The NJ Tax Blog

Tax assessment cards are now in the mail.

Pursuant to N.J.S.A. 54:4-38.1, every municipal tax assessor, prior to February 1, shall provide, by mail, each taxpayer with the current assessment on the taxpayer’s property and the property taxes that were levied on the property the preceding year. Thereafter, the assessor or county board of taxation shall notify each taxpayer by mail within 30 days of any change to the assessment.

Accordingly, all property owners should now be on the lookout for their assessment cards. If you do not receive your tax assessment card in the very near future, it is strongly advised that you contact your local tax assessor immediately in order to inquire as to what the current tax assessment is for your property.

The statutory deadline to file a tax appeal in New Jersey is a strict statutory deadline. N.J.S.A. 54:3-21 provides that all tax appeals must be filed by April 1st, or 45 days from the date the bulk mailing of notification of assessment is completed in the taxing district, whichever is later. Furthermore, in a taxing district where a municipal-wide revaluation or municipal-wide reassessment has been implemented, a taxpayer must file a property tax appeal before or on May 1st.

As we all know, the post office occasionally loses mail. Despite this reality, case law in New Jersey has established a presumption that mail properly addressed, stamped, and posted is received by the party to whom it was addressed. The conditions that must be shown to invoke the presumption are: (1) that the mailing was correctly addressed; (2) that proper postage was affixed; (3) that the return address was correct; and (4) that the mailing was deposited in a proper mail receptacle . . . ." SSI Medical Services, Inc. v. State, Dept. of Human Services, 146 N.J. 614, 621 (1996). In this situation, where a tax assessor’s bulk-mailing of assessment cards are involved, proof of mailing can be demonstrated by evidence of a tax assessor’s habit or routine practice, "evidence of office custom requires other corroboration that the custom was followed in a particular instance, in order to raise a presumption of mailing and receipt and meet the preponderance of the evidence standard." Davis & Associates, L.L.C. v. Stafford Twp., 18 N.J. Tax 621, 627 (Tax 2000).

This standard is very easy for a tax assessor to meet. As a result, taxpayers are almost always presumed to have received the tax assessment card that was allegedly mailed by a municipality’s tax assessor. Consequently, if a taxpayer chooses to appeal an assessment after the statutory filing deadline (listed above) on the basis that the taxpayer never received the tax assessment notice from the tax assessor, the taxpayer must proof to the court, by a preponderance of the evidence, that the taxpayer did not in fact receive the tax assessment notice. See Davis & Associates, 18 N.J. Tax 621 at 632-33.

The Tax Court, in deciding whether or not a taxpayer did in fact receive a tax assessment notice, will inquire into how sophisticated the taxpayer is, whether or not the taxpayer keeps a log of all the mail that the taxpayer receives (something that most businesses do not even do), and the credibility of the taxpayer. It is all but impossible for a taxpayer to prove to the Tax Court that the taxpayer did not receive the tax assessment card. This is because if the evidence supplied by the taxpayer is just as believable as the evidence supplied by the municipality, then the court will deem the evidence in “equipoise” and the taxpayer’s case will be barred as being untimely filed.

Consequently, it is imperative if you do not receive the tax assessment card in the very near future, that you immediately contact your tax assessor in order to determine what your current assessment is for your property. Once you are armed with this information, then you can begin the process of comparing your assessment to what the market value of your property was on October 1, 2008, and whether or not you should file a property tax appeal.

A Letter from New Jersey Senator Robert Singer (R-30) and New Jersey Senate Republican Leader Tom Kean (R-21) was recently sent to New Jersey Governor Jon Corzine which urged a state-wide reassessment of homes. At first blush, such a proposal seems to violate the New Jersey Constitution's Uniformity Clause (art. VIII, sec. 1, para. 1(a)), as the proposal would irrationally treat residential and commercial properties differently. Nonetheless, it is a novel concept and one that only underscores the dire financial crisis of the current real estate market.

The full letter follows:

January 16, 2009

The Honorable Jon Corzine
Office of the Governor
PO Box 001
Trenton, NJ 08625

Dear Governor Corzine:

Declines in home values have resulted in a disparity between the market valuations of homes in New Jersey and the valuations at which those homes are assessed for the determination of property taxes.

Some homeowners have appealed their property tax bills based on these lower market values and have successfully had their assessed valuations reduced. While home values in many neighborhoods have fallen uniformly, this piecemeal approach to reassessment has the potential danger of shifting the tax burden to other homeowners who may not know how to appeal their assessments.

A published report in the Herald News on January 12, 2009 stated that property tax appeals in Passaic County rose by 70% last year. During the same period, the report states that appeals in Wanaque rose by nearly 300%. Similar surges in appeals have likely occurred across New Jersey.

These reports clearly demonstrate that hard financial times are forcing people to scrutinize every expense, including property tax bills that are based on outdated valuations. We can be certain that an even larger flood of appeals can be expected in this difficult year. In these extraordinary times, we should investigate a comprehensive approach to reassessing home values statewide.

We have called on the Senate Budget and Appropriations Committee to hold hearings on the possibility of a statewide reassessment of property values. Cooperation by the State Division of Taxation is obviously essential to any review. We certainly hope that your Administration will support this effort to ensure uniformity in property assessments as the state works through our fiscal difficulties.

Sincerely,

Tom Kean
Senate Republican Leader

Robert Singer

Senator, District 30

The New Jersey Department of Taxation released the Winter 2008 Quarterly Newsletter this morning. This publication provides a general overview of recent legislation, case law, and administrative policies pertaining to property tax appeals, gross income taxes, sales taxes and the corporate business tax.

Of particular note to readers of this blog, are the changes that were enacted on December 18, 2008 to the Property Tax Reimbursement Program (“PTRB”). The recent change to the PTRB raises the maximum income for eligibility for the program t0 $70,000 or less for the 2008 tax year. Previously, the maximum income was $60,000.

Also of note are two specific instructions for the Homestead Rebate Program.

According to the Newsletter:

Tenants who meet the eligibility requirements for the Homestead Rebate Program should "use the application in the New Jersey income tax booklet, Form TR-1040, to apply for the homestead rebate for tenants."

On the other hand, Homeowners who meet the eligibility requirements for the Homestead Rebate Program should "not use the application in the income tax booklet. Applications for the homeowner rebate are expected to be mailed at the end of April, and homeowners will apply either online or by phone."

The full Newsletter may be accessed by clicking the words Property Tax Appeals, NJ.

The Tax Court of New Jersey recently issued a published opinion, Thirty Mazel et al v. City of East Orange, in which it reconciled the Appellate Division opinion Alfred Conhagen, Inc. v. Borough of South Plainfield, 16 N.J. Tax 470 (1997), with the recent Appellate Division opinion H.J. Bailey Co. v. Township of Neptune, 399 N.J. Super 381 (App. Div. 2008).

Both of these Appellate Division opinions concerned N.J.S.A. 54:4-34, which is commonly known as "Chapter 91," and the application of this statute's sanction limiting a taxpayer's right to appeal a tax assessment for failure to respond to a tax assessor's inquiry for income and expense information.

Previously, in Conhagen, the Appellate Division held that Chapter 91's appeal-preclusion provision applied when a taxpayer failed to respond to an assessor's request for income and expense information, even though the subject property was not producing income at the time of the request.

Last year, however, the Appellate Division in H.J. Bailey, held that non-income-producing property is not subject to Chapter 91's appeal limitation provision, even if the assessor's request for income and expense information pursuant to the statute went unanswered by the taxpayer.

At issue in the recently published Tax Court case Thirty Mazel, was a property owner who did not respond to a tax assessor’s request for income and expense information who owned several apartment buildings that were formerly income-producing, but during the tax year at issue received no income, as the properties were undergoing substantial renovations.

In the published opinion, the Tax Court stated:

The gap in rent collection was occasioned not by a change in the use of the property or by owner occupancy, but because the living units had been vacated while a major renovation, presumably to enhance the future earning potential of the buildings, was undertaken. The court finds that plaintiffs never intended to abandon the income-producing nature of the properties and instead committed resources to enhancing the revenue generating potential of the properties.

As a result of the above, the Tax Court reasoned that the property owner who owned the apartments was barred by Chapter 91 from filing a tax appeal.

This reasoning in Thirty Mazel underscores the importance of responding to a tax assessor's request for income and expense information, for even if a property does not produce any income during a relevant year, a tax appeal on such property may be barred by Chapter 91 if the tax assessor’s request is not timely answered.

Residents who reside in three New Jersey Counties pay more in real estate taxes as a percentage of homeowner median income than residents of any other county in the United States. Specifically, residents who reside in Passaic County, N.J. pay on average 8.5% of their income in real estate taxes. Close behind are the residents who reside in Union County, N.J. and Essex County, N.J. who pay on average 8.1% of their income in property taxes.

Given that real estate values have fallen drastically in the last several months, residents who reside within Passaic, Union and Essex counties should give the thought of filing a real estate tax appeal on their property heavy consideration.

The full article posted on Forbes.com may be found by clicking the words Real Estate Tax Appeal Attorney.

New Jersey property taxes were mentioned throughout Governor Corzine’s State of the State Speech yesterday.

One of the first points the governor noted was how, under his administration, an additional 70,000 senior households are now afforded the protections of the Senior Freeze Act.

The governor also noted how he is recommending that municipalities be afforded the option of forgoing pension payments in order to avoid budget cap waivers. According to the governor, allowing municipalities to avoid the pension payments will allow municipalities to avoid painful property tax hikes.

The governor also claimed that he is going to seek to actively enforce the 4% local budget cap, something that over 80% of reporting municipalities did not comply with last year.

Lastly, in concluding the speech, the governor stated: “We must work with county executives, freeholders, mayors, and school boards to make New Jersey more affordable by holding the line on property taxes.”

Despite these statements by the governor, to most property owners throughout New Jersey, little seems to have been accomplished to alleviate the ever-crushing property tax burden.

To read the full text of the governor’s speech, please click the words New Jersey Property Taxes.

A developer building at the Penisula at Bayonne Harbor purchased a tract of land in 2007 for $18.5 million. Despite this, the City of Bayonne is taxing the vacant tract of land as if the property is worth a little over $23 million. As a result, the developer must now pay $568,000 in property taxes instead of $424,000. But that's not all, the tract of land was granted a 30-year tax abatement by Bayonne last March. Unfortunately for the developer, the abatement agreement is structured so that the tax abatement does not begin until the developer gets a certificate of occupancy. Talk about an incentive to get a portion of the development completed.

To read the full article, please click the words Real Estate Tax Appeal Attorney.

Reversing the Tax Court of New Jersey, the Appellate Division on Wednesday adopted the New Jersey Industrial Site Recovery Act (“ISRA”) as the cornerstone in determining whether a tax assessor should value a property by taking into account environmental cleanup costs. As stated by the Appellate Division in Pan Chemical Corp. v. Hawthorne Borough: “The degree to which a property is ‘in use’ or ‘closed down’ cannot be left to subjective standards resulting in inconsistent determinations. ISRA provides a rational, objective standard by which one can determine whether property is in use for tax purposes, as well as for determining whether the obligation to remediate has been triggered.”

The Appellate Division stated that the reason that the ISRA standard should be adopted is due to the fear that a taxpayer, such as the plaintiff here, will keep a bare minimum of continued operations and employees working at a property in order to avoid a “closed operations” status and, thus, avoid triggering the cleanup mandates of ISRA. According to the Appellate Division: “It therefore appears that [the plaintiff] would have it both ways. It wanted the property to be deemed ‘in use’ during the years on appeal for the sole purpose of avoiding the costly cleanup mandated by ISRA. Now, [the plaintiff] wants the property to be deemed ‘not in use’ over the same period of time in order to claim a reduced tax liability.”

However, isn’t the whole point of allowing a reserve deduction to allow a consistent annual deduction for large expenses that a property will have to undergo at some unknown point in the future?

To read the full opinion please click the words New Jersey Property Tax Appeals.

On December 31, 2008 the New Jersey Appellate Division affirmed Chabad of Randolph, Inc. v. Township of Randolph, a case that I have been deeply involved with as counsel for the plaintiff. As a result of this decision, a religious organization will not have to pay property taxes on the property used as a residence by the religious organization's rabbi.

This matter started on October 1, 2005, after the defendant, the Township of Randolph, denied the plaintiff, the Chabad of Randolph, a parsonage exemption for the residence occupied by the plaintiff's rabbi. The defendant denied plaintiff’s application due to alleged zoning violations and the belief that the plaintiff did not otherwise qualify for a parsonage exemption.

Subsequently, on appeal, the County Tax Board affirmed the defendant's decision to deny the plaintiff's parsonage exemption.

Afterwards, the plaintiff then appealed to the Tax Court of New Jersey where the Tax Court reversed the County Tax Board's decision. At trial, the Tax Court judge concluded that the plaintiff carried its burden of proving that the rabbi's Chabad-owned residence was entitled to a parsonage exemption under N.J.S.A. 54:4-3.6, which exempts from taxation "the buildings, not exceeding two, actually occupied as a parsonage by the officiating clergymen of any religious corporation of this State."

The defendant then appealed the Tax Court’s decision to the Appellate Division. On appeal, the Appellate Division agreed with the Tax Court entirely and held that: "The evidence overwhelmingly supports the conclusion that his residence is a 'parsonage' within the meaning of N.J.S.A. 54:4-3.6." As a result, the plaintiff will not have to pay any property taxes for the property used by the plaintiff’s rabbi as his residence.

To read the full Appellate Division decision, please click the words Property Tax Appeals.