Rockland Electric Company v. Director, Division of Taxation

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
ROCKLAND ELECTRIC COMPANY, : TAX COURT OF NEW JERSEY
: DOCKET NO.: 008111-2016
Plaintiff, :
:
v. :
:
DIRECTOR, DIVISION, :
OF TAXATION, :
:
Defendant. :
:
Decided: April 30, 2018
Alysse McLoughlin for plaintiff (McDermott Will & Emery LLP, attorneys).
Michael J. Duffy for defendant (Gurbir Grewal, Attorney General of New Jersey,
attorneys).
BIANCO, J.T.C.
This letter opinion constitutes the court’s decision with respect to a motion for summary
judgment filed by plaintiff, Rockland Electric Company (“Rockland”), and a Cross-Motion for
Summary Judgment filed by defendant, Director, Division of Taxation (“Director”). Rockland
argues that it is not required to add-back the New Jersey Transitional Energy Facility Assessment
(“TEFA”) in determining its entire net income for New Jersey Corporation Business Tax (“CBT”)
because, the plain language of N.J.S.A. 54:10A-4.1 (“the TEFA add-back provision”) ties the
addition of the TEFA to entire net income for CBT purposes under N.J.S.A. 54:10A-4(k)(2)(C),
(“the CBT add-back provision”) which does not apply to New Jersey taxes other than the CBT.
Assuming arguendo that the provision could apply to other New Jersey taxes, Rockland contends
that the TEFA is not a tax “on or measured by profits or income, or business presence or business
activity.” According to Rockland, the TEFA is not required to be added back because (1) it
Approved for Publication
In the New Jersey
Tax Court Reports

2
temporarily replaced the tax revenue from the gross receipts tax, which was not subject to add-
back, and because (2) doing so would put New Jersey Utilities on an unequal footing with
multistate utilities, and (3) Rockland maintains that if there is a doubt as to the interpretation of
the statute it should be resolved in favor of the taxpayer.
Conversely, the Director argues that the plain language of the TEFA add-back provision
requires Rockland to add-back the TEFA when calculating the entire net income base for CBT
purposes; the TEFA add-back provision is a stand-alone provision with its own legislative history;
and the TEFA add-back provision is not discriminatory as to both New Jersey and Multistate
utilities that are doing business in New Jersey.
For the reasons set forth herein, Rockland’s Motion for Summary Judgment is denied, and
the Director’s Cross-Motion for Summary Judgment is granted.
BACKGROUND, FACTS, AND PROCEDURAL HISTORY
The following facts are not materially in dispute. Rockland is organized as a corporation
under the laws of New Jersey, and is engaged in the retail distribution of electrical energy only in
New Jersey. During the year in dispute, Rockland was subject to both the CBT and the TEFA. In
order to determine its TEFA liability, Rockland multiplied the number of kilowatt-hours of
electricity sold to New Jersey customers in that year by the applicable TEFA unit rate surcharge.
For the taxable period of January 1, 2008 through December 31, 2011, Rockland calculated its
CBT by multiplying its entire net income by the applicable tax rate, and then timely filed its CBT
return. In order to calculate Rockland’s entire net income, Rockland first took the taxable income
reported on its United States corporate income tax returns and then added back the CBT and TEFA
liability that was deducted on the federal returns. Rockland then alleged that it had made a mistake
in adding back the TEFA to its entire net income, and timely filed amended CBT returns to reflect

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this alleged mistake. The amended CBT returns reflected a refund of $2,258,493, which the
Director denied in letters dated February 11, 2015, and March 17, 2015. The Director stated the
reason for denying the return is because Rockland’s TEFA liability must be added back to
determine its entire net income for CBT purposes. In a response to the Director’s denial of the
refund, Rockland filed written protests and requested a conference with the Division of Taxation’s
Conference and Appeals Branch in letters dated May 7, 2015 and May 12, 2015. This conference
was held on October 21, 2015 and the Director notified Rockland in a letter dated February 5, 2016
that its final determination is to deny the refund to Rockland. Rockland timely filed a complaint
with the Tax Court of New Jersey, contesting the final determination, and subsequently moved for
Summary Judgment. The Director then filed an answer and a cross-motion for Summary
Judgment. Oral argument was heard on the cross-motions. The issue here is one of first
impression before the Tax Court.
APPLICABLE LAW
A. SUMMARY JUDGMENT
The purpose of summary judgment procedure is to “provide a prompt, businesslike and
inexpensive method of disposing of any cause which a discriminating search of the merits in the
pleadings, depositions and admissions on file, together with the affidavits submitted on the motion
clearly shows not to present any genuine issue of material fact requiring disposition at trial.” Brill
v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 530 (1995) (quoting Ledley v. William Penn Life
Ins., Co., 138 N.J. 627, 641-42 (1995) (quoting Judson v. Peoples Bank & Trust Co., of Westfield,
17 N.J. 67, 74 (1954)).
When deciding a motion for summary Judgment under R. 4:46-2, courts must determine
whether:

4
[T]here exists a genuine issue with respect to a material fact
challenged [that] requires the motion judge to consider whether the
competent evidential materials presented, when viewed in the light
most favorable to the non-moving party in consideration of the
applicable evidentiary standard, are sufficient to permit a rational
factfinder to resolve the alleged disputed issue in favor of the
nonmoving party.
[Brill, 142 N.J. at 523.]
Moreover, “[t]he ‘judge’s function is not himself [or herself] to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue for trial.’” Id.
at 540 (quoting Anderson v. Liberty Lobby, Inc., 447 U.S. 242, 249 (1986)).
In Brill, the New Jersey Supreme Court adopted a less stringent summary judgment
standard. The Brill Court synthesized the summary judgment standard with the directed verdict
standard found in R. 4:40-2. The Court explained that “[t]he essence of the inquiry in each
[summary judgment, R. 4:37-2(b), R. 4:40-1 and R. 4:40-2] is the same: ‘whether the evidence
presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that
one party must prevail as a matter of law.’” Id. at 536 (quoting Anderson, 477 U.S. at 251-52). In
sum, the Brill Court emphasized that the “thrust of [the] decision is to encourage trial courts not
to refrain from granting summary judgment when the proper circumstances present themselves.”
Id. at 541.
When the movant demonstrates a right to summary judgment, the burden shifts to the
opponent of the motion to show by competent evidence that a genuine issue of material fact exists.
See Robbins v. City of Jersey City, 23 N.J. 229, 241 (1957); James Talcott, Inc. v. Shulman, 82
N.J. Super. 438, 443 (App. Div. 1964).
The court finds that the present case is ripe for decision by summary judgment because
there is no genuine issue as to a material fact in the matter. The sole question before the court is
one of “statutory interpretation which can be determined by application of the law to the

5
undisputed facts.” PPL Elec. Utilities Corp. v. Dir., Div. of Taxation, 28 N.J. Tax 128, 133 (Tax
2014). As a matter of first impression, the court must determine here the interplay between the
TEFA add-back provision and the CBT add-back provision in order to determine whether or not
the TEFA must be added back to determine entire net income for CBT purposes.
B. STATUTORY CONSTRUCTION
1. N.J.S.A. 54:10A-4(k)(2)(C); CBT Add-Back Provision
In order to determine whether Rockland must add-back TEFA to its entire net income when
determining its CBT the court must first look to the CBT add-back provision, N.J.S.A. 54:10A-
4(k)(2)(C).
As a starting point, the CBT imposes a tax on each non-exempt domestic corporation and
foreign corporation:
[F]or the privilege of having or exercising its corporate franchise in
this State, or for the privilege of deriving receipts from sources
within this State, or for the privilege of engaging in contacts within
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]
The tax that is imposed on the corporation is determined by their “entire net income” which
is defined as follows:
Entire net income shall mean total net income from all sources,
whether within or without the United States, and shall include the
gain derived from the employment of capital or labor, or from both
combined, as well as profit gained through a sale or conversion of
capital assets.
[N.J.S.A. 54:10A-4(k).]
Entire net income is then limited to line 28 of the federal income tax return by the
subsequent paragraph in N.J.S.A. 54:10A-4(k):

6
For the purpose of [the CBT] … act, the amount of a taxpayer’s
entire net income shall be deemed prima facie to be equal in amount
to the taxable income, before net operating loss deduction and
special deductions, which the taxpayer is required to report . . . to
the United States Treasury Department for the purpose of computing
its federal income tax . . .
[Id.]
The statute then continues to “add-back” certain “exclusions, deductions, and credits” to
entire net income that were allowed for federal tax purposes. N.J.S.A. 54:10A-4(k)(2). Several
exceptions are outlined in the statute, however the exception at issue here is N.J.S.A. 54:10A-
4(k)(2)(C) (the CBT add-back provision):
(2) Entire net income shall be determined without the exclusion,
deduction or credit of:
. . .
(C) Taxes paid or accrued to . . . a state . . . on or measured by
profits or income, or business presence or business activity, or the
tax imposed by this act . . .
[Id.]
The Tax Court has found that the add-back provision was a part of a 1993 amendment to
the CBT, which “was enacted to stop the tax rate discrimination that existed prior to the
amendment.” Ross Fogg Fuel Oil Co. v. Dir., Div. of Taxation, 22 N.J. Tax 372, 376 (Tax 2005).
The “clear purpose of the statute was to put taxpayers, subject only to CBT on equal footing with
taxpayers subject to CBT and equivalent net corporate income taxes in other States.” Duke Energy
Corp. v. Dir., Div. of Taxation, 28 N.J. Tax 226, 235 (Tax 2014). As Rockland points out, our
case law has established that this amendment requires corporations to add-back, other than the tax
imposed by this act (the CBT), taxes paid to other States. Ross Fogg, 22 N.J. Tax at 378.
Furthermore the taxes paid to other states must be “on or measured by profits or income,” as
discussed in Amerada Hess Corp. v. Dir., Div. of Taxation, 107 N.J. 307, 313 (Tax 1987) or
“business presence or business activity” according to N.J.A.C. 18:7-8.7(f).

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2. N.J.S.A. 54:30A-100; The TEFA
This court finds that while it is important to understand the legislative intent of the CBT
add-back provision, for the issue at hand, it is far more important to understand the intent behind
the TEFA and why the legislature incorporated the TEFA add-back provision into the CBT. The
TEFA was enacted and codified under N.J.S.A. 54:30A-100, in 1997, as part of L. 1997, c. 162
(“the Bill”). TEFA was part of the Legislature’s plan to “implement a transition to competition by
utilities resulting from recent regulatory developments on both the Federal and State levels . . . .”
Assembly Policy and Regulatory Oversight Comm. Statement to A. 2825 1 (June 12, 1997).
During this transition the Legislature remained cognizant of the fact that “New Jersey’s taxes are
among the highest in the nation, constraining the State’s economic growth.” Ibid. The Bill was
the Legislature’s answer to the issue of economic erosion; it placed regulated and unregulated
utility companies on the equal footing in terms of taxation. Id. at 1-2.
In order “to prevent the continued erosion of future tax revenues for annual distribution,”
the Bill simultaneously eliminated the collection of gross receipt and franchise taxes by utilities,
and in their place subjected all utilities to the collection of CBT, Sales and Use Tax, and the TEFA.
Ibid. The Bill became effective in 1998 and the TEFA unit rate surcharges were “calculated as the
total of each remitter’s base year1 liability less the sales and use taxes collected and the CBT
booked for the privilege period ending in calendar year 1998 . . . .” L. 1997, c. 162, § 67. The
remitter’s base year liability for TEFA unit rate surcharges were to be reduced in each of the
following years until completely phased out.2 Id. In concert with the Bill, the Legislature added
1 “Base Year” means the calendar year 1996.
2 The TEFA was originally intended to be phased out over a five year period, however the
legislature extended the TEFA until it finally expired in 2013. N.J.S.A. 54:30A-102.

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a statutory provision to the CBT which is referred to as the TEFA add-back provision, which is at
issue in this case. See N.J.S.A. 54:10A-4.1.
3. N.J.S.A. 54:10A-4.1; TEFA Add-Back Provision
The language of the TEFA add-back provision (entitled TEFA as State Tax) can be split
into three parts; (i) “Notwithstanding the use of the term assessment, the [TEFA] is a State tax
within the meaning of . . . 26 U.S.C. [§] 164, 3” (ii) “pursuant to which a deduction is allowed in
arriving at federal taxable income for the taxable year within which it is paid or accrued,” (iii) “and
such amount shall be added back to entire net income pursuant to . . . [the CBT add-back
provision].” N.J.S.A. 54:10A-4.1. The statutory analysis before the court centers upon whether
part (iii) of the TEFA add-back provision requires Rockland to add-back to its entire net income
the amount of TEFA excluded from its federal taxable income.
ANALYSIS
The court initially rejects Rockland’s argument that all doubt concerning the statutory
construction of the TEFA add-back provision, in conjunction with the CBT add-back provision,
should be resolved in favor of the taxpayer. Rockland misguidedly relies on the Tax Court’s
holding in Fedders Fin. Corp. v. Dir., Div. of Taxation, 96 N.J. Tax 376, 385 (Tax 1984) to wit,
“when interpretation of a taxing provision is in doubt, and there is no legislative history that dispels
that doubt, the court should construe the statute in favor of the taxpayer.” Id. The court finds the
rationale of Justice Stone appropriate here:
We are not impressed by the argument that, as the question here
decided is doubtful, all doubts should be resolved in favor of the
taxpayer. It is the function and duty of the courts to resolve doubts.
3 Section 164 is the general rule for “taxes that shall be allowed as a deduction for the taxable year
within which paid or accrued,” such as “real property,” “personal property,” and “income” taxes
paid to a state. 26 U.S.C. [§] 164.

9
We know of no reason why that function should be abdicated in a
tax case more than in any other where the rights of suiters turn on
the construction of a statute and it is our duty to decide what the
construction fairly should be.
[White v. United States, 305 U.S. 281, 292 (1938).]
Moreover, the court is satisfied, as more fully addressed below, that there is legislative
intent that dispels any doubt as to the interpretation of the TEFA add-back provision in conjunction
with the CBT add-back provision in this matter. See e.g. Oberhand v. Dir., Div. of Taxation, 193
N.J. 558, 570 (2008) (where “the legislative history dispels any doubt in the interpretation of the
statute, we find no reason to apply Fedders”).
The statutory construction of the TEFA add-back provision in conjunction with the CBT
add-back provision, begins with an understanding of how our courts have traditionally brought to
life the meaning of a statute. Courts continually struggle with the literal meanings of the words in
a statute, and what the Legislature intended those words to mean. The wisdom of Judge Learned
Hand provides useful guidance in that regard: “there is no surer way to misread any document than
to read it literally.” Guiseppi v. Walling, 144 F.2d 608, 624 (2d Cir. 1944) (Hand, J. concurring)
aff’d sub nom Gemsco v. Walling, 324 U.S. 244 (1945). New Jersey’s Supreme Court found in
Caputo v. Best Foods, 17 N.J. 259 (1955), that statutory construction “emerges from the spirit and
policy of the statute rather than the literal sense of particular items.” Id. at 264. Justice Handler
added in Unemployed-Employed Council of N.J., Inc. v. Horn, 85 N.J. 646 (1981) that “statutory
language must be read perceptively and sensibly with a view toward fulfilling the legislative
intent.” Id. at 655.
Furthermore:
The plain language of a statute must be given effect by the courts.
A statute should be interpreted in accordance with its plain meaning
if it is clear and unambiguous on its face and admits only one
interpretation. The best approach to the meaning of a tax statute is

10
to give to the words used by the Legislature their generally accepted
meaning, unless another or different meaning is expressly indicated.
The duty of . . . this court is to give meaning to the wording of the
statute and, where the words used are unambiguous, apply its plain
meaning in the absence of a legislative intent to the contrary.
[New Cingular Wireless PCS, LLC v. Dir., Div. of Taxation, 28 N.J.
Tax 1, 14-15 (Tax 2014)(citations omitted).]
and:
[A] statutory enactment cannot be deemed as a meaningless exercise
by our Legislature and must be interpreted to have some
purpose. See Flexx Petroleum Corp. v. Dir., Div. of Taxation, 12
N.J. Tax 1, 12 (Tax 1991) (court must avoid any interpretation ‘that
will render any part of a statute inoperative, superfluous or
meaningless’ or ‘attribute to the Legislature a deliberate attempt to
make a meaningless change’).
[Fields v. Trustees of Princeton University, 28 N.J. Tax 547, 587
(Tax 2015)]
This court is further influenced by the established “principle that the Director’s
interpretation of tax statutes is entitled to a presumption of validity.” Duke Energy Corp., 28 N.J.
Tax at 232.
Courts have recognized the Director’s expertise in the highly
specialized and technical area of taxation. The scope of judicial
review of the Director’s decision with respect to the imposition of a
tax “is limited.” The Supreme Court has directed the courts to
accord “great respect” to the Director’s application of tax statutes,
“so long as it is not plainly unreasonable.” Generally, courts accord
substantial deference to the interpretation an agency gives to a
statute that the agency is charged with enforcing. However, judicial
deference is not absolute. An administrative agency’s interpretation
of the law that is plainly at odds with the statute will not be upheld.
[Ibid. (citations omitted).]
In an effort to give meaning to the words of the TEFA add-back provision, the court looks
into the spirit and policy behind that provision at the time it was put into effect. This allows the
court to read the TEFA add-back provision perceptively and sensibly, fulfilling the intent of the

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Legislature in their inclusion of, “such amount shall be added back to entire net income pursuant
to . . . [the CBT add-back provision],” into the TEFA add-back provision (emphasis added).
Accordingly, this court must first distinguish the TEFA from its predecessors, the gross
receipts and franchise tax. The Bill was passed with an economic back drop that spelled disaster
for the future of New Jersey utilities. Tax rates were too high for regulated utilities, causing
unregulated entities, and out of state providers to take to the market. See, Office of the Governor
News Release, Gov. Whitman Signs Legislation Reforming Energy Tax, Lowering Consumer
Rates and Continuing Municipal Property Tax Revenue (July 1997). Accordingly, in an effort to
equalize the playing field for all utility providers, and to retain and attract utility providers to the
State of New Jersey, the Legislature undertook a massive overhaul into how utility companies are
taxed. Id. This overhaul included the removal of the gross receipts and franchise taxes imposed
on regulated utilities, and the imposition of CBT and sales and use tax on all utilities. This alone,
however, would have caused a massive loss to New Jersey’s tax revenue. The Legislature
responded by temporarily implementing the TEFA.4
The TEFA was enacted to essentially wean New Jersey off of the pre-1998 tax revenue
from regulated entities.5 When looking to the calculation of the TEFA unit rate surcharge, it acts
as a replacement to the revenue received from the gross receipts and franchise taxes imposed prior
4 “The five year phase-out of the TEFA will result in a decline in net revenues from the
replacement taxes over the first five years, masking the underlying increases in the permanent
taxes the will become apparent in the sixth year.” Assembly Appropriations Comm. Statement to
A. 2825 (June 19, 1997).
5 “The purpose of the TEFA is to cushion the General Fund impact of the overall tax reduction
provided in the bill . . . . The bill provides that the total amount of taxes paid by the energy utilities
in 1998 will be at least the same amount as the amount paid in calendar year 1997.” Fiscal Note
to A. 2825 2 (June 24, 1997).

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to 1998, and then further deducts the CBT and sales and use tax estimated to be paid by the utility.
This additional deduction from the unit rate surcharge is the distinguishing feature of the TEFA,
because it acts as a bridge between the tax revenue lost during the transition. Accordingly, this
court concludes that rather than the TEFA being a gross receipt and franchise tax replacement, the
TEFA is a CBT and sales and use tax supplement, bridging the anticipated loss in tax revenue post
transition.
Furthermore, the court concludes that the addition of the TEFA add-back provision into
the CBT further drives the intent of the legislature to interpret the TEFA as a supplement to the
CBT rather than a separate tax. The case law dictates that the CBT add-back provision only applies
to “the tax imposed by this act” (i.e. the CBT) and taxes paid to other states “on or measured by
profits or income,” or “business presence or business activity.” With this in mind this court
concludes, when reading the TEFA add-back provision in conjunction with the CBT add-back
provision, the TEFA in essence is a “tax imposed by this act.” Unlike other New Jersey taxes,
which are not subject to the CBT add-back provision, the TEFA add-back provision, given its
specific incorporation into the CBT, ensures that the TEFA will be treated as the Legislature
intended, and added back to entire net income for CBT purposes.
Therefore, when looking to spirit and policy of the Bill at the time it was passed, and how
the TEFA is calculated, coupled with the addition of the TEFA add-back provision directly into
the CBT statute, it is clear to the court that the Legislature intended for the TEFA to be added back
to entire net income for CBT purposes. Additionally, the rules of statutory interpretation preclude
the court from accepting Rockland’s interpretation of the TEFA add-back provision, as it would
render the provision superfluous. see Flexx Petroleum, 12 N.J. Tax at 12. Therefore, the court
may not read “pursuant to the CBT add-back provision” to mean only if the TEFA satisfies the

13
CBT add-back provision, rather the court must read this section as a cross-reference to the CBT
add-back provision, directing the add-back of the TEFA as a “tax imposed by this act.”
Accordingly, the court finds the Director’s interpretation of the TEFA add-back provision to be
reasonable, and not at odds with N.J.S.A. 54:10A-4.1.
The court further rejects Rockland’s argument that by not amending N.J.S.A. 54:10A-
4(k)(2), to specifically require the TEFA to be added back to entire net income (as it did with the
Sales and Use Tax),6 the Legislature intended not to add-back the TEFA. As in Amerada Hess,
the court here also finds that “the doctrine of probable legislative intent [is] more reliable than the
so-called doctrine of legislative inaction.” Amerada Hess, 107 N.J. at 322.7 In fact this court’s
interpretation of the TEFA add-back provision in conjunction with the CBT add-back provision,
parallels the finding by the trial court in Amerada Hess, which the Supreme Court adopted, to wit,
the Court was “entirely satisfied from the ordinary meaning of [the] words and from the public
perception of the purpose of the [tax at issue] that the legislators would have been reassured that
no amendment of the statutory language was needed to protect the State’s revenue source.” 107
N.J. at 322.
Finally, the court rejects Rockland’s contention that by requiring the add-back of the TEFA
to entire net income, the legislative intent of the 1993 amendment to the CBT add-back provision
6 The New Jersey Sales and Use Tax is specifically added back to entire net income under N.J.S.A.
54:10A-4(k)(2)(H).
7 “Legislative inaction has been called a ‘weak reed upon which to lean’ and a ‘poor beacon to
follow’ in construing a statute.” Amerada Hess, 107 N.J. at 322, citing 2A Sutherland, Statutory
Construction, § 49.10 (4th Ed. 1984)

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would be frustrated. 8 This court determined above that the legislature included the TEFA in the
Bill to act as a temporary supplement to the CBT, due to the nature of the TEFA unit rate surcharge
calculation, coupled with the TEFA add-back provision. The TEFA ensures that New Jersey will
receive at least as much tax revenue as it did prior to 1998, by subtracting the estimated CBT and
sales and use tax from the calculation of the TEFA unit rate surcharge, and then adding all three
taxes back to entire net income for CBT purposes. Clearly this matter would not be before the
court had the Legislature temporarily raised the CBT rate to achieve the same result. The court is
satisfied that the TEFA add-back provision will not put corporate taxpayers, subject only to CBT
8 The court in Ross Fogg found that the amendment to the CBT add-back provision, was intended
to “stop the tax rate discrimination that existed prior to the amendment.” 22 N.J. Tax at 376-77.
This discrimination was caused by the “allowance of the deduction of taxes of other jurisdictions,
causing corporations which do business in several states to pay a lower effective rate of tax on
their New Jersey activities than do corporations which only do business in New Jersey.” Id. at 377
(citing Joint Legislative Comm. on Economic Recovery Statement to Assembly Comm. Substitute
for A. 273 and 1870 (June 2, 1993)). The court held that the purpose of this amendment was not
to “expand the scope” of the CBT add-back provision to include other New Jersey taxes, but rather
to “eradicate the tax rate discrimination against New Jersey corporations with solely in-state
activity” by “capturing out-of-state income that had not previously been subject to the add-back.”
Ross Fogg, 22 N.J. Tax 377-78. The TEFA in this matter is distinguishable from the tax at issue
in Ross Fogg. Unlike the petroleum gross receipts tax at issue there, the TEFA brings with it
specific legislative history that points to the Legislature’s clear intent to add-back the TEFA, to
temporarily cushion the General Fund impact after the Bill removed the gross receipts and
franchise taxes. Furthermore, the Legislature specifically tied the TEFA add-back provision to the
CBT add-back provision, which drives this court’s conclusion that the TEFA is “a tax imposed by
this act.” Due to the nature of the TEFA and the TEFA add-back provision, this court finds it
unnecessary to discuss whether or not the TEFA is “on or measured by profits or income” or
“business presence or business activity,” as this only applies to taxes of other states in the
contemplation of whether or not they should be added-back to entire net income for CBT purposes.
Accordingly, the TEFA is distinguishable from any other similar New Jersey tax, and from the
rationale of Ross Fogg which limits the add-back of New Jersey taxes only to the CBT.

15
and the TEFA, on unequal footing with taxpayers subject to CBT, TEFA, and equivalent net
corporate income taxes in other States.
CONCLUSION
The court finds that there is no genuine issues of material fact which precludes the
resolution of this matter in a summary fashion. Accordingly, for the reasons set forth above,
Rockland’s motion for summary judgment is denied, and the Director’s cross motion for summary
judgment is granted. The court’s order consistent with this opinion has been uploaded to eCourts.