Pay Now, Litigate Later Upheld
New Jersey law requires that property taxes must be paid as a prerequisite to filing an appeal before the Tax Court. The principle that taxes must be paid first is to insure that municipal reviews are not interrupted while tax appeals are litigated by the parties. Municipalities take advantage of this requirement to seek dismissal of tax appeals where the property owner is not current on his taxes at the time of filing. The Tax Court is permitted, under N.J.S.A. 54:51A-1(b), to relax tax payment requirements in the interest of justice.
In a recent decision, the New Jersey Tax Court denied one property owner’s request to invoke this rule for two COAH mandated units after failing to pay property taxes before filing its 2012 appeals, and dismissed the appeals.
The property owner conceded that the 2011 property taxes were due and owing when the 2012 appeal was filed, but raised several arguments in its defense. First, the argument outlined above, but buttressed with the added argument that the municipality has obtained the benefit of the two COAH units satisfying the municipality’s COAH obligation, so the property owner should be entitled to have the tax requirement relaxed. The Tax Court found the legislature has specifically exempted properties from the tax requirement, and chose not to do so as part of COAH’s legislative scheme. The owner then argued that the taxes were so oppressive as to be confiscatory, and a hearing should be held to determine the validity of the assessment. The Tax Court denied this argument as well by noting that units have always been COAH units, and the units would always be rented for lower than market rates which would make the taxes appear greater when expressed as a percentage. Thus, the Tax Court dismissed the 2012 appeal, but permitted a 2013 appeal to proceed because a tax lien had satisfied the tax obligation for that tax year.
A copy of the Tax Court’s unpublished opinion in Lafayette Navesink View Homes, L.L.C. v. Borough of Rumson can be found here.
For more how the failure to pay taxes has been addressed previously by the Tax Court, please see the following blog posts:
Failure to Pay Taxes at Time of Appeal Proves Fatal to Commercial Property Owner
Changes to Statute Requiring Payment of Taxes Pending Appeal Being Considered
Tax Court Clarifies Taxpayers’ Need to Pay Property Taxes While Under Appeal
