In considering the arguments, it is important to examine prior case law where the court considered the RPOB statutory requirement. The appellate court first considered the regulation in Hoeganaes Corp. v. Dir., Div. of Taxation, 145 N.J. Super. 352 (App. Div. 1976). There, the taxpayer was a New Jersey specialty manufacturer with its principal office in New Jersey. The taxpayer operated its business through a full-time sales force of employee engineers strategically located in six other States that produced the highest volume of sales.

See cases cited in River Sys., Inc. v. State, Dept. of Treasury, Div. of Taxation, 19 N.J.Tax 599, 607 (Tax 2001), aff'd, 358 N.J.Super. 287, 817 A.2d 964 (App.Div. 2003), and as discussed below. In Hoeganaes, Corp. v. Director, Div. of Taxation, 145 N.J.Super. 352, 361-62, 367 A.2d 1182 (App.Div. 1976), the Appellate Division found that out-of-state employees' homes did not constitute regular places of business. The court noted "[t]here are many factors that might constitute the maintenance of an office for the purpose of allocation," and relied on the following five factors in making its decision: "(1) Name of taxpayer in telephone directory, on building directory if there is one, on door leading to entrance of office or otherwise displayed on the office exterior; (2) Stationery and calling cards showing office address; (3) Storage of inventories or display samples at location in question; (4) A written or oral lease for the space involved and the direct or indirect payment of rent; (5) A written or oral agreement for the maintenance of an office by the agent or agency on behalf of the taxpayer."

In Hoeganaes v. Director of Division of Taxation, 145 N.J. Super. 352, 367 A.2d 1182 (1976), the Appellate Division of the New Jersey Superior Court construed the meaning of the words "maintain a regular place of business outside this State." In that case, a company which maintained its principal office and factory in New Jersey wished to allocate part of its net worth and net income to six states where it had located sales engineers to service customers' complaints, receive orders and assist in the solution of customers' manufacturing problems.

Specifically, HRC asserts that it maintained regular places of business outside this State in New York City, New York, Baltimore, Maryland and at numerous other locations in the 13 states, other than New Jersey, in which plaintiff had gas stations which it leased to its parent, AHC. In the first of a number of cases construing the language of the Director's regulatory definition of a "regular place of business" our Appellate Division in Hoeganaes Corp. v. Dir. of Div. of Tax, 145 N.J. Super. 352, 367 A.2d 1182 (App.Div. 197 6) had to decide whether space made available for the taxpayer's business in the homes of its employees constituted regular places of business. In that case the taxpayer required that each of its sales engineers set aside space in their homes for the purpose of conducting the taxpayer's business in the six states in which the employees were located.

Plaintiff also argues that it meets the definitional standard set forth in the Director's regulation in that it has: (1) an out-of-state office "regularly maintained, occupied and used by the taxpayer," and (2) "one or more regular employees" in attendance there. In Hoeganaes Corp. v. Taxation Div. Director, 145 N.J. Super. 352, 367 A.2d 1182 (App.Div. 1976) our Appellate Division had the opportunity to consider the requirements of § 7.2(a). The court was confronted with a taxpayer who contended that the homes of its sales engineers, who were full-time employees and were located in six states in which the taxpayer sold its products, constituted "regular place[s] of business."

This is not the first time we have considered the phrase "maintain[] a regular place of business outside this State," N.J.S.A. 54:10A-6, and examined the correct application of the factors listed at N.J.A.C. 18:7-7.2(1)-(4). In Hoeganaes Corporation v. Director, Division of Taxation, 145 N.J. Super. 352, 359-62 (App. Div. 1976), we rejected a taxpayer's attempt to allocate income to other states in which it employed full-time salesmen from home. The taxpayer had argued that the use of space in the employees' homes constituted maintaining offices.

6(a)(1), 1.7 and 2.1. Accord Hoeganaes Corp. v. Dir. of Div. of Tax, 145 N.J. Super. 352, 354-355 (App.Div. 1976). The tax is measured by the corporation's net worth and net income allocable to New Jersey. N.J.S.A. 54:10A-5; N.J.A.C. 18:7-1.1(a)(1).

Although these cases concern statutes, the same standards are applicable to the validity of administrative regulations. Essex Cty. Welfare Bd. v. Klein, 149 N.J. Super. 241, 247 (App.Div. 1977); Hoeganaes Corp. v. Div. of Taxation Dir., 145 N.J. Super. 352, 359 (App.Div. 197 6). Within the confines of specificity discussed above, it is recognized that regulations of certain kinds of subject matter and statutes must of necessity be general.

It is well established that a continuous course of practical construction and application of a tax statute by the responsible taxing agency is a factor of potent relevancy in the judicial interpretation of the law. Public Service Electric Gas Co. v. Woodbridge Tp., 73 N.J. 474, 481 (1977); Lloyd v. Vermeulen, 22 N.J. 200 (1956); Hoeganaes Corp. v. Director, Div. of Taxation, 145 N.J. Super. 352, 360 (App.Div. 1976); J.B. Williams, Inc. v.Glaser, 114 N.J. Super. 156, 160 (App.Div. 1971). A further indicator of the correctness of the Director's understanding of the tax provision and its application in this case is the recent amendment to the Act, L. 1979, c. 76.

There have been a number of cases construing the language of N.J.S.A. 54:10A-6 and the Director's regulatory definition of a "regular place of business." New Jersey courts have held that an out-of-state employee's home did not constitute a "regular place of business," Hoeganaes Corp. v. Director, Div. of Taxation, 145 N.J.Super. 352, 367 A.2d 1182 (App.Div. 1976); that a salesman's use of an out-of-state office maintained by its parent corporation did not constitute a "regular place of business," Rocappi, Inc. v. Director, Div. of Taxation, 182 N.J.Super. 163, 3 N.J.Tax 311, 440 A.2d 96 (Tax 1981); that an out-of-state office leased by the taxpayer's parent company and used by the taxpayer did not constitute a "regular place of business," Shelter Development Corp. v. Director, Div. of Taxation, 6 N.J.Tax 547 (Tax 1984); and that an out-of-state gasoline filing station owned by a New Jersey real estate company did not constitute a "regular place of business," SMZ Corp. v. Director, Div. of Taxation, 5 N.J.Tax 232 (Tax 1982), rev'd and rem'd on other grounds, 193 N.J.Super. 305, 473 A.2d 982 (App.Div. 1984). The court, in each case, held that the requisite objective standards for a regular place of business were not met, and, thus, the appealing taxpayers were not permitted to use the three-factor allocation formula of N.J.S.A. 54:10A-6.