.D., concurring.

      I join with my colleagues in affirming the Tax Court's intricate and

impressive decision. In doing so, I nonetheless must acknowledge that appellant

has raised substantial issues.

      The Division of Taxation "sourced" to New Jersey all of the gains

appellant, a Pennsylvania resident, made from selling his company's assets that

were spread around the country in more than twenty other states. The statutory

path the Division followed in reaching that result is not as straight or as clear

as, say, the path of Route One from Elizabeth to Trenton as marked on a Road

Atlas or Google Maps.

      It is still not obvious to me why principles under the Corporate Business

Tax ("CBT"), rather than the Gross Income Tax ("GIT"), dictate the state tax

allocation or assignment of these gains realized by a Subchapter S corporation

in liquidating its business and its out-of-state assets. It would have been far

better if the statutes had cross-referenced one another and provided explicit

direction on this pivotal issue. Alas, they did not. So we are left with the parties '

somewhat meandering explanations of how to solve the question.

      The Division's tax forms and regulations (one of which is now repealed)

lent colorable support to appellant's position that these gains would be allocated
among the various other states, rather than totally assigned to New Jersey as the

business's state of incorporation.

      As appellant apparently did not file protective refund claims in those other

states after being notified of the Division's assessment, he must endure the

consequences of being subjected to double taxation by more than one state for

the same asset gains.

      The Tax Court recognized the legitimacy of appellant's confusion by

declining to impose penalties upon him, a determination the Division notably

has not cross-appealed.

      That said, I am ultimately persuaded that it is best here to defer to the

expertise of the Division and the Tax Court on these close and rather arcane

issues. Moreover, counsel have advised us the pertinent statutes have been

amended since the tax years in question in this case, and those laws now make

clear the proper method of allocation or assignment. So I join in affirming,

having expressed these concerns.




                                                                          A-4452-16T4
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