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June 2, 2023

New Jersey Tax Court finds individual to be responsible person for sales tax purposes, but not gross income tax purposes

The New Jersey Tax Court recently held, in Gill v. Dir., Div. of Taxation,1 that an individual was not liable as a responsible person for unremitted gross income taxes because the New Jersey Division of Taxation did not notify him of the liability within the three-year statute of limitations. He was liable as the responsible person, however, for unremitted sales and use taxes (SUT), as the Division was not required to notify him of that liability under the four-year statute of limitations.


The taxpayer was the vice president and sole shareholder of a business. He had ultimate decision-making authority and oversaw all of the business's finances. The business did not remit all taxes reported on its withholding (GIT-ER) returns for the periods July 2012 through December 2013, and it did not remit a portion of SUT reported for periods in 2012 and 2013. The business filed for bankruptcy on August 8, 2013. On March 15, 2019, the Division, issued a notice of finding of responsible person against the individual taxpayer for unremitted GIT-ER and SUT.

Under New Jersey law, entities must withhold GIT-ER on an amount "substantially equivalent to the tax reasonably estimated to be due resulting from the inclusion in the employee's New Jersey income of his [or her] wages received during such calendar year."2 New Jersey law, N.J.S.A. 54A:9-6(f) and (g), imposes (1) liability (tax and interest) on an employer's failure to make and pay GIT-ER when there is no intent to evade or defeat such tax, and (2) a penalty where GIT-ER returns or withholdings are willfully evaded. In addition, N.J.S.A. 54A:9-6(l) establishes a responsible person obligation for purposes of the GIT-ER liability imposed by subsections (f) and (g).

Under New Jersey law, entities must file and remit SUT.3 N.J.S.A. 54:9-14 establishes a responsible person obligation.

Tax Court's analysis

The Tax Court held that a separate notice requirement applies for the GIT-ER penalties imposed on responsible persons by N.J.S.A. 54A:9-6, subsections (f) and (g), and this notice must be issued within the three-year statute of limitations. Thus, the Tax Court voided the assessment of GIT-ER against the taxpayer in this case.

Because the SUT is self-assessed, the Tax Court also held that a separate personal notice of responsible persons is not required to a responsible person within the four-year statute of limitations. Unlike the gross income tax, the Tax Court noted, "the plain language of the [Sales and Use Tax Act] imposes personal liability for the collection and the obligation to pay over SUT directly upon [the business] and [the taxpayer] when such tax is required to be collected." Thus, the taxpayer is responsible for the remaining SUT owed in this matter.

This decision clarifies that a separate finding of responsible persons must be made to hold an individual liable for GIT-ER under N.J.S.A. 54A:9-6(f) and (g), within the three-year statute of limitations. A separate finding of responsible persons, however, is not required within the four-year statute of limitations for SUT owed under N.J.S.A. 54:32B-1 to -29


The Gill decision is a binding precedential decision in New Jersey on the issue of whether the Division can impose responsible person liability on taxpaying entities that fail to remit GIT-ER and/or SUT owed to New Jersey (either self-assessed or based on a timely assessment by the Division). Because of this ruling, taxpayers potentially liable for SUT may have a lingering responsible-person assessment, even after the statute of limitations has expired.

Further, it is not yet known whether this decision will be appealed to the New Jersey Supervisor Court, Appellate Division, so the Tax Court may not have the final word.

Additionally, individuals may still argue they were not a responsible person, based on the factors announced by the Tax Court in Cooperstein.4


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Yud Harrindranauth (
   • Steven Colby (

Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor


1 Gill v. Dir., Div. of Taxation, Dkt. No. 004035--2021 (N.J. Tax Ct. May 1, 2023).

2 N.J.S.A. 54A:7-1(a).

3 N.J.S.A. 54:32B-1 to -29.

4 Cooperstein v. Dir., Div. of Taxation, 13 N.J. Tax 68 (NJ Tax Ct 1993). The standard for analyzing whether an individual is a responsible person is based on the following nine-factor test established in Cooperstein: (1) the contents of the corporate by-laws, (2) status as an officer and/or stockholder, (3) authority to sign checks and exercise of this authority, (4) authority to hire and fire and exercise of this authority, (5) responsibility to prepare and/or sign tax returns, (6) day-to-day involvement in the business or responsibility for management, (7) power to control payment of corporate creditors and taxes, (8) knowledge of failure to remit taxes when due, and (9) deriving substantial income or benefits from the corporation.