Exempt From Taxes? Not if You Fail to Answer the Chapter 91 Request!

A New Jersey appellate court recently affirmed a Tax Court decision dismissing Alcatel’s complaint, which challenged the 2015 denial of a farmland assessment because Alcatel failed to respond to the tax assessor’s request for Chapter 91 data.

NJSA 54:4-34 (“Chapter 91”) requires every real property owner “on written request of the assessor to render a full and true account of his name and real property and the income therefrom, in the case of income-producing property. Here, the tax assessor made a Chapter 91 request. Alcatel received the request and failed to respond. 54 days after receipt of the request, Alcatel submitted an application for a farmland assessment for the 2015 tax year pursuant to the Farmland Assessment Act of 1964 (N.J.S.A. 54:4-23.1 to 23.23) for the woodland portion of their property. The tax assessor denied the application saying the “agricultural use is not dominant use.”

Tax Court Judge Novin dismissed Alcatel’s complaint because Alcatel did not answer the Chapter 91 request. Before the Appellate Division, Alcatel argued Judge Novin was incorrect in applying Chapter 91 to its farmland assessment appeal of its woodland property because it was not income producing.

The Appellate Division rejected Alcatel’s argument. It discussed that tax appeals must be broadly viewed and Chapter 91 is just a “part of the warp and weft woven into a comprehensive tax scheme.” Specifically, the Act mandates that land devoted to agricultural or horticultural uses, that meets the statutory requirements, should be valued for those uses. N.J.S.A. 54:4-23.2. The Appellate Division agreed with Judge Novin that, pursuant to the Act, assessment of farmland was analogous to a tax exemption. Moreover, the primary purpose of the Act was to preserve the “family farm” by providing economic relief by assessing farmland as a farm only.

The Appellate Division confirmed that owners of income-producing properties must respond to a Chapter 91 inquiry even if the owner claims the property is exempt. Cascade Corp. v. Twp. Of Middle, 323 N.J. Super. 184, 185 (App. Div. 1999). Therefore, Alcatel was required to respond to the Chapter 91 request for the entire lot in order for the assessor to properly value same. Data from a Chapter 91 inquiry was essential because in the event the tax assessor denied an exemption, an appropriate assessment must be made in a timely fashion. The data would help quickly determine an assessment and avoid unnecessary expense, time and effort in litigation. Moreover, the Legislature did not carve out any exceptions in the statute for any property owner group or property class. Twp. Of Mahwah v. Bergen Cty. Bd. Of Taxation, 98 N.J. 268, 279 (1985).

Lastly, Judge Novin opined, and the Appellate Division affirmed, that regardless of whether the property is income producing, Alcatel was still obligated to respond to the Chapter 91 request prior to a determination of a farmland assessment.

A copy of Alcatel-Lucent USA, Inc. v. Township of Berkeley Heights can be found here.