“Effects of Appeals / Settlements on the Municipal Ratable Base During A Declining Market” New Jersey Association of County Tax Boards 2012 Annual Education Conference Thomas Olson, Esq. McKirdy & Riskin, PA 136 South Street Morristown, New Jersey 07962 Telephone: 973-539-8900 Fax: 973-984-5529 Email: firstname.lastname@example.org www.mckirdyriskin.com
Revenue and Collection Source of Revenue Method of Assessment and Collection • Real property taxes are the main source of funds for municipalities • Property taxes are the only real method for municipalities to raise revenue • Funds are budgeted, billed and collected each calendar year • Amount of taxes billed and collected for each property are based on the property’s assessment and the tax rate • Taxes are assessed and collected based on a January 1 – December 31 calendar year • The tax rate is usually finalized in July or August of the calendar year
Tax Appeals • Most appeals must be filed by April 1 or May 1 of the year under appeal • Successful tax appeals reduce assessment, thereby reducing municipal revenue • Successful appeals may not occur until after the assessment has been finalized and the municipal budget adopted and taxes collected • School districts, fire districts and county government do not share in refunding the taxes already collected. Municipality must pay entire amount of refund (there is legislation pending to amend this).
Refunds and Interest on Refunds Refunds Interest • Refunds due 60 days after date of final Judgment N.J.S.A. 54:3-27.2 • Judgment must be final before refund is due, all appeals and time for appeals must be exhausted. Universal Folding Box Co., Inc. v. Hoboken, 20 NJ Tax 1 (Tax Ct. 2002) aff’d, 362 N.J. Super. 429 (App. Div. 2003); Petrie Retail, Inc. v. Secaucus, 19 NJ Tax 356 (Tax Ct. 2001) aff’d, 363 N.J. Super. 74 (App. Div. 2003) (refund must be paid within 60 days of entry of final judgment) • Offsets may be made for outstanding delinquent taxes and interest N.J.S.A. 54:4-134. Pine Street Management v. East Orange, 15 N.J. Tax 316 (Tax Ct. 1995) (municipality’s right to set-off takes precedence over attorney’s lien for fees on refund). • Interest set by statute at 5%. N.J.S.A. 54:3-27.2 • Must be paid within 60 days of date of entry of judgment by the Tax Court • Interest waived by taxpayer in most settlements
Revaluation / Reassessment • Revaluation and reassessment are a good way to keep assessments current with changing market conditions • Can avoid impact of successful appeals due to incorrect assessments • Revaluations expensive and unpopular • Assessment maintenance may be an option • Cannot spot assess. Twp. Of West Milford v. Van Decker, 120 N.J. 354 (1990) (cannot change assessment just on subject property merely because it recently sold); Centorino v. Tewksbury, 347 N.J. Super. 256, 20 N.J. Tax 35 (App. Div. 2001); Schumar v. Bernardsville, 20 N.J. Tax 46 (App. Div. 2001).
Chapter 101 N.J.S.A. 54:4-23 • Assessor must first notify in writing the mayor, municipal governing body and county board of taxation and the county tax administrator of the basis of assessor’s determination that reassessment of that property is warranted • Assessor must submit copy of a compliance plan to the county board of taxation for approval • Following the reassessment, assessor must certify to the county tax board that the reassessment is in substantial compliance with the portions of the taxing district that were not reassessed. Chadwick 99 Assocs. v. Dir. of Taxation, 24 N.J. Tax 493 (Tax Ct. 2008) (tax assessor’s inclusion of non-usable sales in evaluating the need for a compliance plan not per se invalid). Bear Nest Condo Ass’n vs. Bergen County Board, 25 N.J. Tax 237 (Tax Ct. 2009) • BASF Corporation vs. Town of Belvidere, 22 N.J. Tax 550 (Tax Ct. 2005) (even after the passage of Chapter 101 an assessor may still change the assessment of a single property without necessity of a compliance plan). See also New Plan Realty Trust vs. Brick, 23 N.J. Tax 225 (Tax Ct. 2006).
Other Issues • Chapter 91 Requests – N.J.S.A. 54:4-34. Good method to obtain information for assessment purposes and can also be used to have appeals dismissed for non-compliance • Taxes and other municipal charges must be paid when appeals are filed - N.J.S.A. 54:3-27. Milltown Indus. Sites v. Milltown, 12 N.J. Tax 581 (Tax Ct. 1992), aff’d 15 N.J. Tax 144 (App. Div. 1993). Cannot be cured when appealing from a County Tax Board Judgment. N.J.S.A. 54:51A-1(b). Schneider v. East Orange, 196 N.J. Super. 587 (App. Div. 1984), aff’d, 103 N.J. 115 (1985), cert. den. 479 U.S. 824, 107 S. Ct. 97, 93 L.Ed.2d 48 (1986). Trebour v. Randolph, 25 N.J. Tax 227 (Tax Ct. 2009) (taxes owed must be on appealed property in order for motion to be granted.) • Added and Omitted Assessments • Farmland Assessments • Pending legislation would require school districts, fire districts and county governments to share in refunding property taxes. S-1896, A-1503.