In a recent decision, the U.S. Court of Appeals for the 3rd Circuit upheld New Jersey’s partnership filing fee, rejecting a constitutional challenge brought forward by Energy Transfer L.P. (Energy Transfer L.P. v. Ficara, et al., U.S. Ct. App. 3rd Ct., Dkt. No. 22-3347, 06/07/2024).
Energy Transfer L.P., a major player in the energy sector, filed a lawsuit challenging New Jersey’s partnership filing fee, arguing that the fee placed an undue burden on companies with significant out-of-state activities. The partnership had paid the maximum fee of $250,000 and sought relief, claiming the fee was disproportionate and unconstitutional.
The Court’s Ruling
The federal appellate court dismissed the challenge, emphasizing that issues of this nature are more appropriately addressed by state courts. The decision aligns with previous state court rulings that have upheld the fee against similar challenges.
In its decision, the court stated that the federal judiciary has limited remedies available for such state-specific tax and fee disputes. The court noted that previous state court decisions had thoroughly examined and rejected arguments against the partnership filing fee, thereby reinforcing the state’s authority in imposing and regulating such fees.
Implications for Businesses
The ruling has significant implications for businesses operating in New Jersey, particularly those with extensive out-of-state operations. By upholding the fee, the court has confirmed that such companies must comply with New Jersey’s partnership filing requirements, regardless of the extent of their activities outside the state.
The 3rd Circuit’s decision to uphold New Jersey’s partnership filing fee underscores the challenges businesses face when contesting state-imposed fees and taxes in federal court. For now, companies will need to navigate these fees as part of their operational costs within the state.
For further details on the case, the full opinion can be accessed through the U.S. Court of Appeals for the 3rd Circuit’s docket.
For additional details and tax advice, please contact Martin D. Hauptman at (973) 243-7912 or via email at mhauptman@mblawfirm.com