The Supreme Court of New Jersey on Monday upheld an appeals court ruling that Johnson & Johnson pay $ 56 million in tax rebates in connection with its insurance company.
The judgment in Johnson & Johnson v Director, Division of Taxation referred to changes that New Jersey made to its insurance law following the passage of the Federal Unauthorized and Reinsurance Reform Act of 2011.
New Brunswick , New Jersey-based Johnson & Johnson covers risks that exist nationwide through its Vermont-domiciled captured Middlesex Assurance, court documents say.
Before the NRRA passed, states could assess premium taxes paid to non-approved insurance companies only for premiums that covered risks within the state. However, the NRRA allowed a home country to tax the entire unauthorized premium of an insured entity, even though some of the risks were based in other states.
In order to use the NRRA, New Jersey in 201
Johnson & Johnson increased its tax payment to New Jersey as a "precautionary measure" but filed a claim for overpayment, saying the change only covered surplus insurance purchases and did not include estimated value obtained through captivity, court documents say.
The New Jersey tax authorities denied the refund, and in 2018 a tax court ruled in favor of the state, but an appeals board overturned the decision last year.
New Jersey law "clearly limited J & J's tax liability to the risks that the insured in New Jersey [and] did not change in any way, form or form in the 2011 amendment," was stated in the Appeals Board's judgment of 2019.  The State Supreme Court agreed that th The simple language of the New Jersey Act meant that Johnson & Johnson would be reimbursed and noted that the New Jersey legislature could amend the statute further.