The abatement of late payment and tax amnesty penalties was upheld in favor of several United Parcel Services (UPS) subsidiaries by the New Jersey Superior Court, Appellate Division. The taxpayers and their parent company utilized a cash management system designed to ensure that all subsidiaries had access to cash for daily operations and to maximize the return received by the parent on its overall cash reserves. The New Jersey Division of Taxation determined that the taxpayers’ payments constituted loans on which interest should have been imputed, and then assessed tax with interest and penalties. On appeal, the court stated, in part and parcel, that the taxpayers’ initial failure to pay tax was reasonable because the tax consequences of the cash management system presented an issue of first impression in New Jersey and that the Division acted unreasonably in first stating that the penalties would be waived upon payment of taxes due, but then imposing the penalties when the taxpayers challenged the Division’s assessment. Additionally, the court ruled that the “mandatory” amnesty penalty did not apply because of the uncertainty surrounding the taxpayers’ liability for certain taxes and because the Division’s assessments were issued after the close of the amnesty period. The court also noted that the language of the amnesty penalty statute was ambiguous, and the relevant legislative history specifically stated that amnesty penalties would not be applied to deficiencies assessed through routine audits. United Parcel Service General Services Co. v. Director, Division of Taxation, N.J. Super. Ct., App. Div., Dkt. No. A-0940-10T3 (Mar. 7, 2013).