Property Tax Appeal Deadline Is Nearing

Rising real estate taxes can be challenged by filing an appeal of the property’s 2011 assessment. Due to the significant decline in property values in recent years, a reduction of a property’s assessment and taxes is often warranted.

Fox Rothschild attorneys have successfully prosecuted taxpayers’ appeals throughout New Jersey before the Tax Court and various County Boards of Taxation in tax appeals involving properties of all kinds. Some of our successes include:

  • A reduction of more than $10 million in assessed value for an office building located in Mercer County, which saved the taxpayer almost $300,000 in property taxes in one year alone.
  • More than 40 percent reduction in the assessments for three noncontiguous light industrial properties located in Mercer County that we successfully argued were a single economic unit.
  • Annual tax savings of more than $30,000 per year for a 44,000-square-foot flex warehouse/office space in Burlington County (assessment reduced by 31 percent).
  • Many assessment reductions ranging from 10 percent to nearly 30 percent of high-end residential properties in appeals for their owners throughout New Jersey.

Fox Rothschild attorneys vet properties efficiently and guide a taxpayer on the process and suggest whether an appeal should be taken.

To contest a 2011 assessment, appeals must be filed by April 1, 2011, unless a later filing deadline is ordered. If an appeal is not filed on time, the opportunity for lower taxes in 2011 is lost.

Our attorneys Jeffrey M. Hall (Princeton), Jeffrey M. Herskowitz (Atlantic City) and Alexander M. Wixted (Princeton) will work with you to evaluate whether a tax appeal is warranted. Please contact any one of them in advance of the deadline if you would like to know the merits of an assessment appeal for your property. We can also assist you with regard to properties located throughout the United States.

Jeffrey M. Hall, Co-Chair, Tax Appeals Practice
Princeton
609.895.6755 |  jhall@foxrothschild.com
 

Jeffrey M. Herskowitz
Atlantic City
609.572.2327 |  jherskowitz@foxrothschild.com
 

Alexander M. Wixted
Princeton
609.895.6730 |  awixted@foxrothschild.com
 

Notice of 2011 property tax assessments are "in the mail"

All taxpayers should expect to receive soon their notice of assessment for the 2011 tax year.  By statute, every assessor, prior to February 1st, must notify each taxpayer by mail of the current asssessment and the preceding year's taxes.  The notice is typically in the form of a postcard and will contain information instructing taxpayers on how to appeal their assessment.   

Note, however, that the notice is sent to the addressee of record, which may not be the physical address of the subject property.  Often times for commercial properties, the postcards are mailed to the home office, and can be inadvertently discarded or ignored. 

The deadline to appeal this year's tax assessment is Friday, April 1, 2011.  In select municipalities, that deadline may be extended beyond April 1st, in which case the taxpayer would receive notice at the address of record. 

REMINDER: December 1st Deadline to Appeal Added Assessment

The clock is ticking to file a tax appeal to challenge an added assessment, an omitted assessment, or an omitted added assessment.  Wednesday, December 1, 2010 marks the statutory deadline for taxpayers to challenge assessments levied against real property relative to improvements completed in 2010.  In most circumstances, an appeal would be filed with the county Board of Taxation in the county where the property is located.  However, where the amount of the added or omitted assessment exceeds $750,000, aggrieved property owners can elect instead o file an appeal directly in the Tax Court.  In either instance, the appeal must be received by December 1st.

Taxpayers can be saddled with a hefty tax bill in an added or omitted assessment.  Appealing such an assessment offers benefits not only for the 2010 taxes to be paid, but also in determining the fair market value of the assessment to ensure that the property is properly assessed in future years.  

Are Hospital Exemptions in Jeopardy?

Yet another Tax Court decision applying N.J.S.A. 54:4-3.6 (the Exemption Statute) was issued that should give pause to New Jersey’s Medical Centers.  Before the court in AHS Hospital Corp v Town of Morristown, were cross-motions for summary judgment, pretrial motions seeking to dispose of the case by means in lieu of a lengthy trial.  Morristown succeeded in securing a favorable decision on its issues but the Hospital did not.  As summarized by the Tax Court’s website:

 

“The court found that portions of buildings owned by Morristown Hospital and used as offices and a café were not exempt from local property taxes as hospital purpose properties because the spaces were used by private physicians and other private third parties for profit making purposes.  The court also found that there exists a genuine issue of material fact as to whether the use or operation of the remainder of the subject property was conducted for profit.”

 

 

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FILING REQUIREMENTS FOR 2010 TAX APPEALS

N.J.S.A. 54:3-21 is the jurisdictional statute for tax appeals. It was recently amended by L. 2009, c.251, effective January 16, 2010. This amendment is noteworthy as it raises the floor for filing direct real property assessment challenges in the Tax Court. Previously, a complaint could not be filed in the Tax Court and the County Board of Taxation by passed if the assessed value exceeded $750,000.   As of January 16, 2010, the assessed value for a property must exceed $1 million to trigger the court’s original jurisdiction.    R. 8:3-5 of New Jersey’s Rules of Court were changed as of February 9th to conform.

Taxpayers are not remediless if the property’s assessment is $1 million or less. In that case, a petition, not a complaint, can be filed with the County Board of Taxation of the county in which the property is located. The procedural requirements for County Boards differ from board to board as well as with the procedural requirements of the Tax Court. However, in either forum, a taxpayer must comply with several challenges including: (1) the burden of proof on value, (2) Chapter 91, and (3) Chapter 123. Failure to comply with any of these will result in dismissal of the taxpayer’s petition or complaint, as the case may be.

 

The specifics of N.J.S.A. 54:3-21 (the “Statute”) remain the same:

 

  • A petition or a complaint must be filed on or before April 1st of the year of assessment or, on or before May 1st, if the taxing district undertook a municipal-wide revaluation or a municipal-wide reassessment.
  • The taxing district (the assessor) is required to bulk mail to each property owner a notification of the assessment and file a certification with the County Board of Taxation advising of the date the bulk mailing was completed.
  • Appeals are governed by the State Uniform Tax Procedure Law. An appeal to the Tax Court establishes jurisdiction over the entire matter with the court.
  • A cross-petition of appeal or a counterclaim can be filed within 20 days from the date of service of a petition or a complaint by the other party.

 

 

 

 

It is well established that this Statute is jurisdictional and therefore filing deadlines cannot be waived. An untimely filing will result in a dismissal of an appeal no matter how meritorious. Finally, the appeal process established by this Statute does not apply to appeals of an assessment or an exemption based on a financial agreement controlled by the Long Term Tax Exemption Law.

 

If you have any further questions, please feel free to consult Jeffrey M. Hall at (609) 895-6755 or jhall@foxrothschild.com.

New Jersey Legislature Increases Minimum Threshold for Filing a Property Tax Appeal Directly With the New Jersey Tax Court

     As noted on the official website for the New Jersey Tax Court, due to recently enacted legislation, any local property tax appeals that are not added or omitted assessments may be filed directly with the Tax Court only if the original assessment exceeds $1,000,000. 

     The Assembly Committee that reviewed the legislation and recommended its adoption noted that "[i]ncreasing the assessed value requirement will decrease the overburdened Tax Court's caseload and allow these cases to be heard by county boards of taxation, which are better equipped to handle a large volume of tax appeals."  For what it is worth, the prior $750,000 threshold had not been increased since it was first established in 1979. 

     The legislation increases the threshold for making a direct filing from $750,000 to $1,000,000.  Therefore, any taxpayer whose assessment is below the minimum threshold may still challenge its tax assessment by filing a Petition of Appeal with the County Board of Taxation in the county where the property is located.  However, those taxpayers whose assessments exceed $1,000,000 may either file a Petition at the County Board level or file a direct appeal with the Tax Court.  There are advantages and disadvantages with both approaches.

 

     Notices of the tax assessments are typically mailed on or around February 1st.  

Tax Appeals Filed in 2009 Nearing the All-Time High

     A recent article published in the Newark Star Ledger noted that the number of property tax appeals filed in New Jersey for the 2009 tax year is considerable. The author notes that nearly 16,000 tax appeals were filed in the State of New Jersey in 2009 which is nearing the record of 16,300 set in 1992. In Ocean County, appeals have tripled to more than 14,000 from the levels filed in 2008. In Essex County, the number of appeals is nearly twice the amount filed in 2008.

     Interestingly, the article highlighted several arguments that taxpayers often make in seeking a reduction in their property tax assessment. These often range from “I overpaid for my property” and “I bought at the peak of the market” to “my home is outdated and needs to be modernized”. For those property owners who did not file a tax appeal in 2009, they will have to wait until the 2010 tax year to challenge their assessment as the deadline to file for 2009 was April 1st

   Nonetheless, it is not too early for a property owner to start preparing for the inevitable tax appeal next year. Below are a few tips that will aid all classes of taxpayers from the residential homeowner to the commercial developer.

  1. DO YOUR HOMEWORK – At times, a taxpayer will focus on the attributes of their own home and disregard how their property sits in the general scheme of the surrounding neighborhood.   An Internet search or your local real estate broker may be willing to assist you in locating comparable sales (known as “comps”) that can be used to justify a reduction in your assessment if a home similar enough to yours has sold for a value less than what your equalized assessment is. However, as any taxpayer will quickly find, no two properties are exactly alike. Therefore, it is important to conduct thorough research to make sure you have the best and most comparable information available.   Ideally, a licensed appraiser should be consulted for a professional opinion. 
  2. VERIFY YOUR INFORMATION – The tax assessor in each municipality maintains a property record card for every property within its taxing district. The property record card identifies the particular attributes of each property and provides an excellent starting point for anyone looking to lower their taxes. Sometimes, the property record card contains an innocent error or miscalculation that the tax assessor may relied upon for determining a property’s assessment.  Accordingly, sometimes a property owner can justify a reduction in its assessment based upon a correction of an error in the property record card. A property record card which is a public record can usually be obtained by contacting the tax assessor’s office – however, every assessor’s office has their own procedures for obtaining a copy of the card which should be strictly followed as a matter of courtesy and procedure
  3. KNOW AND MEET THE DEADLINE – The deadline to file a tax appeal for the 2010 tax year in most municipalities will be Thursday, April 1, 2010. In those municipalities undergoing a revaluation and reassessment which may not be concluded by the statutory deadline, the April 1st filing deadline might be extended (but not automatically). If the filing deadline is extended, the taxpayer will receive a written notice from its tax assessor listing the revised filing date. By rule and procedure, tax appeals must be RECEIVED by the filing deadline. 

     One of the easiest ways for a taxpayer to lose their right to appeal is to simply mail in their application by the filing date. Most people will simply drop their federal and state tax returns in the mail at the same time they file their tax appeals. This may past muster with Uncle Sam but it will not under New Jersey tax appeal laws.   To be safe, a taxpayer can hand deliver the appeal to the local County Board of Taxation or the Tax Court on the deadline date, but it must remember to hand deliver or mail copies to the appropriate recipients noted in the appeal form. 

Camden County Property Taxes Highest in the State, 11th in the Nation

     One New Jersey county is on the cusp of cracking a Top 10 List that probably leaves little to be desired. 

     As reported in an article by Jim Walsh published in today's edition of the Courier-Post, (follow link here for online article) a new study published by the Washington D.C. based Tax Foundation has concluded that property taxes in Camden County are the highest in New Jersey and 11th highest in the nation (out of 790 "high population" counties) when measured as a percentage of a home's value.  The national median is nearly 1 percent (0.96%) - Camden County's was estimated at 2.33%. Following close behind were Gloucester County (31st), Salem County (32nd) and Burlington County (46th). 

     Not to be outdone, the North Jersey counties fared even better (or worse...) according to the Foundation's ranking of median property tax paid per owner-occupied home in 2008.  New Jersey had six of the top 10 counties (from 1 to 10, Westchester County, NY ($8,890); Nassau County, NY ($8,628); Hunterdon County, NJ ($8,492); Bergen County, NJ ($8,446); Rockland County, NY ($8,430); Essex County, NJ ($7,924); Somerset County, NJ ($7,743); Morris County, NJ ($7,557); Passaic County, NJ ($7,370); and Putnam County, NY ($7,324). The national median is $1,897.

     According to its website,  Tax Foundation "is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937."  Click here to review a copy of the Foundation's press release on the property tax census survey. 

     The question remains - what can be done to fix the problem?  That remains to be seen, but suffice it to say that property taxes are sure to be a hot button issue in the upcoming Gubernatorial elections in New Jersey.  From a practical perspective, the deadline to file an appeal challenging a property's assessment for tax purposes is April 1st annually (unless extended in which case the taxpayer would receive written notice).  It is important to note, however, that pursuant to state statute the property taxes for the 2010 tax year are determined, in part, based upon the fair market value of your property as of October 1, 2009

     October 1, 2009 is a week away.  One can only hope that next week will not mark the start of a top 10 ranking for Camden County, or a blue ribbon for the six North Jersey contenders. 

Applications for Farmland Assessment DUE AUGUST 1st

The New Jersey Farmland Assessment Act of 1964 (N.J.S.A. 54:4-23.2) (“Farmland Assessment Act”) permits farmland and woodland of not less than five acres in area that is actively devoted to agricultural or horticultural use to be assessed at its productivity value, rather than the fair market value.  

The practical effect of a farmland assessment is that qualifying property owners will pay significantly less in property taxes versus the property taxes that would be levied based on the fair market value of the property. Far too often a seemingly compliant farmland property does not qualify for a Farmland Assessment because the owner did not adhere to the stringent filing and qualification criteria necessary to qualify.  Among the many criteria is a requirement that the land must be actively devoted to agricultural or horticultural uses for at least two years prior to the tax year in which the assessment is sought. Also, property owners must file annually for Farmland Assessment by completing a Form FA-1 with the municipal tax assessor prior to the August 1st deadline.  Note that an approved Farmland Assessment does not automatically renew from year to year but requires the property owner to file every year for the Assessment

Interestingly, the property owner seeking the assessment need not be the actual farmer or cultivator of the land. The Farmland Assessment Act permits an owner to rent the qualifying farmland to a farmer to cultivate agriculture and horticulture consistent with the Farmland Assessment Act. However, the use of the land for agriculture or horticultural purposes must not be haphazard even if it produces enough income to satisfy the gross sales requirement of the Farmland Assessment Act. 


The New Jersey Department of Agriculture publishes an informational guide to Farmland Assessments. See
http://www.state.nj.us/agriculture/
FarmlandAssessmentGuide.pdf
or call the Department of Agriculture at (609) 984-2503. 

Tax Appeals - Score Another Victory for the Municipality in a Chapter 91 dismissal

 Further to my May 12, 2009 blog posting whereby the Appellate Division affirmed the dismissal of a taxpayer's tax assessment appeal on Chapter 91 grounds, the Appellate Division reinforced its interpretation that the Chapter 91 dismissal sanction does not violate the Excessive Fines Clause of the United States and New Jersey Constitutions.  

In Davanne Realty v. Edison Township (decided June 15, 2009), the Appellate Division concluded that "[t]he appeal-dismissal sanction imposed by N.J.S.A. 54:4-34 is not punishment because it is rationally and reasonably related to and fully justified by the need to efficiently assess and collect property taxes based on property value. The Legislature's denial of an opportunity to present relevant information beyond the statutory deadline may further the government's interest in timely receipt of data by "creat[ing] a reasonable incentive" for meeting the deadline for response.""

It is important to note that the taxpayer here did not avail itself of the right to challenge the tax assessor's methodology at a "reasonableness hearing".  In short, inquiry focuses on the reasonableness of the data used by the assessor and its methodology used to determine the assessment. Unless the tax assessor’s assessment is completely unfounded, the assessment will likely be upheld. 

However, because a reasonableness hearing is a consequence of the taxpayer’s failure to respond to a Chapter 91 request, the taxpayer is prohibited from introducing any affirmative evidence to refute the data used by and the conclusion reached by the assessor.  Nevertheless, it is an opportunity for the taxpayer to obtain some clarity as to how its income-producing property is being valued. 

Not to sound like a broken record  (does today's youth even know what a 45 is?) a corrupted .mp3 file, but if you are served with a Chapter 91 income and expense request, and you are desirous of reducing your taxes by filing a tax appeal the following year, you must file a Chapter 91 response within the required time period.  It is ever clear with each passing decision that the failure to comply with Chapter 91 will almost certainly result in the dismissal of your tax appeal.

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. 

 

Deadline to File Property Tax Appeals Extended to May 1st in Select Municipalities

In most municipalities, the deadline to file an appeal contesting a property’s assessment for property tax purposes expired on April 1, 2009. However, in those municipalities undergoing a revaluation and reassessment, the deadline to file an appeal may have been extended, in most instances until May 1st. Notice of the 2009 assessments should have been mailed on or around February 1, 2009. 

There is still time to consider the merits of filing a tax appeal to reduce your property taxes. Unfortunately, it is apparent that the trend for commercial and industrial property values continues downward. Property owners and existing tenants responsible for property taxes could be paying unfairly high property taxes. 

 

For more information, please review the following ALERT (.PDF) prepared by Fox Rothschild’s Tax Appeal Practice Group. 

 

Chapter 91 - Stealth Killer of Meritorious Commercial Tax Appeals

In a time when opportunities abound for real property tax appeals of excessive assessments, owners and tenants should pay close attention to Chapter 91 requests issued by municipal assessors. Named after a State law, Chapter 91 has claimed many a worthy appeal filed with the Tax Court and the County Boards of Taxation over the years. It is recommended that any taxpayer contemplating tax relief and seeking a reduction in property taxes for non-residential property carefully scrutinize Chapter 91 requests.

 Chapter 91, also called N.J.S.A. 54:4-34, allows a municipal assessor to mail a request to the addressee of record to complete a summary of the income and expenses for an income-producing property – the so-called I&E statement. The I&E statement is in a prescribed format; it, along with a summary or copy of Chapter 91 must accompany the assessor’s request. Failure on the part of the assessor to follow this procedure may give a taxpayer an “out.” 

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