So What Do Assessors Do With All That Income And Expense Information Anyway?
Thanks to a recent tax court decision, WPH Mount Laurel LLC v. Township of Mount Laurel, property owners and their attorneys will get a rare glimpse of what municipal tax assessors really do with all of that income and expense information they receive from taxpayers every year pursuant to the assessor’s requests under N.J.S.A. 54:4-34, also known as Chapter 91.
Chapter 91 allows a municipal assessor to request income and expense information and requires a property owner to respond within 45 days. As we have lamented on this blog many times before, the Chapter 91 request is a favorite tool for municipalities to have tax appeals dismissed on procedural grounds rather than on the merits of whether the property is over-assessed. The statute provides that if a Chapter 91 request has been properly served on a taxpayer, the taxpayer’s failure to respond or to provide a timely response is grounds to dismiss the appeal. Municipal reliance on Chapter 91 is all too often rewarded by the Tax Court with dismissals of subsequent tax appeals.
Our courts have long-held that the purpose of Chapter 91 is to provide the assessor with information to assist them in the valuation of properties. (See Lucent Technologies, Inc. v. Township of Berkley Heights, 405 N.J. 257, 263 (App. Div. 2009), rev’d in part, aff’d in part, 201 N.J. 237 (2010)) Indeed, the courts have gone so far to suggest that the availability of the requested income and expense information will help “avoid unnecessary expense, time and effort in litigation.” (See Lucent Technologies; see also Ocean Pines, Ltd. v. Borough of Pt. Pleasant, 112 N.J. 1 (1988)) One thing is certain, much tax appeal litigation has been avoided due the harsh consequences of Chapter 91 which has led to the dismissal of countless tax appeals each year. Of course, the courts probably envisioned a system where the information through Chapter 91 requests would be used in reviewing assessments to ensure their accuracy rather than the focus on the mechanics of the Chapter 91 process to avoid the review of an assessment on the merits.
We have suggested that the real purpose of the statute is to serve as a shield to defend against tax appeals. We have even gone as far as to say Chapter 91 provides an offensive weapon to launch a preemptive strike against taxpayers.
The court’s decision in WPH Mount Laurel LLC may offer a glimpse of the future of Chapter 91. In this case, the owner of income-producing property challenged the 2011 assessment. The Township of Mount Laurel filed a motion to dismiss the appeal because the property owner’s response to the assessor’s Chapter 91 request was two weeks late. In response to the motion, the owner served notice of deposition and request for production of documents on the Township seeking discovery to assist in opposing the chapter 91 motion. Specifically, the owner was seeking the assessor’s general policies and procedures concerning the use of information received in response to Chapter 91 requests and specifically, its use of such information in 2010 (which purportedly would have been used in establishing the 2011 assessment).
The Township moved to quash owner’s request for discovery. The owner argued in response that the Chapter 91 motion could be granted only if the assessor actually reviews the income and expense information received in response to Chapter 91 requests as part of the assessing function. If, as argued by the owner, the assessor has no intention of reviewing the information received in response to such requests, then the requests are “pretext” to block the appeals and as such, dismissal would be unwarranted.
The court agreed that the assessor’s use of Chapter 91 responses in the assessment process for year under appeal is relevant to a potential defense to a Chapter 91 motion. The tax court held that owner is entitled to pursue its potential defense to the municipality’s motion through discovery. The court denied the Township’s motion to quash discovery regarding the assessor’s general policies and procedures concerning the use of Chapter 91 information and its use of such information during 2010. A copy of the Tax Court’s unpublished opinion may be found here.
It will be interesting to see what comes next in this case and whether the discovery tactic is employed in defense of other Chapter 91 motions. We will, of course, keep you posted on any future developments.
For more on Chapter 91 cases please see:
No Landlord-Tenant Relationship Means No Dismissal Under Chapter 91
Two More Taxpayers Victims of Chapter 91 “Litigation Gamesmanship”
To Wield Chapter 91 Sword to Dismiss Tax Appeals Towns Must Play by the Rules
Property Owner’s “False” Responses Lead to Dismissal of Tax Appeal
Property owner survives Verona’s “Chapter 91″ attack
Chapter 91 Strikes Another Taxpayer
Tax Court Denies Phillipsburg’s Chapter 91 Motion to Dismiss
