Re: Carol Lagomarsino v. Director, Division of Taxation
This letter constitutes the court's opinion after trial in the above-referenced matter in which plaintiff challenges the final decision of the Director, Division of Taxation denying her application for a homestead property tax reimbursement for tax year 2014. For the reasons explained more fully below, the Director's final determination is affirmed.
I. Procedural History and Findings of Fact
Because this matter is assigned to the small claims division, the trial was conducted pursuant to R. 8:11(b), which provides that “the hearing shall be informal and the court may hear such testimony and receive such evidence as it deems necessary or desirable for a just and equitable determination of the case.” Based on the evidence gathered during the trial, as well as the documents submitted by the parties prior to trial, the court makes the following findings of fact.
During 2014, plaintiff Carol Lagomarsino resided in Ocean County. The home in which plaintiff resided is owned by her two children. Plaintiff holds a life estate in the property. There is no dispute that plaintiff suffers from disabilities. In 2011, plaintiff applied for Supplemental Security Income (“SSI”) benefits under Title XVI of the Social Security Act, 42 U.S.C. § 1381, et seq., based on her disabilities. Eligibility for SSI is, in part, based on need. Because plaintiff did not reveal on her application approximately $50,000 in gambling winnings, she was denied benefits. Plaintiff's failure to report the gambling winnings rendered her in eligible for benefits for two years.
Plaintiff reapplied for SSI benefits in 2014. On August 24, 2014, the Social Security Administration informed plaintiff that was eligible for SSI benefits as of January 2014.
Plaintiff applied for a homestead property tax reimbursement for tax year 2014. This benefit is available to certain taxpayers with disabilities. On November 2, 2015, the Director denied plaintiff's application. The Director determined that plaintiff was not entitled to a reimbursement because the statute defines a qualified “disabled person” as “an individual receiving monetary payments pursuant to Title II of the federal Social Security Act (42 U.S.C. s.401 et seq.) on December 31, 1998, or on December 31 in all or any part of the year for which a homestead property tax reimbursement under this act is claimed.” N.J.S.A. 54:4–8.67. The Director concluded that because plaintiff was receiving payments under Title XVI of the Social Security Act she did not qualify for a reimbursement.1
On November 13, 2015, plaintiff filed a Complaint challenging the Director's final determination.
A trial was held on March 2, 2016. As directed by the court, the Director submitted a supplemental brief on March 30, 2016. Plaintiff did not file a supplemental brief by the April 14, 2016 deadline established by the court for her submission.
II. Conclusions of Law
The court's analysis begins with the familiar principle that the Director's interpretation of tax statutes is entitled to a presumption of validity. “Courts have recognized the Director's expertise in the highly specialized and technical area of taxation.” Aetna Burglar & Fire Alarm Co. v. Director, Div. of Taxation, 16 N.J. Tax 584, 589 (Tax 1997) (citing Metromedia, Inc v. Director, Div. of Taxation, 97 N.J. 313, 327 (1984)). The scope of judicial review of the Director's decision with respect to the imposition of a tax “is limited.” Quest Diagnostics, Inc. v. Director, Div. of Taxation, 387 N.J.Super. 104, 109 (App.Div.), certif. denied, 188 N.J. 577 (2006). 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.” Metromedia, supra, 97 N.J. at 327. See also GE Solid State, Inc. v. Director, Div. of Taxation, 132 N.J. 298, 306 (1993) ( “Generally, courts accord substantial deference to the interpretation an agency gives to a statute that the agency is charged with enforcing.”)
In addition, the Appellate Division has instructed this court to construe the statutes defining eligibility for homestead rebates narrowly. MacMillan v. Director, Div. of Taxation, 180 N.J.Super. 175, 178 (App.Div.1981), aff'd, 89 NX 216 (1982). “[T]ax preference provisions are strictly construed against those claiming exemption. This is so with regard to local property taxes. It is also true with respect to state taxes.” Ibid. (citations omitted). Where the homestead rebate “statute is outspoken and unambiguous” its terms must be strictly applied. Id. at 179. Accord Fedders Fin. Corp. v. Director, Div. of Taxation, 96 N.J. 376, 384–86 (1984); Vavoulakis v. Director, Div. of Taxation, 12 N.J. Tax 318, 329 (1992), aff'd o.b., 13 N.J. Tax 322 (App.Div.1993).
In 1975, our Constitution was amended to authorize the enactment of laws to allow homeowners and residential tenants “a rebate or a credit of a sum of money related to property taxes paid by or allocable to them at such rates and subject to such limits as may be provided by law.” N.J. Const. (1947) Art. VIII, § 1, par. 5. Since that time, the Legislature has enacted a series of homestead rebate programs for resident homeowners and tenants. Vavoulakis v. Director, Div. of Taxation, supra, 12 N.J. Tax at 323–24. Although the programs have had various names and eligibility requirements, the purpose of the programs has consistently been “the beneficent purpose of alleviating the heavy realty tax burden.” Rubin v. Glaser, 83 N.J. 299, 307, app. dis., 449 U.S. 977, 101 S.Ct. 389, 66 L. Ed.2d 239 (1980).
A homestead property tax reimbursement is available to any person sixty-five or more years of age or who is disabled who meets certain income limits and who, as a “homeowner, has made a long-term contribution to the fabric, social structure and finances of one or more communities in this State, as demonstrated through the payment of property taxes ․ on any homestead ․ used as a principal residence in this State for at least 10 consecutive years at least three of which as owner of the homestead for which a homestead property tax reimbursement is sought prior to the date that an application for a homestead property tax reimbursement is filed.” N.J.S.A. 54:4–8.67. The amount of the reimbursement is the difference between the amount of property tax due in the year for which the reimbursement is claimed and the amount due in the “base year.” Ibid. The “base year” is tax year 1997 or the first year in which a claimant becomes eligible for a reimbursement after December 31, 1997. Ibid.
For purposes of the homestead property tax reimbursement tax year is defined as “the calendar year in which a homestead is assessed and the property tax is levied thereon and it means the calendar year in which income is received or accrued.” N.J.S.A. 54:4–8.67. In addition, a homestead must be a “dwelling house” which “is owned and used by the eligible claimant as the eligible claimant's principal residence.” Ibid. To qualify for the reimbursement, a claimant must own the residence, be 65 or over, and meet annual income limitations during the tax year at issue. Because the tax year is defined as the calendar year, a claimant must satisfy the statutory obligations as of December 31st of the tax year.
In addition, the Legislature limited eligibility to disabled persons “receiving monetary payments pursuant to Title II of the federal Social Security Act (42 U.S.C. s.401 et seq.) on December 31, 1998, or on December 31 in all or any part of the year for which a homestead property tax reimbursement under this act is claimed.” N.J.S.A. 54:4–8.67. The Legislature established clear parameters for eligibility for the reimbursement, including a requirement that to be eligible for reimbursement a taxpayer must be receiving disability payments under a particular Title of the Social Security Act. Plaintiff does not satisfy that condition.
Title II of the Social Security Act provides “disability insurance benefits,” or “SSDI,” to insured individuals. 42 U.S.C. § 423. Title XVI of the Social Security Act, on the other hand, provides Supplemental Security Income, or SSI, to qualified individuals. 42 U.S.C. § 1381, et seq. “Eligibility for SSDI depends on the insured person's contributions and insured status, 42 U.S.C. § 423(a)(1), (c)(1) (1982); SSI provides a minimum income for disabled people based on need, 42 U.S.C. § 1382 (a)(1), (c)(1) (1982).” Dion v. Secretary of Health & Human Servs., 823 F.2d 669, 670 (1st Cir.1987). The programs are distinct. Ibid.; Kozaczka v. Schweiker, 520 F.Supp. 1189 (W.D.N.Y.1981).
There can be no doubt that the Legislature did not intend to include recipients of Title XVI SSI payments as eligible to receive a homestead property tax reimbursement. N.J.S.A. 54:4–8.67 references only Title II of the Social Security Act. No other Title of the Act is included in the statute. See Reck v. Director, Div. of Taxation, 345 N.J.Super. 443, 455 (App.Div.2001)(The Legislature's explicit inclusion of one item in a statute, where it could easily have also included a similar item, indicates that the similar item is not included), aff'd, 175 N.J. 54 (2002).
One might suggest that all recipients of disability-related benefits under federal statutes should be accorded a homestead property tax reimbursement. The Legislature, however, is accorded significant leeway when enacting a tax benefit and authorizing the expenditure of State funds. It exercised its prerogative to limit reimbursements to those receiving benefits under Title II of the Social Security Act. One readily apparent rationale for such a distinction is the limited financial resources of the State. It is the Legislature's prerogative to establish the fiscal policies of the State, including determining how and to what extent public funds will be expended on property tax relief programs. Were homestead property tax reimbursements made available to all recipients of federal disability-related benefits the cost to the State would increase. In addition, the Legislature is entitled, as a matter of administrative convenience and efficiency, to rely on a person's qualification for a particular federal statutory benefit as the prerequisite for a state statutory benefit. Barone v. Department of Human Servs., 107 N.J. 355 (1987).
The court lacks the authority to rewrite the statute to extend the reimbursement benefit to taxpayers receiving SSI benefits under Title XVI. While the court does not doubt that plaintiff would be assisted in maintaining her home were she to receive a reimbursement, this observation alone is insufficient to award relief. It is this court's obligation to enforce unambiguous statutory provisions, regardless of whether a variation of those provisions might accommodate a particular taxpayer or better accomplish the stated goals of the law.
The court will enter Judgment affirming the Director's Final Determination.
1. A taxpayer may also qualify for a homestead property tax reimbursement by meeting the age requirement of 65 or older. There is no dispute that plaintiff was not 65 or older as of the December 31, 2014 eligibility date for a reimbursement for tax year 2014.
Patrick DeAlmeida, Presiding Judge