Tax Appeals - Chapter 91 dismissal sanctions are not an "excessive fine" prohibited by the United States and New Jersey Constitutions

decision (.PDF) today from the New Jersey Appellate Division cemented the long-standing rule of tax appeal law that the failure to timely respond to a municipal tax assessor's request for income and expense information will likely prevent a taxpayer from seeking a reduction of its property assessment.  

Known as a Chapter 91 request, a taxpayer has a mere forty-five days to respond to a tax assessor's request for information (which must be made by certified mail in accordance with the requirements of N.J.S.A. 54:4-34).  Otherwise, the taxpayer risks a motion to dismiss a subsequent year's compliant for failure to timely respond to the Chapter 91 request. To promote timely compliance, the statute imposes an appeal-dismissal sanction upon taxpayers which municipalities are becoming increasing adept at wielding and weeding out the number of tax appeals, which were expected to rise this year. 

In the instant case, the plaintiff taxpayer argued that the fair market value of the subject property was approximately $20,180,000, as opposed to the tax assessment's imputed a fair market value of $29,665,700.   In dollars and cents, this difference of opinion amounted to approximately $192,551.71 of tax dollars in dispute. 

Because the taxpayer here failed to timely file its Chapter 91 response, its Complaint was dismissed by the Tax Court on motion from the municipality.  The Appellate Division was not persuaded by the taxpayer's argument on appeal that the sanction of paying the imposed taxes is an "excessive fine" prohibited by the Eighth Amendment of the United States Constitution and Article I, § 1, ¶ 12 of the New Jersey Constitution.  According to the Appellate Division, the application of N.J.S.A. 54:4-34 did not impose any additional tax upon plaintiff for its failure to comply.

 

 

If you take away anything from this post, remember this.  If you are the owner of an income-producing property, be on the lookout for a Chapter 91 request this summer.  While serving a request is at the tax assessor's discretion, the receiving taxpayer is required to repond, even if the property is "owner-occupied".  The tax assessor will direct the request to the addressee on record.  Forty-five days may sound like a long time, but that is a little over six weeks, and time flies in the summertime.  And if your management office is located outside of New Jersey, by the time the request is routed to the decision-maker, the clock is already ticking. 

 

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