Andrew J. Shechtel v. Director, Div. of Taxation

NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS

TAX COURT OF NEW JERSEY

Mala Sundar R.J. Hughes Justice Complex
JUDGE P.O. Box 975
25 Market Street
Trenton, New Jersey 08625
Telephone (609) 943-4761
TeleFax: (609) 984-0805
taxcourttrenton2@judiciary.state.nj.us

August 22, 2017

John L. Berger, Esq.
Kenneth J. Slutsky, Esq.
Lowenstein Sandler, L.L.P.
One Lowenstein Drive
Roseland, New Jersey 07068

Ramanjit K. Chawla
Deputy Attorney General
R.J. Hughes Justice Complex
25 Market Street, P.O. Box 106
Trenton, New Jersey 08625-0106

Re: Andrew J. Shechtel v. Director, Div. of Taxation
Docket No. 000295-2017
Dear Counsel:

This is the court’s opinion on the motions for reconsideration filed by both parties.

Defendant, (“Taxation”) filed its motion first claiming that the court erred by overlooking

controlling law when it voided Taxation’s imposed interest and penalties. Plaintiff then filed his

reconsideration motion claiming that the court erred in construing a fact and misconstrued, or

erroneously applied, the law. Each party replied to the other’s motion claiming the court did not

err as alleged by the respective movant.

For the reasons stated below, the court denies both motions.

*
(A) Prior Decision

Prior to these instant motions for reconsideration, plaintiff moved for summary judgment

claiming it was legally permissible for him to offset his distributive share of partnership pass-

through income for tax year 2010 with a portion of a 2009 passed-through loss from that same

partnership pursuant to the federally accepted methods of accounting, which is required to be

followed for New Jersey Gross Income Tax (“GIT”) purposes under N.J.S.A. 54A:8-3(a).

Taxation cross-moved for summary judgment arguing that carry-forward of suspended losses to

subsequent years is prohibited by N.J.S.A. 54A:5-2, the controlling statute for GIT purposes.

This court, in a published opinion issued July 6, 2018, denied plaintiff’s motion for

summary judgment, except as to interest and penalty. The court agreed with Taxation that carry-

forward of suspended losses to subsequent years is prohibited by N.J.S.A 54A:5-2, and that the at-

risk rules of I.R.C. § 465, were (1) not a method of accounting for purposes of N.J.S.A. 54:8-3(a);

and, (2) even if deemed a method of accounting, could not supersede the carry-forward of loss

prohibition in N.J.S.A 54A:5-2. The court also found that the principles of equitable recoupment

did not apply because the offset of 2010 income by loss incurred by the partnership, and passed-

through to plaintiff in 2009, were not a single transaction. The court thus affirmed the GIT

assessment of $436,281.

The court however voided the interest ($82,012) and non-amnesty penalty ($21,814)

imposed by Taxation.1 The court held that plaintiff had consistently argued, and the records

undisputedly evidenced, that he had overpaid his 2010 GIT such that it was sufficient to cover

1
The final determination accrued interest to 12/15/2016. The total interest charged was $154,644.
2
Taxation’s audited assessment/demand of $436,281, thus, “[i]f no GIT is due, interest or penalty

cannot be due since Taxation did not have to wait for the payment of tax.” The court observed:

That plaintiff requested the excess monies withheld for 2010 (i.e.
$903,123) to be credited towards his 2011 GIT obligation does not
mean that those taxes were not usable towards the 2010 audited
assessment. As he points out, he overpaid his GIT liabilities by
more than the audited amount in 2011 through 2015 and in each year
requested the overpayment be applied to the following tax year.
Taxation does not dispute any of these contentions. Other than
reciting the statutes permitting interest and penalty imposition for
late payments, Taxation offers no cogent reason why plaintiff’s
payments in 2010, clearly in excess of the tax due, self-reported plus
audited, cannot be applied towards the audited tax, or why excess
GIT paid in 2010 to be credited towards the 2011 GIT, cannot be
used to satisfy the 2010 audited GIT. Therefore, the interest and
penalty amounts ($82,012 and $21,814) are voided.

(B) Reconsideration

A motion for reconsideration is governed by R. 8:10. This rule provides, in part, that R.

4:49-2 “shall apply to Tax Court matters” and that “all such motions shall be filed and served not

later than 20 days after the conclusions of the court are announced orally or in writing . . . .” R.

8:10. Here, both parties’ motions are timely.

Pursuant to R. 4:49-2, a motion for reconsideration “shall state with specificity the basis

on which it is made, including a statement of the matters or controlling decisions which counsel

believes the court has overlooked or as to which it has erred . . . .” Grant of such motion is “within

the sound discretion of the Court, to be exercised in the interest of justice.” D’Atria v. D’Atria,

242 N.J. Super. 392, 401 (Ch. Div. 1990) (citations omitted). Reconsideration is appropriate in a

“narrow corridor” of cases, where either “1) the Court has expressed its decision based upon a

palpably incorrect or irrational basis, or 2) it is obvious that the Court either did not consider, or

3
failed to appreciate the significance of probative, competent evidence.” Ibid. In other words, it

must be demonstrated that the court acted in a manner that is “arbitrary, capricious, or

unreasonable,” prior to the court engaging in the reconsideration process. Ibid.

Reconsideration is not a proxy for filing an appeal. See Palumbo v. Twp. of Old Bridge,

243 N.J. Super. 142, 147 n.3 (App. Div. 1990). It is not a means to challenge a court’s decision

merely because a party is dissatisfied with the court’s decision. D’Atria, 242 N.J. Super. at 401.

“[M]otion practice must come to an end at some point, and if repetitive bites at the apple are

allowed, the core will swiftly sour.” Ibid.

Despite the above restrictions on the use of a motion for reconsideration, “if a litigant

wishes to bring new or additional information to the Court's attention which it could not have

provided on the first application, the Court should, in the interest of justice (and in the exercise of

sound discretion), consider the evidence.” Ibid.

1. Taxation’s Motion for Reconsideration

Taxation argues that the court erred in voiding the interest and penalty. Specifically, it

claims that the court overlooked the law that prohibits Taxation from “applying an overpayment

to a deficiency assessment that a taxpayer has elected to apply as a credit for a subsequent period,”

and that the court “overlooked the fact that the audit resulting in the challenged Notice of

Deficiency was not completed until September 2014.” It cites to N.J.S.A. 54A:9-7(d) and N.J.A.C.

18:35-3.1, to support its claim that it has no discretion to apply the plaintiff’s overpayment,

reported in 2010, and directed to be used for 2011, to a subsequently determined deficiency.

4
Plaintiff argues that Taxation never once raised its inability to use plaintiff’s GIT

overpayment pursuant to the above authority. This is despite his consistent contention that he

never underpaid his 2010 GIT, nor was there any deficiency for 2010, even after reducing his self-

reported overpayment of $903, 123 with the audited assessment of $436,281.

Plaintiff is correct. In his administrative protest he contended that he “[d]id [n]ot

[u]nderpay [h]is 2010 [GIT] Liability.” “How is [it] possible,” he argued, to assess interest and

penalty “as if [he] . . . had underpaid” his GIT liability, when in fact, he “paid more tax than he

owed.” He noted although Taxation “having years earlier moved” his self-reported 2010 GIT

overpayment to his “2011 tax year,” that “mistake could be easily corrected by moving $436,281”

which was the amount Taxation assessed after audit, “of [his] 2010 tax payments . . . from 2011

back to 2010 (and, of course, reducing [his] credit for 2011 and future years by $436,281.” The

resultant reduction in the amount available to be credited to a future year would not prejudice

Taxation since he had overpaid his GIT by more than the audited assessment in 2011-2013, and in

each year had requested the overpayment be applied to the “following year’s tax.”2

In response, the conferee quoted N.J.S.A. 54A:9-5(a), which imposes interest if tax “is not

paid on or before the last date prescribed in” the GIT Act, and N.J.S.A. 54A:9-8, which sets the

time limit claiming credit or refund. There was no mention of, or reference to either N.J.S.A.

54A:9-7(d) or N.J.A.C. 18:35-3.1, as being a legal impediment.

2
He argued alternatively that the interest start date should have been from 10/14/2011, the date he
filed his return. He also contended that penalty should not be imposed, not only because he had
never underpaid his 2010 GIT, but also because he reasonably relied on the GIT Act requiring that
he follow federal methods of accounting, which he felt included the federal at-risk rules.
5
In plaintiff’s complaint to this court, he alleged essentially the same arguments as he had

in the protest, namely that Taxation’s demand for penalty and interest was “wrong” since he paid

more than what was owed even after the audit ($1,525,453 was paid, $1,058,611 was owed after

audit); Taxation should have applied the $466,842 ($1,525,453 less $1,058,611), the overpayment

as it determined to tax year 2011; and by using the self-reported overpayment amount of $903,123,

Taxation was creating “a phantom tax shortfall for 2010,” when in fact there was no “2010 tax

deficiency.” He demanded that the interest and penalty be set aside.

Taxation responded that it was without knowledge or information sufficient to form a belief

as to the truth of the allegations, did not have to respond to legal conclusions, and denied any error

on its part. It also denied that plaintiff was entitled to the relief sought. It did not cite to N.J.S.A.

54A:9-5(d) or N.J.A.C. 18:35-3.1 in support of this allegation.

Plaintiff’s brief in support of his summary judgment motion repeated the above contentions

albeit, at length, in Point IV, which was titled in part, “PLAINTIFF DID NOT UNDERPAY HIS

2010 GROSS INCOME TAX LIABILITY.” He reiterated that he never underpaid his 2010 GIT;

Taxation could have easily moved the audited tax of $436,281 from 2011 back to 2010; while this

would reduce his credit for 2011 and future years, it would not prejudice Taxation since he had

overpaid his GIT liability by more than $436,281 in each year 2011 to 2015; and the 2011

overpayment reduction would only reduce the tax to be credited towards his 2016 tax liability.

In response, Taxation’s cross-motion cited to N.J.S.A. 54:32B-26, a sales and use tax

provision, as authority for Taxation to impose penalties and interest on underpaid taxes not

remitted in time as provided under N.J.S.A 54:48-1, -4. It also cited to N.J.S.A. 54:49-3, as to the

6
rates that can be imposed. It then argued that it is entirely up to Taxation to abate or waive interest;

the Tax Court cannot overturn such a decision unless manifestly wrong; in any event, the court

cannot question the quantum to be abated; and that it is the taxpayer’s burden to show “a reasonable

basis for their mistaken interpretation of the tax statutes.” Taxation contended that since plaintiff

had no reasonable basis to assert that he could suspend the 2009 loss and carry it forward to 2010,

to net it against 2010 income, there was no reason to abate interest or penalty, therefore Taxation

“determination not to waive penalty and interest . . . is reasonable and should be sustained.”

As is evident from plaintiff’s pleadings, and protest, he clearly was not seeking a waiver

or abatement of interest and penalties. He was seeking a cancellation of the same on grounds he

paid his 2010 GIT on time, he never underpaid his 2010 GIT even after the audit, thus, there never

was a GIT deficiency for 2010, a foundational requirement for imposition of interest and penalty,

and further, as to penalty, that he had a reasonable basis for his assertions. Therefore, and since

Taxation’s reply to plaintiff’s argument was non-responsive, and never mentioned N.J.S.A. 54A:9-

7(d) or N.J.A.C. 18:35-3.1 (even during oral argument) the court found plaintiff’s arguments to be

persuasive and credible, which it reflected in its prior decision.

Taxation now claims that the court erred in overlooking this statute and regulation, and that

the court’s focus was “misplaced” when it found persuasive plaintiff’s arguments that he never

underpaid his 2010 GIT. When Taxation never raised the statute or regulation it now deems is

controlling, and a legal bar to the relief plaintiff sought, it is not the court’s error. Taxation’s

contention now is that while it conceded plaintiff did have an overpayment for tax year 2010, it

never “concede[d] that Taxation could have applied any portion of the overpayment to satisfy

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[p]laintiff’s subsequently assessed and outstanding 2010 liability.” This argument is off the mark.

Having never even addressed plaintiff’s argument, its silence cannot be considered as an implied

or inferred opposition or non-concession, although it could be construed as a waiver.

Equally off the mark is Taxation’s argument that the court erred in finding “without legal

basis, that Taxation should have offset all interest and penalties properly assessed.” But the court

never found that Taxation “should have offset” the interest or penalty. Rather, it voided the interest

and penalties because it agreed with plaintiff that he did not underpay his 2010 GIT even after the

audited assessment. This is why the court held, “[i]f no GIT is due, interest or penalty cannot be

due since Taxation did not have to wait for the payment of tax.”

A motion for reconsideration is not the method for a party to assert new arguments or legal

position. See e.g. Medina v. Pitta, 442 N.J. Super. 1, 18 (App. Div. 2015) (“Filing a motion for

reconsideration does not provide the litigant with an opportunity to raise new legal issues that were

not presented to the court in the underlying motion.”) (citation omitted); Cummings v. Bahr, 295

N.J. Super. 374, 384-85 (App. Div. 1996) (affirming denial of plaintiff’s second motion for

reconsideration because “[p]laintiff offered a new theory as to liability premised on a new

characterization,” which was available to plaintiff when it responded to defendant’s motion for

summary judgment). See also Pressler & Verniero, Current N.J. Court Rules, cmt. 2 on R. 4:49-

2 (2018) (citations omitted); Lahue v. Pio Costa, 263 N.J. Super. 575, 598 (App. Div. 1993)

(rejecting defendant’s affirmative defense claim, which was raised for the first time after the three-

day trial, via a motion for reconsideration). Yet, this is what Taxation is attempting here. It was

sufficiently aware of plaintiff’s arguments that he never underpaid his 2010 GIT, even after

8
Taxation’s audited assessment, therefore interest and penalty should not be imposed. It had ample

opportunities to oppose this argument using the now cited statute and regulation. It either chose

or failed not to, possibly because it misconstrued plaintiff’s argument as one seeking an abatement

or waiver during summary judgment, and now misconstrues the court’s decision as one requiring

Taxation to “offset” the interest and penalty.

Thus, and although the court erred factually by noting in the opinion that the interest of

only $82,012 is voided, rather than $154,644,3 it nevertheless did not err as claimed by Taxation.

Having failed to show that this court acted in an “arbitrary, capricious, or unreasonable,” manner,

the court can deny Taxation’s reconsideration motion.

Even if this court were to consider the plain language of the now cited statute, it would not

change its opinion. N.J.S.A. 54A:9-7(d) provides:

The director may prescribe regulations providing for the crediting
against the estimated income tax for any taxable year of the amount
determined to be an overpayment of the income tax for a preceding
taxable year. If any overpayment of income tax is so claimed as a
credit against estimated tax for the succeeding taxable year, such
amount shall be considered as a payment of the income tax for the
succeeding taxable year (whether or not claimed as a credit in the
declaration of estimated tax for such succeeding taxable year), and
no claim for credit or refund of such overpayment shall be allowed
for the taxable year for which the overpayment arises.
Taxation’s argument, distilled to plain language is this: In October of 2011, plaintiff self-

reported an overpayment of $903,123, and asked it be applied to 2011 tax year. Taxation complied

3
See supra n.1. However, the court’s Order granting Taxation’s cross-motion for summary
judgment did not include any dollar amount, but simply voided the “interest and penalties imposed
by defendant.” Thus, effectively, the court voided all interest imposed, even if its opinion indicated
a lower amount of $82,012.
9
with his request. This rendered his 2010 “account” as having zero dollars. Thus, when it assessed

plaintiff $436,281 of GIT in September 2014, the amount in his 2010 “account,” was -$436,281.

It cannot, in 2014, credit plaintiff’s 2010 account with any money already moved to 2011, because

N.J.S.A. 54A:9-5(d) forbids it. This means there was a deficiency of $436,281, which means

interest and penalty must be imposed.

Plaintiff agrees with Taxation except as to its statutory interpretation, and its conclusions

therefrom. He correctly points out that “[f]or any given year, there can only be an overpayment to

the extent that the amount paid in by a taxpayer exceeds the taxpayer’s tax liability for that year as

finally determined.” For 2010, it is $466,842 (plaintiff’s self-reported overpayment of $903,123

less audited assessment of $436,281). If plaintiff told Taxation that his overpayment is $903,123

for 2010, Taxation would disagree and tell him that it is only $466,842. Taxation would not credit

his 2011 “account” with $903,123 because that self-reported amount is, post-audit, not the

overpayment, just as it would not comply with a direction to refund, or apply an incorrectly

computed self-reported overpayment to a future year. Thus, plaintiff agrees, that under N.J.S.A.

54A:9-7(d), an overpayment of one year that was credited to another year, cannot be re-credited

to the overpayment year. What he disagrees is that it is not $903,123 that cannot be re-claimed as

a credit for 2010. It is $466,842. It is $466,842 which is the overpayment as determined, it is only

this amount which can be credited for a future year or years, and therefore, it is only this amount

that cannot be used towards any tax due for 2010, which he is not seeking to do. This has been

plaintiff’s argument since the time of his protest, and has never wavered thus far. Therefore, the

10
court accepted that he never underpaid his 2010 GIT liability even after the audited assessment,

and in the absence of a 2010 GIT deficiency, held that there can be no interest and no penalty.

Taxation is reading the last portion of the second sentence of N.J.S.A. 54A:9-5(d) in a

vacuum and in a constrained manner. It ignores the statutory language and intent that only one,

and the correct amount, of overpayment can be used as a credit for future years, and it is that

amount which cannot be “moved back” to the year in of the overpayment. N.J.S.A. 54A:5-9(d)

does not require Taxation to deem only the self-reported amount as the overpayment. Rather it is

the amount which is “determined” to be an overpayment, which is permitted to be “claimed” for

the following year, and which cannot be re-claimed as a credit for the prior year.

Such a construction of the statute will not, as Taxation fears, open the floodgates for claims

for credit (“moving” an overpayment which taxpayers had directed to be applied to a particular

future tax year, back to the tax year for which a deficiency is assessed). The facts here, and the

intent of N.J.S.A. 54A:9-7(d), militate against such a concern. Plaintiff concedes that if his 2010

overpayment, which he directed be used as a credit for 2011, fell short of the 2010 GIT due after

the audited assessment, he would be liable for interest because there would be a 2010 GIT

deficiency. Creating a deficiency by ignoring the correct amount of the overpayment for 2010

($466,842), is the “phantom” deficiency that plaintiff contends is erroneous, and contrary to the

now cited N.J.S.A. 54A:9-5(d).4

4
Taxation’s contention that plaintiff makes a new argument of a “phantom” overpayment, lacks
merit. Plaintiff’s complaint and briefs in support of his summary judgment motion reference this
term more than once in the context of his arguments that the imposition of interest and penalty is
improper.
11
The court agrees with plaintiff that after Taxation audited his 2010 GIT return and imposed

additional GIT, there was no deficiency remaining. Therefore, the court need not alter its

conclusion that no interest or penalty can be imposed upon plaintiff when he has no GIT

deficiency.

Taxation cites to a portion N.J.A.C. 18:35-3.1, as a law that this court overlooked, to claim

that credit is applied “where the taxpayer indicates on the face of such return that he or she elects

to have such overpayment so applied,” and if so, “will be considered to be a payment of the first

installment of the estimated tax for the next succeeding year unless the taxpayer designates

otherwise on the face of the return for the year in which the overpayment was made.” It argues

that never, at any point, did plaintiff “contend that he requested Taxation to disregard his credit

election and apply any reported overpayments to satisfy his 2010 GIT deficiency assessment.”

This argument fails because regardless of a taxpayer’s request to credit a certain amount to

a future year, under N.J.S.A. 54A:9-5(d), Taxation can credit only the amount that is the

overpayment for that particular tax year. That Taxation determined the overpayment amount in

2014, as opposed to 2011 when plaintiff filed his return, does not alter that statutory provision, nor

render plaintiff in control, especially when the regulation does not address how it will apply if the

overpayment amount is changed by Taxation due to an audit, as is the case here. Additionally, as

explained above, plaintiff has consistently requested that the correct amount of overpayment be

used for 2011, and the 2010 “phantom” deficiency be removed. Until this reconsideration motion,

Taxation chose to ignore that request, or misconstrue that request as one for a waiver/abatement.

12
Taxation’s last argument that plaintiff made a business decision to apply his self-reported

2010 overpayment to 2011, cannot now backtrack and claim it as a payment for 2010, is meritless

under N.J.S.A. 54A:9-5(d). Equally meritless is its reliance on Kaplan v. Dir., Div. of Taxation,

23 N.J. Tax 594, aff’d, 24 N.J. Tax 415 (App. Div. 2009). That case has absolutely no bearing

here, being entirely dissimilar in facts and the applicable law. For all of the above reasons,

Taxation’s motion for reconsideration is denied.

II. Plaintiff’s Motion for Reconsideration

Plaintiff articulates several reasons why the court erred: (1) the “court erroneously states

that plaintiff ‘does not dispute’ that his share of SSY’s 2009 loss was distributed to him in 2009,”

and erroneously concludes that the loss was carried forward to 2010; (2) the court misconstrues

Estate of Guzzardi v. Dir., Div. of Taxation, 15 N.J. Tax 395 (Tax 1995) and improperly analogizes

capital losses, discussed in that case, to the at risk rules of I.R.C. § 465; (3) the court improperly

used Estate of Guzzardi in discussing federal accounting methods, when the case has nothing to

do with federal accounting methods; (4) the court erroneously draws a distinction between

accounting provisions and substantive provisions; (5) the court erred in saying that the ‘“thrust of

I.R.C. § 465 is not a timing of a loss recognition;’” (6) the court erred in claiming that plaintiff’s

situation is no different than a situation where a partner in partnership has a loss in excess of his

or her basis; (7) the court’s conclusion that N.J.S.A. 54A:5-2 protects against tax shelters is

mistaken. During oral argument, plaintiff articulated that the court’s primary error was limiting

the GIT’s tax-shelter avoidance intent to N.J.S.A. 54A:5-2, when clearly, that intent permeated the

entire GIT Act. This per plaintiff, results in the GIT actually allowing tax shelters such as the ones

13
intended to be avoided by I.R.C. § 465, the federal at-risk rules; (8) the court misunderstood that

only a single transaction occurred when addressing the equitable recoupment argument; and, (9)

the court failed to address plaintiff’s square corners doctrine argument.

The court finds that almost all of these reasons essentially state why the court got it wrong.

But dissatisfaction with the court’s decision is not grounds for revisiting the same by granting a

motion for reconsideration. Palumbo, 243 N.J. Super. at 147 n.3 ( “We . . . disapprove of the

excessive use of motions for reconsideration . . . [which are being] made with increasing frequency

when essentially there is little more than disagreement with the court’s decision. Motions for

reconsideration were never meant to be a substitute for the filing of a timely appeal.”).

Three points however, warrant mention. The first is plaintiff’s contention that the court

“erroneously” stated that plaintiff did not “dispute” that his share of the partnership’s loss in 2009

was distributed to him in 2009. Plaintiff does not point to any document or evidence that proves

otherwise. The K-1 issued to plaintiff showed his distributive share of loss. Plaintiff argued that

the at-risk rules function on the individual level, not at the entity level. Indeed, in 2010, the K-1

showed his distributive share, yet there was a hand-written note that “[t]here is an additional loss

. . . taken on this 2010 return. It was suspended in 2009 by the ‘at risk’ rules, but allowed now.”

To thus claim that this was somehow a factual error, in that plaintiff was never distributed his share

of the partnership loss, is misleading. The loss was distributed. Whether or not he could use that

loss to offset income differed federally due to the at-risk rules, and in New Jersey due to N.J.S.A.

54A:5-2. Thus, plaintiff’s assignment of a factual error on the court’s part is unpersuasive. While

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plaintiff continues to argue that it is not a carry-forward of a prior year’s loss, this is more

appropriately made to the Appellate Division.

The second point is the court’s “palpably” erroneous conclusion that our Legislature’s

intent to avoid tax-shelters is adequately expressed in N.J.S.A. 54A:5-2. Per plaintiff, the anti-tax

shelter motivation permeates the entire GIT Act, thus, the court’s ruling artificially limits the same,

which in turn leads to an absurd result of allowing some anti-tax shelters (such as the present case),

and prohibiting others. Although well-articulated, the argument is not new. Plaintiff argued

similarly in his summary judgment motions. The court considered these arguments, and made its

finding. The court however, does now note that under plaintiff’s argument of the anti-tax shelter

motivation being the foundational foothold of the GIT Act, there is no need for resort to N.J.S.A.

54A:5-2 or even to 54A:8-3, the statute plaintiff is relying upon. All one needs to show is that the

taxpayer’s treatment of a particular item of income or loss is anti-tax shelter, and the court must

treat such item accordingly. It is doubtful that the Legislature intended so broad an incorporation

of the federal anti-tax shelter regime when it enacted the GIT Act or N.J.S.A. 54A:5-2. The court

therefore finds no reason for it to re-visit its prior conclusion. Plaintiff’s remedy is with the higher

court, which may very well agree with him.

The last point plaintiff raises is that the court failed to address his “square corners

doctrine.”5 He is correct in that the court’s opinion does not use this phrase. Taxation correctly

5
The square corners doctrine as set forth by our Supreme Court is that the “government will act
scrupulously, correctly, efficiently, and honestly.” F.M.C. Stores Co. v. Borough of Morris Plains,
100 N.J. 418, 427 (1985). The assumption is that a governmental authority “will exercise its
governmental responsibilities in the field of taxation conscientiously, in good faith and without
15
points out that this aspect of the court’s finding was in the portion addressing the inapplicability

of the equitable recoupment principle. Plaintiff correctly points out that equitable recoupment

principle is not the square corners doctrine.

However, the latter is a distinction without significant difference. Plaintiff’s brief in

support of his summary judgment motion argued that Taxation failed to turn square corners

because it consistently advised all taxpayers to follow the federal methods of accounting, and never

promulgated regulations or other guidance on its interpretation of the at-risk rules. Had Taxation

publicly stated its position on the at-risk rules, argued plaintiff, he would have filed his GIT returns

differently. The court agreed with plaintiff that Taxation never published any articles on how the

at-risk rules apply in New Jersey, however, it also explained that there was ample guidance that

use of a prior’s year loss in a subsequent tax year is impermissible, thus, plaintiff could not credibly

claim lack of guidance as a reason to annul the assessment. Thus, it is evident that plaintiff’s

arguments focused on a lack of guidance as to the applicability of the federal at-risk rules, and it

is equally evident that the same were addressed by the court. Therefore, even if the court were to

label its findings recited above as addressing plaintiff’s square corners doctrine, it would not

change those findings.

Verily, the court did not specifically distinguish the cases plaintiff cited, such as Residuary

Trust A v. Dir., Div. of Taxation, 28 N.J. Tax 541 (App. Div. 2015); Milligan v. Dir., Div. of

Taxation, 29 N.J. Tax 381 (Tax 2016); or Harrington v. Dir., Div. of Taxation, 29 N.J. Tax 370

ulterior motives.” Ibid. Thus, a taxing authority “may not conduct itself so as to achieve or
preserve any kind of bargaining or litigational advantage over” a taxpayer. Ibid.
16
(Tax 2016). However, the court is not bound to address each and every case cited by a party. Even

if the court were to examine these cases, in the context of plaintiff’s present argument that a change

in Taxation’s position requires a voiding of the entire assessment, the court would not reconsider

its findings. In those cases, there was an explicit pronouncement by Taxation or another State

agency, that an item was not taxable, and then during an audit, the item was deemed taxable, or

that to be exempt, an additional requirement was imposed. Those cases involved an attempt to

retroactively change a prior position taken by the government. There is nothing similar here.

Plaintiff was never advised that the federal at-risk rules would permit use of a loss passed through

to him in tax year 2009, in tax year 2010. Plaintiff’s inference that the same is permissible because

Taxation espoused following the federal methods of accounting for GIT return filing purposes, is

a far cry from an explicit pronouncement that a transaction is not taxable. Those cited cases are

inapplicable by analogy or extension.

A motion for reconsideration is improper when it is used “to ask the Court to rethink what

is had already thought through -- rightly or wrongly.” Oritani Sav. & Loan Assoc. v. Fidelity &

Deposit Co., 744 F. Supp. 1311, 1314 (D. N.J. 1990) (citations and internal quotation

marksomitted), rev’d & remanded on other grounds, 989 F.2d 635 (3d Cir. 1993). While plaintiff

may consider the court’s decision as “so aberrational as to border on the Kafkaesque,” re-

emphasizing his prior arguments do not merit reconsideration. For all of the foregoing reasons,

this court denies plaintiff’s reconsideration motion.

Very Truly Yours,

Mala Sundar, J.T.C.

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