New Jersey State Real Estate Laws & Regulations : New Jersey Real Estate Lawyer & Attorney : Fox Rothschild Law Firm : Zoning, Commercial Leasing : Atlantic City, Princeton NJ

     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 These often range from “I overpaid for my property” and “I bought at the peak of the market” to “my home is outdated and needs to be modernized”.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 1^st. 

   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 1^st 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. 

• Email This
• Print
• Comments
• Trackbacks

     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. 

• Email This
• Print
• Comments
• Trackbacks

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 1^st 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. 

• Email This
• Print
• Comments
• Trackbacks

 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.

• Email This
• Print
• Comments
• Trackbacks

A 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. 

• Email This
• Print
• Comments
• Trackbacks

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 1^st. 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. 

• Email This
• Print
• Comments
• Trackbacks

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.” 

• Email This
• Print
• Comments
• Trackbacks