Two More Taxpayers Victims of Chapter 91 “Litigation Gamesmanship”

Two different taxpayers’ appeals were recently dismissed by a Tax Court judge after they failed to submit income and expense information pursuant to a “Chapter 91” request.  Under N.J.S.A. 54:4-34, also known as Chapter 91, a municipality can request income and expense information and requires a property owner to respond within 45 days.  It has become a favorite tool for municipalities to attack property owners’ tax appeals on procedural grounds, rather than on the merits of whether the property is over-assessed.   Once a request has been successfully served on a taxpayer, failing to respond within 45 days equates to a death sentence for the taxpayer’s appeal.  The taxpayer must then show that it responded to the request, or show that the assessor’s request was deficient or confusing.  The taxpayers in the following two cases failed to do so.

In KC Propco, LLC, v. Plainsboro Twp., the municipality sent a Chapter 91 request in 2010, and received a response that the property was 100 percent owner-occupied.  However, the complaint filed in the 2011 tax year indicated that the property was occupied by a tenant.  Citing SKG Realty Corp. v. Wall Twp., 8 N.J. Tax 209 (App. Div. 1985), the court dismissed the plaintiff’s 2011 complaint for failure to provide the income and expense information it initially requested.  However, the court denied Plainsboro’s motion for the 2012 tax year because there was no evidence before the court that indisputably showed the property was occupied by a tenant.  The court did note that there was no time limit on a motion to dismiss when a taxpayer provides false information as part of a Chapter 91 request.

In 201 Industrial Way, LLC v. Eatontown Boro., the taxpayer opposed Eatontown’s motion on the ground that it is unclear what response is being sought by the assessor because a copy of the Annual Statement referred to in the assessor’s letter to the plaintiff was not included in the motion papers, and that the motion papers failed to include a copy of the form for the reporting of income and expense information.  The judge granted Eatontown’s motion because there was nothing before the court from the taxpayer, by way of certification, to indicate that the assessor’s request was deficient.  The only evidence before the court, through the assessor’s certification, was that the assessor sent a request for income and expense information, the letter specifically referenced an enclosed form for reporting income and expenses, and the taxpayer received a copy of the assessor’s Chapter 91 request, as evidenced by the signed certified mail return receipt.

The court noted in one of the opinions that Chapter 91 has become nothing more than “litigation gamesmanship” whereby the municipalities do not use Chapter 91 to collect information but to try to dismiss cases on technicalities rather than the merits of an appeal, and taxpayers search through the requests for anything that can be construed as an ambiguity in either the identification of the property owner and/or the property and/or in the instructions for completion of the form.  However, it should be noted that taxpayers do not have a constitutional mandate to tax property equally, as the municipalities do.  Moreover, the burden is on the municipality to provide clear instructions and direction on the information to be provided, and not on the taxpayer to divine what information must be provided.

For more examples of Chapter 91 litigation, please see the following blog posts:

To Wield Chapter 91 Sword to Dismiss Tax Appeals Towns Must Play by the Rules

Property owner survives Verona’s “Chapter 91″ attack

Chapter 91 Strikes Another Taxpayer

Tax Court Denies Phillipsburg’s Chapter 91 Motion to Dismiss

Paramus Appeal Dismissed: Obligation to Submit Income and Expense Info Runs with the Land

Property Owner’s “False” Responses Lead to Dismissal of Tax Appeal