Tax Court Clarifies Taxpayers’ Need to Pay Property Taxes While Under Appeal

by: Thomas Olson
7 Oct 2009

The New Jersey Tax Court has recently clarified the longstanding statutory requirement that a taxpayer must pay its outstanding taxes prior to filing a tax appeal.  In a case of first impression, the Tax Court ruled that the requirement to pay taxes and municipal charges, as a condition to filing and maintaining a tax appeal under N.J.S.A. 54:3-27, is limited to the taxes and charges due on the property actually under appeal.

 In John Trebour Trustees v. Randolph Township, October 1, 2009 (Approved for Publication in N.J. Tax Reports), the Township of Randolph moved to dismiss the complaint that challenged the assessments on two properties, Block 42, Lots 114 and 114.01, based on the taxpayer’s failure to pay taxes owed on Lot 114.  Upon the filing of the Complaint, all taxes due on Lot 114.01 had been paid.  In response to the Township’s motion, the taxpayer withdrew that count of the Complaint pertaining Lot 114.  

The Township maintained that in order to prosecute a tax appeal on any property, a taxpayer must be current on all taxes on all properties within the municipality.  The Township argued that the plain language of N.J.S.A. 54:3-27 supported dismissal.  The statute states: “A taxpayer who shall file an appeal from an assessment against him shall pay to the collector of the taxing district no less than the total of all taxes and municipal charges due, up to and including the first quarter of the taxes and municipal charges assessed against him for the current tax year.”  The Township argued also that its interpretation of N.J.S.A. 54:3-27 was consistent with the important public interest advanced by the statute, i.e., to ensure that tax appeals do not interrupt the flow of municipal revenues.  In addition, the Township argued that its reading of the statute was consistent with New Jersey’s policy allowing refunds of tax overpayments to be used as a setoff of tax delinquencies on other parcels owned by the same property owner under the municipal offset statute, N.J.S.A. 54:4-134. 

 The taxpayer maintained that the statute should only be read to refer to the assessment under appeal. 

 The Tax Court determined that it was not clear from the plain language of N.J.S.A. 54:3-27, which interpretation should prevail.  After reviewing the statute in context with other tax statutes, the court concluded that the requirement to pay “taxes and municipal charges assessed against him” referred to assessments against the property for which the appeal was filed.  In reaching its conclusion, the court relied on a cases holding that property taxes are assessed against the property and not the individual and therefore, property taxes are a lien on the property and not a personal obligation of the taxpayer.  Thus, the court held that the mandate under N.J.S.A. 54:3-27 to pay taxes is specific to the property that is the subject of the appeal. 

In this matter, McKirdy & Riskin’s Richard P. DeAngelis, Jr., served as special property tax counsel to the Township of Randolph.