S3968

An Act concerning certain real property assessment appeals and amending R.S.54:3-26 and R.S.54:51A-8.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. R.S.54:3-26 is amended to read as follows:

54:3-26. a. The county board of taxation shall hear and determine all such appeals within three months after the last day for filing such appeals, and shall keep a record of its judgments thereon in permanent form, and shall transmit a written memorandum of its judgments to the assessor of the taxing district and to the taxpayer, setting forth the reasons on which such judgment was based, and in all cases where the amount of tax to be paid shall be changed as the result of an appeal, to the collector of the taxing district. The Director of the Division of Taxation shall prescribe such procedures and forms for the setting forth of such written memorandums of judgments as may be necessary.

Whenever any review is sought of the determination of the county board of taxation, the complaint shall contain a copy of the memorandum of judgment of the county board.

Where no request for review is taken to the Tax Court to review the action or determination of the county board involving real property the judgment of the county board shall be conclusive and binding upon the municipal assessor and the taxing district for the assessment year, and for the two assessment years succeeding the assessment year, covered by the judgment, except as to changes in value of the property occurring after the assessment date. The conclusive and binding effect of such judgment shall terminate with the tax year immediately preceding the year in which a program for a complete revaluation or complete reassessment of all real property within the district has been put into effect or the tax year immediately preceding the tax year in which the assessor implements either an annual reassessment, or other form of district-wide assessment review, which requires the revision of 100 percent of property assessments in the taxing district to current market value, that is approved by the county board of taxation. If as of October 1 of the pretax year, the property in question has been the subject of an addition qualifying as an added assessment, a condominium or cooperative conversion, a subdivision or a zoning change, the conclusive and binding effect of such judgment shall terminate with said pretax year.

[If] b. If the conclusive and binding effect of the judgment does not terminate pursuant to subsection a. of this section, and if the assessor increases the assessment or fails to reflect on the tax duplicate a county board of taxation or Tax Court judgment issued prior to the final preparation of the tax duplicate in either of the two years following the year for which the judgment of the county board was rendered, and if said judgment is a final judgment not further appealed, then the burden of proof shall be on the taxing district to establish that the assessor acted reasonably in increasing the assessment. If the county board finds that the assessor did not act reasonably in increasing the assessment or failed to reflect said judgment on the tax duplicate, the county board shall award to the taxpayer reasonable counsel fees, appraisal costs and other costs which shall be paid by the taxing district.

(cf: P.L.1999, c.208, s.3)

2. R.S.54:51A-8 is amended to read as follows:

54:51A-8. a. Conclusiveness of judgment; changes in value; effect of revaluation program. Where a judgment not subject to further appeal has been rendered by the Tax Court involving real property, the judgment shall be conclusive and binding upon the municipal assessor and the taxing district, parties to the proceeding, for the assessment year and for the two assessment years succeeding the assessment year covered by the final judgment, except as to changes in the value of the property occurring after the assessment date. The conclusive and binding effect of the judgment shall terminate with the tax year immediately preceding the year in which a program for a complete revaluation or complete reassessment of all real property within the district has been put into effect or the tax year immediately preceding the tax year in which the assessor implements either an annual reassessment, or other form of district-wide assessment review, which requires the revision of 100 percent of property assessments in the taxing district to current market value, that is approved by the county board of taxation. If as of October 1 of the pretax year, the property in question has been the subject of an addition qualifying as an added assessment, a condominium or cooperative conversion, a subdivision or a zoning change, the conclusive and binding effect of such judgment shall terminate with said pretax year.

b. [If] If the conclusive and binding effect of the judgment does not terminate pursuant to subsection a. of this section, and if the assessor increases the assessment or fails to reflect on the tax duplicate a county board of taxation or Tax Court judgment issued prior to the final preparation of the tax duplicate in either of the two years following the year for which the judgment of the Tax Court was rendered and if said judgment is a final judgment not subject to further appeal, then the burden of proof is on the taxing district to establish that the assessor acted reasonably in increasing the assessment. If the Tax Court finds that the assessor did not act reasonably in increasing the assessment or failed to reflect said judgment on the tax duplicate, the Tax Court shall award to the taxpayer reasonable counsel fees, appraisal costs and other costs which shall be paid by the taxing district.

c. In the event that a taxpayer is successful in an appeal from an assessment on nonresidential real property, the respective taxing district shall refund any excess taxes paid, less any amount of taxes, interest, and penalties, which may be applied against delinquencies pursuant to section 2 of P.L.1983, c.137 (C.54:4-134), in substantially equal payment periods and substantially equal payment amounts within three years of the date of final judgment.

In the event that a taxpayer is successful in an appeal from an assessment on residential real property, the respective taxing district shall refund any excess taxes paid, less any amount of taxes, interest, and penalties, which may be applied against delinquencies pursuant to section 2 of P.L.1983, c.137 (C.54:4-134) within 60 days of the date of final judgment.

(cf: P.L.2019, c.230, s.2)

3. This act shall take effect immediately.

STATEMENT

The purpose of this legislation is to amend current law regarding tax appeal judgments within taxing districts (municipalities) performing a review and revision of all property to current market value that is approved by the County Board of Taxation. A tax appeal is an appeal of the assessment of a parcel of real property, not of the property tax bill.

Both R.S.54:3-26 (regarding tax appeal judgments rendered by a county board of taxation and not appealed to the Tax Court) and R.S.54:51A-8 (regarding tax appeal judgments rendered by the Tax Court) currently require that a tax appeal judgment shall be conclusive and binding upon the municipal assessor and the taxing district for the assessment year and for the two assessment years succeeding the assessment year covered by the final judgment, except as to changes in the value of the property occurring after the assessment date. The requirement that a tax appeal judgment is binding upon the assessor and the taxing district for two consecutive years in addition to the tax year that is the subject of the appeal is colloquially referred to in the assessment community as a “freeze.”

Current law require that the conclusive and binding effect of the judgment terminates with the tax year immediately preceding the year in which a program for a complete revaluation or complete reassessment of all real property within the taxing district has been put into effect. However, in recent Tax Court decisions, judges of the Tax Court have ruled that the implementation of either an annual reassessment, or other form of district-wide assessment review, which requires the revision of 100 percent of property assessments in the taxing district to current market value, that is approved by the county board of taxation, does not meet the requirement that “a program for a complete revaluation or complete reassessment of all real property within the taxing district has been put into effect” under current law. These rulings have allowed taxpayers who have received judgments “freezing” their assessments to continue to pay property taxes based on real property assessments that may be below, or above, current market value, rather than at current market value.

For the purpose of providing the fairest distribution of the annual property tax levy and ensuring that all similar properties are allocated similar tax bills, this bill would revise current law to clarify that the conclusive and binding effect of a county board of taxation or the Tax Court judgment for two additional tax years would not apply to any municipality wherein the assessor has implemented either an annual reassessment, or other form of district-wide assessment review, which requires the revision of 100 percent of property assessments in the taxing district to current market value, that is approved by the county board of taxation.