DiCICCO CRAFTING LEGISLATION TO BETTER INFORM PROPERTY TAXPAYERS ABOUT APPEAL PROCESS | Politicker NJ

DiCICCO CRAFTING LEGISLATION TO BETTER INFORM PROPERTY TAXPAYERS ABOUT APPEAL PROCESS | Politicker NJ.

Governor Corzine Signs Bill Limiting Tax Court Filings and Reducing Notice Requirements

On January 16, 2010, Governor Corzine signed tax appeal legislation adopted by the Legislature into law as L. 2009, c. 251, which amended N.J.S.A. 54:3-21 and 54:4-23 effective immediately.  The new law, discussed last month in the New Jersey Property Tax Law Blog here, would modifies the powers granted to tax assessors, while also raising the jurisdictional limit to $1,000,000 for filing a direct appeal to the Tax Court.

A copy of the Assembly Bill can be found on the New Jersey Legislature website by following this link.

Property Owner Wins Opportunity to Present Appeal Based Upon Highlands Act Exemption Claim

In this recent opinion from the New Jersey Tax Court, the taxpayer, Princeton Alliance Church (PAC), survived a motion to dismiss its property tax appeal after Tax Court Judge Vito Bianco found that the Morris County Tax Board improperly dismissed its appeal for failing to present a witness at the county tax board hearing.  The undisputed facts of Princeton Alliance Church v. Mount Olive Township showed that PAC filed a brief with its appeal alleging that a portion of its property should be exempt as “taken by the State for conservation purposes” because it was located within the Highlands Preservation Area.  The Morris County Tax Board dismissed the matter for lack of prosecution after PAC’s attorney advised that he was not presenting witnesses, and would instead address only legal arguments raised in its appeal.

            Judge Bianco denied Mount Olive’s motion to dismiss as being contrary to statutory and case law.  As was recognized in VSH Realty, Inc. v. Harding Twp., 291 N.J. Super. 295 (App. Div. 1996), dismissal for lack of prosecution is only appropriate where the taxpayer fails to appear.  The VSH Realty case does not impose a requirement on taxpayers to present witnesses at the county tax board hearings, although the taxpayer does bear the burden of proof to show it complies with the statutory requirements establishing an exemption.  However, the tax boards and parties may instead rely on “competent documentary evidence” to establish whether a taxpayer has submitted sufficient proofs to qualify for the requested exemption.  See Ganifas Trust v. City of Wildwood, 15 N.J. Tax 722, 726 (App. Div. 1996).

            Judge Bianco also noted that a tax board has the authority to determine legal questions raised in exemption cases.  He highlighted that this power protects property owners like PAC who would not qualify for a direct appeal to the tax court because it does not meet the jurisdictional dollar limit.  Moreover, because the Tax Board must determine the appropriate level of taxation to determine if PAC’s property is exempt, the Tax Board here has the authority to determine the legal issues raised by PAC. 

The full text of the Appellate Division’s opinion can be found here.  This case could present taxpayers with relief in the future in avoiding dismissals with prejudice by county tax boards.

The VSH Realty case, which was relied upon by the Tax Court in the PAC matter, was argued before the tax board and tax court by McKirdy & Riskin’s Anthony Della Pelle .  The author wishes to acknowledge the assistance of Cory Kestner of McKirdy & Riskin in the preparation of this article.

Tax Court Remands Revaluation Order

In Mount Laurel Twp. v. Burlington County Board of Taxation, __ N.J. Tax __ (December 15, 2009) (Approved for Publication in N.J. Tax Reports) the New Jersey Tax Court remanded an appeal from a revaluation order by the Burlington County Tax Board. Mount Laurel Township appealed the board’s order for a municipal-wide revaluation. Both the board and the township moved for summary judgment. The record consisted solely of the board’s order which contained limited information regarding the average ratio of assessed values, and did not indicate whether the board considered the ten criteria for revaluation required by N.J.A.C. 18:12A-1.14(b). Nor did the record indicate any other reason for the revaluation order. In denying both motions for summary judgment, the Tax Court found that the record was not sufficient to determine whether the board’s order was reasonable. The Tax Court held that it must know the facts upon which the board relied before rendering a decision as to whether the revaluation order was reasonable. Because the board’s order failed to disclose the reasons for the revaluation, the Tax Court held that remand is appropriate so that the board may make a record of its factual and legal conclusions.

This opinion indicates that the Tax Court is not likely to give rubber stamp approval to procedural decisions by local County Tax Boards, and will require that administrative procedures be followed when a county board orders a municipal revaluation.

Appeals Court Upholds Limit on Homestead Rebate Qualification

A New Jersey appellate court recently affirmed the decision of New Jersey Tax Court Judge Joseph C. Small, P.J.T.C. (now retired), for the reasons expressed in Judge Small’s published decision at 24 N.J. Tax 141 (2008), which held that a resident may not tack previous time living at a residence with time spent at their current residence to satisfy the three year residency requirement to qualify for Homestead Rebates under N.J.S.A. 54:4-8.67.  Information about the Homestead Rebate Act is available here.

 The taxpayer claimed she should be permitted to tack the time she resided in each of her residences because she was forced to relocate after her property was taken through eminent domain.  This argument, along with her statutory interpretation of N.J.S.A. 54:4-8.67, was rejected because the interpretation would render portions of the statute meaningless.  Additionally, the Appellate Division agreed with Judge Small that tacking should only be permitted in adverse possession cases unless expressly permitted by the Legislature.

 The Appellate Division disagreed with Judge Small’s conclusion that the Legislature’s repeated failure to enact bills to reduce the residency requirement displayed their intent to maintain a bright-line three year residency period.  A footnote highlighted that the Legislature amended N.J.S.A. 54:4-8.67 to allow a one-year eligibility requirement for a previously-qualified taxpayer who relocates.  The Appellate Division concluded however that that portion of Judge Small’s opinion was not essential to his final conclusion, and therefore affirmed the “balance of his well-reasoned opinion”.

 The Appellate Division’s opinion can be found here.

Bill Proposes Limit on Tax Court Filings, and Reduces Notice Requirements

The Senate Community and Urban Affairs Committee released a statement reporting favorably on S. 2711, and recommended several amendments to the bill as introduced.  The bill, available here, is sponsored by Senators Robert W. Singer, Paul A. Sarlo, as Primary Sponsors, and Senator Thomas H. Kean, Jr., as a Co-Sponsor.  The identical Assembly bill, A. 4313, is sponsored by Assemblyman Frederick Scalera.

The amended bill would permit a tax assessor to perform reassessments on a portion of a taxing district without notifying the mayor, municipal governing body, and/or the Director of Taxation, while still requiring the tax assessor to notify the county board of taxation and county tax administrator of the assessor’s reasons for conducting the partial reassessment.  Furthermore, the assessor would only need the county board of taxation’s approval of the assessor’s compliance plan, and not the Division of Taxation.  The amended bill also removes the automatic approval language for the Division of Taxation or county board of taxation’s failure to approve or disapprove the compliance plan within 45 days.

The Committee additionally amended the bill to require a minimum assessed value of at least $1,000,000.00 ($750,000 is the current minimum) for a property tax appeal to be directly filed with the Tax Court.  The statement claims raising the assessed value requirement will reduce the burden on the New Jersey Tax Court by reducing the volume of tax appeals filed there, and correspondingly increasing the volume of appeals with county tax boards.  Whether the county boards could effectively handle increased volumes of petitions, if the bill is signed into law, remains to be seen.

The first reprint of the bill can be found here.

Taxpayer’s Challenge to Re-Assessment Out of Time

Bear’s Nest Condo. Ass’n v. Bergen County Bd. of Taxation, 2009 N.J. Tax LEXIS 26 (October 19, 2009) (Approved for Publication in New Jersey Tax Court Reports).  In this matter, plaintiff, a condominium association, sued county tax board and borough, appealing the board’s approval of a re-assessment of all condominium units in the borough, including all units in plaintiff’s complex. The re-assessment was initiated pursuant to N.J.S.A. 54:4-23 and, in particular, the amendment to that statute enacted as P.L. 2001, c. 101 (commonly known as “Chapter 101”), which authorizes the re-assessment of all or part of the taxable real property within a taxing district. The statute requires an assessor who wishes to conduct a full or partial re-assessment to first obtain the approval of the county tax board. In this case, the tax board approved the re-assessment in December 2005. The affected unit owners received notice of the re-assessment and the revised assessment, required under N.J.S.A. 54:4-38.1 (commonly known as the “Chapter 75 Notice”) by February 1, 2006 so that the time for filing an appeal challenging the assessment on any re-assessed unit ran through Monday, April 3, 2006. On March 8, 2006, the tax board rejected a request by plaintiff and individual unit owners to set aside the new assessments. Plaintiff filed its complaint on April 17, 2006. Defendants moved to dismiss the complaint as out of time. Plaintiffs argued that the time within which to seek judicial review of county board actions is 45 days and as such, their action was filed on time. The Tax Court held that when the board denied plaintiff’s request to restore the assessments, it was not taking formal action. By then, the board had already approved the Chapter 101 plan. The new assessments had been disclosed in the Chapter 75 notices and had been included in the tax list. As no assessments were changed after the Chapter 75 notice, the time to appeal ran from the date of the initial notice, which in this case was April 3, 2006.  Accordingly, the taxpayer’s claim was denied.

Pension Funds and Property Taxes Plague NJ

Pension Funds and Property Taxes Plague NJ.

Tax Sale Certificate Holder Rights Upheld

In DSC of Newark Enterprises, Inc. v. South Plainfield Borough, decided October 6, 2009 (Approved for Publication in N.J. Tax Reports), the New Jersey Tax Court was confronted with an issue concerning the amount and allocation of a refund resulting from tax sale certificates that were issued as a consequence of nonpayment of taxes on the subject proeprty during the pendency of the tax appeal.  In its ruling, the Tax Court clarified the rights of the taxpayer, municipality and tax sale certificate holder. 

 A taxpayer is required to pay taxes during pendency of tax appeal, notwithstanding a purported agreement with a taxing authority providing that no taxes would be paid because both parties anticipated a substantial refund.  In this case, tax sale certificates issued were not void ab initio because the tax appeal resulted in a considerably reduced assessment and corresponding tax liability. 

 The certificate holders’ rights were preserved.  The town was authorized to deduct from the refund the amount needed to redeem tax sale certificates, in addition to any penalties, back taxes and other municipal charges and interest owed by the taxpayer. 

 As part of the settlement of the tax appeal, the parties agreed that statutory interest would be waived on the refund if it was paid within 60 days of the judgment.  The municipality withheld payment of the refund while the taxpayer disputed the municipality’s refund calculations.  Because the municipality withheld the undisputed amount of the refund beyond the 60 day time period, it was obligated to pay interest on the refund.  

This case recognizes that the statutory rights of a tax sale certificate holder will be protected even when a property owner and a municipality may make an agreement as to the allocation of refunds that may be owing in a successful property tax appeal.

Tax Court Clarifies Taxpayers’ Need to Pay Property Taxes While Under Appeal

The New Jersey Tax Court has recently clarified the longstanding statutory requirement that a taxpayer must pay its outstanding taxes prior to filing a tax appeal.  In a case of first impression, the Tax Court ruled that the requirement to pay taxes and municipal charges, as a condition to filing and maintaining a tax appeal under N.J.S.A. 54:3-27, is limited to the taxes and charges due on the property actually under appeal.

 In John Trebour Trustees v. Randolph Township, October 1, 2009 (Approved for Publication in N.J. Tax Reports), the Township of Randolph moved to dismiss the complaint that challenged the assessments on two properties, Block 42, Lots 114 and 114.01, based on the taxpayer’s failure to pay taxes owed on Lot 114.  Upon the filing of the Complaint, all taxes due on Lot 114.01 had been paid.  In response to the Township’s motion, the taxpayer withdrew that count of the Complaint pertaining Lot 114.  

The Township maintained that in order to prosecute a tax appeal on any property, a taxpayer must be current on all taxes on all properties within the municipality.  The Township argued that the plain language of N.J.S.A. 54:3-27 supported dismissal.  The statute states: “A taxpayer who shall file an appeal from an assessment against him shall pay to the collector of the taxing district no less than the total of all taxes and municipal charges due, up to and including the first quarter of the taxes and municipal charges assessed against him for the current tax year.”  The Township argued also that its interpretation of N.J.S.A. 54:3-27 was consistent with the important public interest advanced by the statute, i.e., to ensure that tax appeals do not interrupt the flow of municipal revenues.  In addition, the Township argued that its reading of the statute was consistent with New Jersey’s policy allowing refunds of tax overpayments to be used as a setoff of tax delinquencies on other parcels owned by the same property owner under the municipal offset statute, N.J.S.A. 54:4-134. 

 The taxpayer maintained that the statute should only be read to refer to the assessment under appeal. 

 The Tax Court determined that it was not clear from the plain language of N.J.S.A. 54:3-27, which interpretation should prevail.  After reviewing the statute in context with other tax statutes, the court concluded that the requirement to pay “taxes and municipal charges assessed against him” referred to assessments against the property for which the appeal was filed.  In reaching its conclusion, the court relied on a cases holding that property taxes are assessed against the property and not the individual and therefore, property taxes are a lien on the property and not a personal obligation of the taxpayer.  Thus, the court held that the mandate under N.J.S.A. 54:3-27 to pay taxes is specific to the property that is the subject of the appeal. 

In this matter, McKirdy & Riskin’s Richard P. DeAngelis, Jr., served as special property tax counsel to the Township of Randolph.