Township Argues for Dismissal on Grounds Taxpayer Submitted False and Fraudulent Information

by: Anthony F. Della Pelle
21 Sep 2016

A motion to dismiss for failure to comply with N.J.S.A. 54:4-34 (“Ch. 91”) is common practice in the Tax Court.  In Alcatel-Lucent USA, Inc. v. Township of Berkeley Heights, plaintiff filed complaints challenging the assessment and also sought a farmland assessment exemption for tax years 2014 and 2015.  For tax year 2014, the Township filed a motion to dismiss charging that plaintiff’s financial information in response to the Township’s Ch. 91 request constituted a “false or fraudulent account.”  For tax year 2015, plaintiff failed to respond to the request altogether.

In a lengthy opinion, the Tax Court granted the Township’s motion to dismiss plaintiff’s 2015 complaint.  The court was not persuaded that the Township’s Ch. 91 request with respect to tax year 2015 was vague or ambiguous.  Furthermore, the court rejected plaintiff’s argument that its application for farmland assessment excused its compliance with N.J.S.A. 54:4-34.  The court held “that Chapter 91 is applicable to every New Jersey property owner, including property owners who may subsequently make application for an exemption from local property tax or who believe their land may qualify for preferential farmland assessment under the Farmland Assessment Act.”

The Tax Court however reserved its decision with respect to the Township’s motion to dismiss plaintiff’s 2014 complaint.  When plaintiff’s corporate counsel responded by letter to the Township’s Ch. 91 request in 2013, he had indicated that the subject property was not income-producing and thus owner-occupied.  The Township argued that after it had reviewed discovery from plaintiff in connection with the pending tax appeal, plaintiff’s Ch. 91 response intentionally misrepresented the fact that the property was not income producing.  Furthermore, the Township contended that plaintiff’s omission of certain income collected from a license agreement amounted to plaintiff’s misrepresentation of the total rental income.  Therefore, the Township urged the court to dismiss the complaint because plaintiff’s responses constituted a “false or fraudulent account” pursuant to N.J.S.A. 54:4-34.

The Tax Court disagreed with the Township’s strict interpretation of the phrase “false or fraudulent” under N.J.S.A. 54:4-34.  Under the Township’s interpretation, any inaccuracy, distortion or misrepresentation, no matter how insignificant, of a property owner’s response to a Ch. 91 request would warrant dismissal and no consideration of intent would be required.  Plaintiff argued, and the court agreed, that both the scope of the information submitted and the corresponding intent of the party in formulating the response should be examined.  In addition, the court also noted that the materiality of the information omitted must also be considered.  Therefore, the court reserved its decision for further hearing “to weigh and assess the credibility of the party who offered the information and to discern their intent.”  The burden will rest with the plaintiff to demonstrate that its information was submitted in good faith, and were not designed to deceive or mislead the defendant.

A copy of the Tax Court’s opinion can be read here.