Failure to Pay Taxes at Time of Appeal Proves Fatal to Commercial Property Owner

In consolidated matters, a New Jersey appeals court considered whether a State law requiring that all municipal taxes be current for the tax year under appeal may be relaxed. Pursuant to N.J.S.A. 54:51A-1(b): “At the time that a complaint has been filed with the Tax Court seeking review of judgment of county tax boards, all taxes or installments thereof then due and payable for the year for which review is sought must have been paid.” This statute was amended in 1999 to provide an “interest of justice” exception. However, the Legislature did not define “interests of justice” and there was a conflict in previous New Jersey Tax Court decisions interpreting this clause. In one prior decision, Wellington Belleville, L.L.C. v. Twp. of Belleville, a Tax Court Judge held that a determination of whether the interests of justice exception should apply is a fact sensitive inquiry. Another Tax Court Judge, in United States Land Res. v. Borough of Roseland, 24 N.J. Tax 484 (Tax 2009), had held that the interests of justice exception warranted relaxation of the tax payment requirement when all taxes were paid in full prior to a court hearing date for a motion to dismiss the complaint filed by the municipality.

In these most recent cases, Dover-Chester Associates v. Randolph Township and Randolph Town Center Associates, L.P. v. Randolph Township, the taxpayers filed complaints in the Tax Court appealing their property tax assessments, which had been affirmed by the Morris County Board of Taxation. Neither taxpayer was current in its taxes at the time the appeals were filed with the Tax Court. In each case, the municipality moved to dismiss the appeal for nonpayment of taxes. The taxpayers argued that relaxation under the “interests of justice” exception was appropriate because the taxes had been paid before the hearing date on the municipality’s motion to dismiss. The Tax Court Judge disagreed with the taxpayers. In its opinion, which has been approved for publication, the appellate court agreed with the Tax Court and affirmed the dismissal of the complaints. The specific question presented in this case was whether relaxation is required under the interests of justice exception if the payment is made prior to the return date on a motion to dismiss. The appeals court held that it is not.