New Jersey Tax Appeal Now



State Tax Court

State Tax Court
Getting There

  • There are two ways to wind up in State Tax Court.
    1. You asked for it. If you are a property owner assessed greater than $750,000, you can file an appeal directly with the State Tax Court, (by April 1, or 45 days from date of bulk mailing of Assessment Notices, whichever is later.) May 1 if in a revalued district.
    2. You did not get relief either from your Informal Tax Assessor Meeting or the County Tax Board, or both.

Case ‘Track’ Assignment

  • The Tax Court Management Office shall advise the parties of the ‘track’ assignment.
    1. Track assignment may be advanced or delayed at discretion of the Presiding Judge.
      1. Standard Track – An action not qualifying for assignment to the complex track, farmland assessment and exemption track, small claims track or expedited track shall be assigned to the Standard Track.
      2. Complex Track – A case is assigned to the complex track for individual judicial management if it appears likely that the case will require a disproportionate expenditure of court and litigation resources in its preparation for trial or by reason of the number of parties involved, the number of claims and defenses raised, the legal difficulty of the issues presented, factual difficulty of the subject matter, or a combination of these or other factors.
      3. Expedited Track – Where specific disposition times are imposed by statute or where it appears that tax policy considerations as reflected in the statutes or court rules demonstrate that a summary proceeding would be more appropriate than a plenary trial.
      4. Farmland Assessment and Exemption Track – Reviews of farmland assessment, rollback tax assessment and / or exemption shall ordinarily be assigned this track.
      5. Small Claims Track – An action shall ordinarily be assigned to the small claims track if it is indicated on the case information statement that the matter is within the small claims jurisdiction.
        1. Complaint does not exceed the sum of $2,000 exclusive of interest and penalties
        2. Hears all local property cases involving class 2 property, (1-4 family residence), or class 3A, (farm residence)

What You Need For Tax Appeal At The State Court Level

  • To be successful at the State tax Court level.
    1. Business Entity other than sole proprietor
      1. Licensed NJ Attorney to prosecute the case
      2. Competent Professional Appraisal Assistance
      3. Appraisal report prepared for Tax Appeal Purposes
        1. Specific to rules, dates and methods for ‘True Value’
    2. Individual or Business Entity Sole Proprietor
      1. Detailed and specific market evidence for your case
        1. Appraisal Preferred / Appraiser must then be present
        2. Specific sales, leasing, vacancy and cap rate information at the least.
          1. Licensed appraisers are recognized as having the necessary expertise to make market adjustments to data. The individual owner will be challenged if they attempt to do same.
  • The burden of proof remains on you the taxpayer to prove your case. At this level, you have presumably exhausted all efforts to negotiate the case. You will now have to prove to a sitting judge with a two year backlog, (or more), of tax appeal cases, that your case has merit. You will not have much time.
    1. You MUST present relevant data within the rules of the Court. There is far less latitude at the Tax Court level compared to the County Board.
    2. If you choose to represent yourself through the process, familiarize yourself with the rules of State Tax Court.
    3. You need to weigh the benefits of having a formal appraisal in this venue.
      1. Appraisal Cost plus testimony fees vs. loss of case for improper or insufficient data.
      2. Weigh the value or YOUR TIME to assemble, verify, prepare, and present your data evidence. Appraisers train for years to learn valuation tools and to locate data sources that give them a time efficiency advantage.
      3. Appraisers in the tax appeal venue can be invaluable in terms of case presentation before a judge.

Pre-Trial Conference

  • Local Property Tax Cases
    1. Pre-trial conferences may be held at the discretion of the court either on its own motion or on a party’s written request.
      1. The request of a party for a pre-trial conference shall include a statement of the facts and reasons supporting the request.
    2. The pre-trial conference may be conducted by telephone.
    3. Each party shall file with the court and exchange with each other its pre-trial memorandum no less than 7 business days before the pre-trial conference.
      1. Pre-trial memorandum to be in form prescribed by court.

Discovery Rules of State Tax Court

  • As per ‘Rules Governing Practice in The Tax Court of New Jersey’
    1. Discovery may be taken in accordance with the provisions of R. 4:10-1 through R. 4:18-2 and R. 4:22 through R. 4:25 as applicable except as follows:
      1. In state tax cases, (other than small claims cases), leave of court, granted with or without notice, must be obtained if a party seeks to take a deposition by oral examination prior to the expiration of 60 days after service of complaint.
      2. In state tax cases the 150 days for completion of discovery prescribed by R. 4:24-1 shall commence to run 60 days after the service of complaint.
      3. In actions to review the equalization table, answers to interrogatories shall be served within 20 days from the date of service of the interrogatories.
      4. In local property tax cases assigned to the Small Claims Track, discovery shall be limited the property record card for the subject premises, inspection of the subject premises, a closing statement if there has been a sale of the subject premises within three years of the assessing date, the costs of improvements within three years of the assessing date, and income, expense, and lease information for income producing property. The court may grant additional discovery for good cause shown. (Discoverable with 30 day response time limit after being served.)
      5. In local property tax cases, interrogatories and requests for production of documents shall be in the form and manner prescribed by the Tax Court.
      6. In local property tax cases, the following time limits  are applicable to discovery:
        1. Small Claims Track Cases: To be completed within 75 days of filing complaint.
        2. Standard Track Cases: To be completed within 150 days of filing of complaint.
        3. Complex Track Cases: To be completed within 150 days of filing if complaint unless extended by court.
        4. Expedited Track Cases: To be completed within the time set by the court.
        5. Farmland Assessment & Exemption Track: Within 150 days of filing of complaint.

Exchange of Appraisals and Comparable Sales and Rentals

  • A party intending to rely on the testimony of any person testifying as a valuation expert, shall furnish each opposing party with a copy of the written appraisal report of the expert .
    1. Standard Track Cases – 30 days prior to trial date as designated by the court.
    2. Small Claims Track – 20 Days prior to trial date.
    3. All Other Track Cases – As directed by the court.
  • Same Discovery Standard applied to sales and rental data for comparable properties to be used as evidence.
    1. Sale Comparables must list the location of the property by block, lot, street, street number and municipality.  Each sale must note the name of seller and purchaser, date of sale, consideration, book and page number and if available the form SR1A identification number of the Division of taxation.
    2. Rent Comparables must note the location of the property by block, lot, street, street number and municipality. The name of the landlord and tenant, date of lease and relevant lease terms must be identified.

Notes on Discovery

  • Chapter 91, (otherwise known as N.J.S.A 54:4-34), is a request for information form used by assessor’s to gather information on income producing properties to assist in the valuation process.
    1. For the most part, assessors do NOT use this data to compile accurate vacancy estimates or to support market rent.
    2. Chapter 91 is often utilized as a weapon against property owners. If the owner does not respond in a timely manner, they lose the right of appeal in a given tax year.
    3. This information IS often shared with the taxing district expert, who will provide an appraisal and market evidence to defend the district at appeal.
    4. This information has historically been classified by taxing districts as ‘confidential’, however if the data has been used by the taxing district expert in their defense, you may request copies of these forms to assist in your appeal.
      1. Note – this remains a hotly contested issue. Assessors insist the chapter 91 forms are confidential, yet many tax appeal attorneys seem to agree that once this data is shared with the taxing district expert for their own defense, it is discoverable. You should absolutely utilize your rights under OPRA, The Open Public Records Act, to target suitable comparable properties for this invaluable data.
    5. Property Record Cards for your subject property and all sales data that you employ in the report should be requested under OPRA, from the appropriate taxing district. This will assist you in the verification process for your data.

The Power of ‘OPRA’

  • The New Jersey Open Public Records Act
    1. Powerful tool to obtain data needed for appeal.
    2. Can be used to obtain information on the physical character of the subject, sales or lease data.
    3. Can be potentially used to access Chapter 91 data.
    4. SHOULD be used as leverage to access data quickly and completely from municipal sources.
    5. http://www.state.nj.us/opra/ – website

Presenting Your Case in State Tax Court

  • Presenting your case in tax court is the easy part. The difficulty is in the preparation. Effectively, the case at the State Tax Court level is driven by the attorney, (if you are using one), and proven by the appraiser, (again if you are using one).
  • If you are presenting the case pro se, then you will simply have to pre-determine your agenda, ensure that it complies with the rules and procedures governing tax court in New Jersey and comply with discovery and filing deadlines.
    1. This assumes you HAVE an appraiser expert. If you do not, then you will add gathering suitable data and forming a cogent report for the Court to that list.
  • The same logic and goals that you presumably brought into the County Tax Board hearing will apply at this level. The case presentation outline is presented on the following slide, as was illustrated in the presentation for appearance before the County Tax Board.

The hearing will likely begin with the taxing district attorney trying to qualify your expert appraiser.

    1. Have the appraiser prepared to discuss their education, background, licenses and certifications as well as any relevant appraisal experience including prior testimony before Tax Boards.
    2. Once qualified, your appraiser expert needs to present their appraisal in a concise, clear and convincing manner. (The appraiser cannot act as an ‘advocate’ of your position without compromising its merit and their license under USPAP guidelines. They can however be advocates of their report, research and conclusions.)
    3. If you are presenting the case without an appraiser, you may be questioned as to your competence to do so.

There are a few ways to highlight your case.

    1. If your appraiser has strong presence and verbal skills, and knows how to be concise, step back and let them go. Present the case and use the attorney as the director.
    2. If the appraisal evidence is strong, but the appraiser’s oral skills are uncertain, have the attorney prepare an outline to follow. The attorney takes the lead and dissects the report into digestible blocks. 
    3. Keep the pace fluid and the appraiser focused. Get to the point and spell out clearly a concluded True Value.

If there is cross examination, the appraiser needs to address any questions.
Typical Case Outline – Highlights

Focus The Expert, (If Applicable) & The Evidence
Property Summary – Concisely describe the subject property and its trade area. Discuss relevant trending conditions and market drivers. Where does the subject lie with respect to commuter and commercial links and amenities.        
Cost Approach – If Applied, you will need to thoroughly support the highest and best use conclusions and land values. The contributory value of the depreciated replacement costs new are problematic when presented in court because of the largely subjective nature of estimating accrued depreciation. You will need to clearly illustrate your logic and applied costs.
Sales Approach – Presentation in summary of the sales data and a concluded value range.          
Income Approach – The Income Approach must establish Market Rent, (regardless of whether the subject is leased), market stabilized vacancy, stabilized expenses, and a capitalization rate.

      1. Taxes should NOT be included as a line item cost if terms employed are Net or where the tax cost is typically passed through to tenants.
      2. Depending on market lease terms, you may or may not be required to ‘load the cap rate’ with the equalized taxing district tax rate.

Conclusions – Tie the applied approaches together. Choose which is dominant and highlight the conclusions. Illustrate the supportive nature of any secondary approach. If the approaches do not corroborate each other, one is likely unsuitable based on the property class and type or there are potential issues with your arguments that will need to be addressed. In closing State clearly your, (or the appraiser’s opinion of ‘True Value’. Do not be ambiguous or indirect.

Settlement / The ‘Freeze Act’

  • The State Tax Court provides a form called a ‘Stipulation of Settlement’ when a judgment is entered to reduce assessments. This form is completed by the taxpayer, (or their attorney), and is the basis for enforcement of the Freeze Act.
    1. The ‘Freeze Act’, (N.J.S.A.54:51A-8) – effectively allows taxpayers to freeze the amended assessments after judgment of appeal for two successive years following the original judgment.
      1. Can be voided by municipality under  certain conditions
    2. An alternative to the submission of the stipulation form is to have the settlement presented in open court on the record or by recorded telephone conference call.

Realities of State Tax Court

  • According to New Jersey Courts Annual Report for 2008-2009:
    1. In court year 2009, 10,016 cases were filed in the Tax Court of New Jersey, a 36% increase over the prior year.
    2. On June 30, 2009, there were 25,893 cases pending, a number greater than any year-end inventory in the 30 year history of the court.
    3. There are 12 authorized judgeships on the Tax Court. As of the filing of the 2008-2009 report, the active roster included 10 judges.
    4. Cases being filed as of the 2009 Annual Report are being assigned trial dates fully two years from the date of filing.

Conclusions

  • State Tax Court is typically the final stop of a tax appeal. Appeal beyond this point is rarely worth the cost and effort to seek remedy. 
    1. Remedy beyond the Tax Court can be sought at the Appellate Division and subsequently at the Supreme Court.
  • The State Tax Court is a formal venue with well defined rules and procedures. If you can adhere to filing deadlines, discovery and hearing rules, AND you have assembled the necessary data to prove your case, then the hearing itself is nothing to fear.
  • The Tax Appeal Process is a mechanism meant to be used by the taxpayer. If you have questions or concerns along the way to settlement:
    1. Ask your attorney. If you don’t have one, ask the Court Clerk or assigned Case Manager where you can find the information you need. You would be surprised at the volume of published data that is available to assist you at each level of the appeal process. The Main page of this site has links to the pertinent sites and publications you will need for your appeal.