The first seven months of 2002 produced decisions that could affect the assessment of real property in New Jersey, whether it is commercial, residential, farmland or tax exempt. Following are synopses of key rulings, organized by categories.
REAL VS. PERSONAL PROPERTY
General Motors Corp., v. Linden City, 2002 N.J. Tax LEXIS 11 (Feb. 21, 2002).
The plaintiff manufacturer in this case contended that certain personal property was not assessable, while the city argued that the property was assessable as part of the real property. The court had “a” and “b” tests to determine what was taxable and what was not, and held that the burden was on the city to produce evidence that the personal property was affixed, and that certain factors that would shift this burden. The “b” test refers to machinery, etc.
Real property that is taxable under this chapter N.J.S.A. 54:4-1 is all land and improvements thereon and includes personal property affixed to the real property unless: (a)(1) the personal property is so affixed that it can not be removed or severed without material injury to the real property; (2) the personal property is so affixed that it can not be removed or severed without material injury to the personal property itself; and (3) the personal property so affixed is not ordinarily intended to be affixed permanently to real property; or, (b) the personal property is machinery, apparatus, or equipment used or held for use in business and it is neither structure nor machinery, the primary purpose of which is to support, shelter, contain, or enclose the persons or property.
The Legislature enacted the Business Retention Act to clarify its intent to distinguish between property integrated with the business, and property integrated with the realty upon which the business is located. The act was intended to distinguish between machinery that participates in the business and machinery that accommodates the business. Even after the BRA was passed, the court concluded that the “one constant in the evolution of the legislation has been the intent that property traditionally taxed as real property should remain so.”
Both plaintiffs and defendants presented proofs as to the personal property (in this case booths and oven). Based on the proofs, the court concluded that the booths and oven could be removed from the plant without material injury to the real property. However, evidence showed that the booths and oven are relocated very rarely and only under very rare and unusual circumstances, which would indicate that they are fixtures.
Based on the evidence presented and industry standard practices, the court concluded that a person who is familiar with the customary practices in the automobile industry would conclude that booths and ovens, including control booths, support structures and platforms, are intended to be affixed permanently. Therefore, these items were assessable.
ATTORNEY-CLIENT PRIVILEGE FOR ASSESSORS
Mobil Oil Corp. v. Greenwich Township, 2002 N.J. Tax LEXIS 8 (April 15, 2002).
The issue before the Tax Court was whether a tax assessor could use the attorney-client privilege in refusing to discuss conversations he had with the town’s municipal attorney (which he believed to be confidential and privileged).
The assessor for Greenwich Township refused to answer questions he was asked at trial about certain assessments that were the subject on appeal. The court held that the assessor interpreted the title of “Assessor” in two different lights: the way the job was prescribed by statute (independent assessors) and the way that the job is in actuality (assessors are part of the municipal family and work for the mayor and the town).
The court held that statutorily, an assessor should be independent from the municipal attorney and the town for which he works. However, assessors act as agents to the municipality by advising the mayor on certain tax assessment issues. As part of their job, assessors generally discuss matters with municipal attorneys and their employer, the municipal government.
The assessor contended that his conversations were privileged because they were conversations that he was having with “his attorney.” Assessors run into a conflict because their job requires them to act independently while assessing, but then to be loyal to their employer, the municipality.
The Legislature has stated that the primary role of the assessor is to determine property tax assessments, N.J.S.A. 54:4-23, 4-24, 4-27, and 4-35, and has ensured a certain degree of insulation for tax assessors so they will not be pressured politically, N.J.S.A 40A:9-151.
The court held that “where there is a basis for attorney-client privilege, it should be given as broad a scope as possible.” Also, the privilege has been extended to governmental agencies and attorneys for those bodies. Therefore, the court held that the attorney-client privilege in this case must be construed in accord with the expectations of the parties. The court did not compel the assessor to disclose discussions that he had with the municipal attorney, discussions he expected were privileged.
The court also took the extraordinary step of describing the clear conflict between the independence of the assessor in making assessments, while being dependent on municipal officers, such as a mayor and council. The court suggested that any constitutional convention to examine New Jersey’s property tax system should include a review of the governmental structure to make sure that assessors can truly make independent judgments on their assessments.
REVALUATION
Essex County Board of Taxation v. Township of Caldwell, 19 N.J. Tax 587 (2001).
In 1986, the Essex County Board of Taxation issued orders to several municipalities to conduct municipal-wide revaluations. The Borough of Caldwell was issued an order on July 3, 1986 and was to comply by Sept. 30, 1987. The order was signed and approved by the director of taxation. Caldwell never complied with the order, nor did they appeal the order. Caldwell had not conducted a revaluation since 1970.
On June 24, 1993, the board met with all the municipalities who did not comply with the 1986 order and directed them to show cause as to why they did not comply. Caldwell claimed that the board agreed to update or rescind the order based on whether or not revaluation was actually necessary.
In 1985, West Caldwell, a neighboring municipality, conducted a revaluation. In a letter to the board, the West Caldwell mayor explained that the neighboring municipalities’ failure to comply with the order caused unfairness to the county and school tax apportionment.
The board met again in January of 1996. In closed session, the board discussed the delinquent towns. They reconvened in open session and made a motion to send a letter to the deputy attorney general requesting enforcement of the orders against the noncompliant municipalities. There was no vote on the motion. The record showed that the county tax administrator would draft a resolution at a later time. The resolution was dated Jan. 4, 1996, and incorporated the sentiment of the meeting. It was signed and displayed a record of the board members’ vote.
The board filed a Complaint in Lieu of Prerogative Writ in Superior Court to enforce the 1986 order and on Sept. 6, 2001, moved for summary judgment. On Oct. 2, 2001, Caldwell cross-moved for dismissal of the complaint as untimely pursuant to R. 4:69. On Nov. 8, 2001, the board adopted a resolution that ratified the Jan. 4, 1996 resolution to correct any flaws therein. Caldwell moved to supplement its counter-claim to incorporate the new resolution.
Caldwell filed a cross-motion for dismissal of the complaint arguing three different points. The first was that there was undue political influence and a conflict of interest. The court found no merit in this claim as it was based only on speculation and innuendo. The second argument was that the board’s Jan. 4, 1996 resolution where the board elected to enforce the order against Caldwell was never properly adopted and was in violation of the Open Public Meetings Act. The court determined that the board is a public body and is subject to the provisions of the statute. After reviewing the series of votes, resolutions and other board documents, the court held that the board acted accordingly by correcting its subsequent actions.
The final argument was that the complaint was not filed in a timely manner in accordance with R. 4:69-6 (a). The defendants misapplied Essex Tax County Board of Tax v. Newark, 340 N.J. Super. 432 (App. Div. 2001), and it was determined that the court found no viable argument here. The court denied the cross-motion to the complaint, rejecting all three of the defendant’s arguments.
The board made a motion for summary judgment, claiming that there was no genuine issue as to any material fact and that they are entitled to a judgment as a matter of law. The court realized that Caldwell had ample time to submit an appeal, it had 15 years to comply with the order and it had not conducted a revaluation in 30 years. After reviewing the evidence presented by the board, it concluded that it was so one-sided that it must prevail as a matter of law.
The court denied Caldwell’s motion to amend its counterclaim, as the point was moot since the court granted summary judgment in favor of the board in this matter.
RIGHT TO APPEAL � OWNERSHIP
Siegfried O. and Carla B. Slater v. Holmdel Township, 20 N.J. Tax 8 (Jan 9, 2002).
The plaintiff couple appealed a property’s original 2000 assessment to the Monmouth County Board of Taxation. The county board reduced the original assessment of the property and entered judgment. The couple and the municipality appealed the board’s determination.
An issue arose as to the fact that only the wife held title to the property. The appellate court found that the husband did qualify as a taxpayer within the meaning of the N.J.S.A. 54:3-21 based on the fact that he has a right to his marital residence and his potential tax liability. The property qualifies as “taxpayer’s property” because the husband has an inalienable right and a substantial ownership interest in the property.
No matter which spouse holds legal title, when the couple is married and they together occupy a residence as their principal matrimonial residence, both have a right to a possession of it as long as their marriage lasts. The Tax Court, in Ewing Township v. Mercer Paper Tube Co., 8 N.J. Tax 84 (1985), said that the Tax Court afforded the right to appeal to any person whose tax payments have been adversely affected by an improper assessment, and not only to an owner in fee of the assessed property appealed.
TAX EXEMPTION
Southern Jersey Family Medical Centers, Inc. v. City of Pleasantville, 351 N.J. Super. 262 (May 30, 2002).
The taxpayer was a nonprofit corporation, designated as a community health center, which provided health and dental services to indigent people and the general public. Payment for the services was based on the patient’s income.
The Tax Court ruled that because the taxpayer received 85 percent of its annual funding from the federal and state government, with virtually no voluntary charitable contributions, it was not entitled to tax-exempt status.
The appellate court disagreed, stating that the taxpayer did in fact meet all the requirements of tax-exempt status under the Paper Mill test. These requirements are the following: (1) it was organized for a charitable purpose; (2) its property was used for the moral and mental improvement of men, women, and children; and (3) its operation and use of its property was not conducted for profit.
Whether the first requirement for the tax-exempt status under the Paper Mill test was met is to be determined by the statement of purposes in the owning entity’s certificates of incorporation, and so on. Southern Jersey Family Medical Centers, Inc. amended its certificates of incorporation by adding article eight, which says that the “purposes for which this Corporation is formed are exclusively charitable.”
The appellate court held that the mere fact that a taxpayer did not receive significant private donations and was almost exclusively supported by the government did not disqualify it from receiving a local property tax exemption.
Town of Secaucus v. City of Jersey City and TPI Urban Renewal, 19 N.J. Tax 538 (2001)
Jersey City and TPI Urban Development sought reconsideration of Secaucus’ proposed interpretation of N.J.S.A. � 40:55C-65, which requires municipalities to annually certify any entities’ entitlements to property tax exemptions. The issue here is whether the interpretation should be applied retrospectively or prospectively.
The court held that since property tax exemptions are granted on an annual basis, a municipal governing body could delegate the certification responsibility to an appropriate municipal officer under appropriate procedures. The court did not, however, determine which procedures to use or which municipal officer would be appropriate.
The defendants contended that the court’s interpretation of N.J.S.A. � 40:55C-65 and N.J.S.A. � 40A:20-12 should be applied prospectively because the interpretation could not have been reasonably foreseen and the city had a long standing interpretation of the certification requirements which they relied on and should therefore be afforded deference.
The plaintiff argued that retrospective application is the rule and should be applied, especially since the court’s interpretation could have been anticipated because the statutory language grants tax exemption if the certification requirement is not fulfilled.
The doctrine of prospective application applies to decisions involving statutory construction. It may be applied to a situation where a court renders a clarifying decision in a murky or uncertain area of law. The court finds this to be one of those situations.
The court found that the defendants had interpreted the clarification requirement differently from the court but they reasonably relied on it consistently over a period of years without any challenge. If the interpretation were to be applied retroactively, a number of projects would lose their tax-exempt status under the Fox-Lance Law or Long Term Law. The court found that it would be unjust and unfair to deprive projects of their tax-exempt status because of the absence of the certification.
The court then had to consider whether any tax appeals filed by the plaintiff should be excluded from the prospective application of the court’s interpretation of the statute. The matter before the court deals with one of thirteen similar projects in the plaintiff’s town. If the present matter were excluded from the prospective application, it would exclude the 12 companion matters.
The court considered whether fundamental fairness warrants excluding the plaintiff’s matter and the twelve companion matters from the prospective ruling. It weighed the plaintiff’s effort, expenses, and the unfairness and injustice that may result in the applying the interpretation prospectively. The court also weighed the public policy in favor of development and redevelopment projects.
The court found that public policy and upholding the Fox-Lance Law or Long Term Law tax exemptions outweighed the fairness to the plaintiff. The prospective interpretation of the statute was applied to the matter at hand and the twelve companion matters.
Town of Secaucus v. City of Jersey City and Battery View Senior Citizens Housing, LTD., 19 N.J Tax 568 (Nov. 7, 2001, revised Jan. 22, 2002).
This action involved challenges to the validity of tax exemptions that were granted by Jersey City to the Battery View Senior Citizens Housing, Ltd., for the tax years between 1998-2001. The plaintiffs contended that the tax exemptions wrongly included an exemption for land taxes that were in violation of the Limited-Dividend Nonprofit Housing Corporations or Associations Law, N.J.S.A. � 55:16-1 and the Long Term Exemptions Law N.J.S.A. � 40A:20-1.
The plaintiffs stated three causes of action for their appeals: (1) Battery View’s tax exemption wrongfully includes an exemption for land taxes in violation of the Limited-Dividend Law and the Long Term Tax Exemption Law; (2) if any provision from the laws allows a tax exemption for land, then that provision is exceeding the authority of tax exemptions under the New Jersey Constitution; and (3) the total financial return, that the owning interests in Battery View received, exceeded the total amount allowed by the governing statutes and by their Certificates of Limited Partnership.
The defendants claimed the exemption that they were granted is in compliance with the Limited-Dividend Law, the Long Term Law, and the New Jersey Constitution.
In this case, the property discussed is a multi-family housing project for senior citizens. The apartments are affordable and are meant to be for low-income families. The Jersey City Municipal Council authorized a tax exemption for the project under the Limited-Dividend Law.
In the resolution, it said that the “proposed development and improvements will be exempt from all property taxation.” The resolution and the financial agreement allowed for Battery View to make payments, rather then paying taxes, which is known as PILOT (Payment in Lieu of Taxes), to Jersey City. Battery View had made all its PILOT payments, and Jersey City had not made an assessment on the land in the projects. Consequently, Battery View had never paid land taxes regarding the project.
To determine the validity of the tax exemption, the statute must be interpreted with respect to the Limited-Dividend Law and the financial agreement.
The tax exemption language in the Limited-Dividend Law states that “when the governing body of any municipality in which a project of a housing corporation association will be located, finds that the project will be an improvement, development, or redevelopment of any blighted area . . . that such project and improvement shall be exempt from all property taxation.”
The word “improvement” is defined as “something that enhances value or excellence.” Merriam Webster’s Collegiate Dictionary 585 (10th ed. 1996). The word “project” is defined by the Limited-Dividend Law as “any work or undertaking to provide decent, safe, and sanitary dwelling for families in need of housing; such undertakings may include buildings, land . . . or other real or personal property or interests which are necessary, convenient, or desirable appurtenances of said undertaking, such as, but not limited to, streets, sewers, water . . . or to provide any part or combination of the foregoing.” See N.J.S.A 55:16-3(6).
The defendants contended that because the term “land” is included in the definition of the word project, as defined by the Limited-Dividend Law, it should include the land. However, the tax-exemption that the Long Term Law allows does not apply to land, according to the provisions of the law. The Limited-Dividend Law must be interpreted according to the Long Term Law. Therefore, the only way the two laws can be interpreted consistently is to read the laws as not applying to land.
Therefore, the court held that the exemption provided for in the financial agreement and resolution applies only for improvements and not for land.
However, because of the public policy factors and the interest to have the housing project come to fruition, the court did not impose a substantial change in the existing financial agreement. The court held that for the years under appeal, Jersey City should be held to the terms of the agreement and that the land taxes payable would be credited against the PILOT payments in accordance with N.J.S.A 40A:20-12. The court denied Battery View’s motion for summary judgment.
FARMLAND ASSESSMENT
Pio Costa, Anthony II � Subtrust v. Borough of Riverdale, 2002 N.J. Tax LEXIS 15 (June 19, 2002).
The plaintiff taxpayer filed farmland assessment applications for the years 1999, 2000, and 2001. However, even though timely, the applications were held to be deficient for failure to show that the property was devoted to woodland management for the tax years in which the applications were filed.
The plaintiff complied with a Woodland Management Plan. The plan’s objective was to lower plaintiff’s taxes on the property by qualifying for farmland assessment. The plan described four stands of trees located on the property and how they were going to be thinned to a certain stocking level, concentrating on the removal of unacceptable growing stock.
Various requirements that must be met in order for woodland to qualify for farmland assessment exist under the Farmland Assessment Act, N.J.S.A. 54:4-23.1. A general requirement is that the land be “actively devoted to agricultural or horticultural land use” and be “so devoted for at least the 2 successive years immediately preceding that tax year in issue.”
In addition to the general requirements, there are other conditions that the taxpayer must abide by, as well as proving that the land qualifies for farmland assessment. “Statutes granting preferential tax treatment must be strictly construed against the taxpayer seeking such preferential treatment because they provide benefits at the expense of all taxpayers in the municipality.” See Miele v. Jackson Township, 11 N.J. Tax 97 (App. Div. 1989).
The plaintiff’s application for the 1999 tax year included a stand map, which showed cutting in 1997. However, there was nothing in the application that shows that there was any cutting during 1998, which was the pre-tax year.
The plan called for cutting of two-thirds of the trees in stand IV; however, the evidence shows that the cutting actually took place in stand II in tax year 1997. The plaintiff’s application was not in compliance with the plan and the statement in the 1999 WD-1 Form was incorrect by claiming that the plan that was previously filed continues to be followed.
The tax assessor relies on the information that is provided in the application in order to determine where the cutting of the woodland took place. The assessor is also entitled to inspect the land itself in order to verify whether or not the cutting actually took place.
The court denied the plaintiff’s farmland assessment application because the application did not properly demonstrate the actual farmland activity in question. The woodland management activity on the property during the pre-tax years was not in compliance with the plan. Judgments were entered affirming the 1999, 2000, and 2001 assessments on the plaintiff’s property.
Saddle Mountain LP, v. Ringwood Borough, 20 N.J. Tax 29; 2002 N.J. Tax LEXIS 4 (Feb. 19, 2002).
The plaintiff taxpayer applied for a farmland assessment for the tax years of 2000 and 2001. The application was denied by the borough. The reasoning the board used to deny the application was that the taxpayer was not entitled to farmland assessment because he had failed to file an application for both of the two years preceding each year that was under appeal.
To qualify for farmland assessment, a property must be actively devoted to agricultural or horticulture use for a minimum of two successive years immediately preceding the tax year in question. N.J.S.A. � 54:4-23.1. To be considered “actively devoted,” certain income requirements must be fulfilled, which vary depending on the type of agricultural or horticultural activities on the property.
However, there is no specific provision that the taxpayer must file an application regarding the two successive years, which precede the year for which the taxpayer is seeking an assessment. The statutes state that an application be filed only for the year that the taxpayer wants to receive farmland assessment. N.J.S.A. � 54:4-23.6(a).
The defendant alleged that, because land can only qualify for farmland assessment if it has been used for a minimum of two successive years immediately preceding the tax year at issue, the taxpayer must file an application for each of the “pre-qualifying years” as well as the year requested for valuation.
The defendant contended that the purpose for filing an application for both of the two years immediately preceding the tax year in question, is that the tax assessor will have ample time to assess the property and determine whether or not it is actually being devoted to agricultural or horticultural use. If the tax assessor is not given the chance to make these inspections, he is placed in a very difficult position when trying to determine whether property qualifies for farmland assessment.
The plaintiff was in agreement with the defendant’s argument in terms of the merit. However, there is no legally binding rule or law that compels one to file an application for the two years immediately preceding the year requested for a valuation.
According to N.J.S.A. 54:4-23.13, “eligibility of land valuation, assessment, and taxation under this Act shall be determined for each year separately.” The statutes do not require a taxpayer to file an application regarding “pre-qualifying” years. Neither the Handbook for New Jersey Assessors � 504.32, nor the regulations, contain any requirement that a farmland assessment application has to be filed for either of the pre-qualifying years.
Therefore, the court held that the statutory requirement for filing a farmland assessment application relates only to the first year for which the taxpayer wishes to receive farmland assessment. There is no application that needs to be filed for either of the two pre-qualifying years. The plaintiff’s motion for summary judgment was granted.
FREEZE ACT
Coastal Eagle Point Oil Co. v. Township of West Deptford, 353 N.J. Super. 212 (July 19, 2002).
The taxpayer is the owner of the Eagle Point Refinery located in West Deptford Township and Westville Borough. The two towns assessed the taxpayer’s refinery at $75,530,500 for the 1987 tax year. The Tax Court reduced the assessment to $48,406,4000. The taxpayer filed a motion with the Tax Court to freeze its 1988 and 1989 assessments at the 1987 assessment level. The two towns claimed that the taxpayer made significant improvements to the property since the 1987 assessment and increased the market value of the property.
The Tax Court granted the taxpayer’s application for the 1988 freeze but required a plenary hearing before deciding the 1989 assessment. In 1988, the taxpayer invested $10 million for improvements to the property assessed at $75,530,500. Since the investments were made during 1988, in an unpublished decision, the Tax Court held that the municipalities were entitled to a plenary hearing for both the 1988 and 1989 tax years.
The Tax Court ruled that the municipalities had the burden of proving that the change in the value of the property was based on the taxpayer’s investments and improvements, not a general trend in increasing property values. The taxpayer and Westville settled, but the case continued against West Deptford.
This case was transferred to a judge who made a pre-trial ruling that barred the introduction of evidence in respect to the value of the taxpayer’s refinery for the 1988 and 1989 tax years. The court still held that the the taxpayer was not entitled to Freeze Act relief.
The court held that although it was impossible for West Deptford to prove a “substantial and meaningful” change in the refinery’s value, the $10 million investment that the taxpayer made for improvements in between a base year and a freeze year precluded it from receiving the benefits of the Freeze Act.
This is not consistent with the long held rule that to avoid the Freeze Act, the municipality must prove significant increases in the property value. Due to this inconsistency, the case was reversed and remanded to the Tax Court to determine whether there was a substantial and meaningful increase.
In this appeal, the taxpayer moved for summary judgment on the grounds that the taxpayer is entitled to Freeze Act relief. There are certain criteria that West Deptford must meet to be entitled to a plenary hearing. The municipality must prove that there was a change in the refinery’s value between the assessment dates for the base year and the freeze years and that this change was caused by an external or internal change after the assessing date of the base year.
The issue here was whether the Tax Court erred in determining that West Deptford met its burden in determining the increase in the value of the refinery.
The Appellate Division held that the Tax Court erred in refusing the taxpayer Freeze Act protection based on the money expended for improvements. Further, the Tax Court erred in precluding the evidence of the property’s 1988 and 1989 values. The municipality must prove that there was a “substantial and meaningful” increase in the refinery’s value between the assessment dates for the base year and freeze year and that either internal or external changes in the property were a substantial cause of the increase.
TAX REFUNDS
Universal Folding Box Co., Inc. v. Hoboken City, 20 N.J. Tax 1 (Jan. 2, 2002).
The taxpayer, Universal Folding Box Co., Inc. filed a local property tax appeal resulting in reduced tax assessments from 1994-1999. Hoboken complied with the Tax Court’s judgment and lowered the assessments for the years at issue. The taxpayer then moved to compel Hoboken to pay the tax refunds resulting in the reduced assessments.
However, at the time, Hoboken had an appeal of those judgments pending. Hoboken then moved for a stay pending the resolution of the appeal. The Tax Court denied the the taxpayer’s motion to compel the refund of the overpayments and dismissed Hoboken’s motion for a stay without prejudice.
The taxpayer claimed that it had an immediate right to receive reimbursements of overpaid taxes with interest. The Tax Court found that the taxpayer incorrectly relied on Arrow Manufacturing Co. v. Town of West New York, 321 N.J. Super. 596, (Tax 2000), because in that case the municipality did not comply with the Tax Court’s judgment. In the case at bar, Hoboken was ordered only to lower the assessments, not to pay tax refunds to the taxpayer, and complied with the court’s order.
The statute, N.J.S.A. 54:3-27.2, states, that “in the event that a taxpayer is successful in an appeal from an assessment on real property, the respective taxing district shall refund any excess taxes paid, together with interest thereon from the date of payment at a rate of 5 percent per annum, less any amount of taxes, interest, or both, which may be applied against delinquencies pursuant to P.L. 1983, c. 137 (C. 54:4-134), within 60 days of final judgment.”
In 1977, the Legislature amended the statute changing the language from “judgment” to “final judgment.” “Final judgment” has been interpreted to mean the date of the judgment from which no appeal has been or may be taken. Wilshire Selby West, Ltd. v. Ramsey Borough, 6 N.J. Tax 60 (1983).
The Tax Court held that the authority for a taxpayer to retrieve tax refunds and interest based on overpayments vests solely in N.J.S.A. 54:3-27.2, and the only time when these funds may be collected is after all appeals have been exhausted.
The next point of contention presented by the taxpayer was that N.J.S.A. 54:3-27.2 and R. 2:9-5 conflict and thereby violate N.J. Const., Art. VI, � 2, �� 3, the separation of powers. The Tax Court immediately rejected the argument that N.J.S.A. 54:3-27.2 stays the taxpayer’s right to the refund and that the staying of a court judgment should only be governed by R. 2:9-5. The Tax Court concluded that nothing had been stayed and that Hoboken lowered the assessment and complied with the judgment.
The final issue presented by the taxpayer was that N.J.S.A. 54:3-27.2 violates substantive due process because this provision forces a losing litigant to forestall payment or force a settlement. After the 60 days prescribed by the statute following the “final judgment,” N.J.S.A. 54:3-27.2 provides that the taxpayer is compensated, with interest, from the time the overpayment was made to the municipality.
The Appellate Division has held that the “interest of the municipality in receiving timely payment of taxes is clearly significant and outweighs any incidental burden imposed upon plaintiffs, and other taxpayers similarly situated by this jurisdictional burden.” Schneider v. City of East Orange, 196 N.J. Super. 587 (App. Div. 1984).
The two major policy reasonings behind waiting for a final judgment are that refunding taxes prior to the litigant’s final appeal may result in increased tax delinquencies, and if a municipality repays a taxpayer prematurely, the municipality may not be able to regain the funds.
Brodman is a partner and chair of the real property taxation group at Scarinci & Hollenbeck of Lyndhurst. Crusius and Radovici were summer associates at the firm. None of the materials contained within this update constitutes legal advice.
