BEWARE: RESPOND TO THAT INNOCUOUS LETTER FROM THE MUNICIPAL TAX ASSESSOR
In the past five years, with the onslaught of tax appeals, there has been a sharp spike in the use by local tax assessors of the Chapter 91 “Request for Information on Income Producing Properties” pursuant to NJSA 54:4-34. Compliance with Chapter 91 should not at all be onerous. All that is required to complete the forms is to provide basic details regarding the physical description of the property and improvements and a description of the leases with a statement of operating income and expenses. In most cases, the Tax Assessor will accept a copy of your pro forma operating statement. These formal requests, normally issued in the summer, were originally devised to allow tax assessors to request income and expense information for the purpose of making assessments on income producing properties. Now, however, the original purpose has been relegated to the scrap heap and the requests are use purely to gain litigation advantage. Even municipalities which have not traditionally employed the Chapter 91 process will do so in the year before a revaluation is implemented; e.g. Jersey City and Hoboken-both scheduled to implement revaluations in 2014.
Many municipalities have been bled virtually dry by tax appeals and they have, as a result become very aggressive in defending the appeals which are filed. The dismissal of a tax appeal for failure to file a Chapter 91 response can result in the loss of tens if not hundreds of thousands of dollars in potential tax savings.
The Chapter 91 Request is sent to the taxpayer of record by certified mail, return receipt requested, and a written response is required within 45 days of delivery. Failure to respond in time entitles the municipality to move to dismiss any tax appeal filed on the subject property in the following year. Even if your property is owner occupied and does not produce income, the law requires a timely written response to that effect. If you are a net lease tenant responsible for paying taxes and the Request is mailed to your landlord who is the taxpayer of record, you are charged with knowledge of the request and required to respond, even if the landlord never forwards the request to your attention. Likewise, if you have purchased a property recently and the form was mailed to your seller as the taxpayer of record, it is your responsibility to respond to the request even if the seller never tells you about it.
There are certain precautions that we are recommending that all of our property tax clients put into place immediately:
• Alert all of your internal property tax personnel and your management companies to be on the lookout for any communications from the Municipal Tax Assessor’s Office.
• Call the local tax assessor and ask if they are issuing Chapter 91 Requests this year. If so, ask for your forms now and complete and file them. If not, get the name of the person you spoke with and document the call.
• If you are a net lease tenant, call your landlord and ask if they have received the forms and have them forward them immediately.
• If you are a ground lessee paying taxes on a long term ground lease, ask your landlord to cooperate in arranging with the tax assessor and tax collector to have all assessment notices, tax bills, delinquency notices and Chapter 91 Requests mailed to you directly as the taxpayer of record.
• Even if you are not sure if a Chapter 91 Request has been issued, consider filing a response every July 1 as a matter of policy n a protective basis-especially if you have a tax appeal pending and anticipate filing it again next year.
• Retain copies of your Chapter 91 responses and we recommend mailing them back by certified mail to ensure that you have proof of compliance, just as the municipality retains the “Green Card” as proof of delivery to you.
In short, there is every reason to comply with a Chapter 91 Request and no disadvantage to a taxpayer in the midst of or contemplating a tax appeal. The information requested is essentially the same as that which you would be providing by way of routine discovery in your tax appeal anyway. On the other hand, the consequences of non-compliance can be devastating to your efforts to control tax burden and consequently harmful to efforts to market property for sale or lease.
Please call if you have any questions or require our assistance in complying with Chapter 91.
Waters McPherson McNeill is interested in your comments and questions regarding our services. Please fill out the form below and we will respond as soon as possible. Thank you.
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