What Landlords and Tenants Should Do Before and After the December 1st Appeal Deadline

If the commercial property you own or rent has had recent construction and the Certificate of Occupancy (CO) was issued, it is likely the municipal assessor tacked on an added assessment to its regular assessment. It is also possible you may have received a tax bill for an omitted assessment, which has a similar deadline of December 1st.

While you may be already reeling from paying the non-residential development fee at the time of CO, as a taxpaying landlord or tenant, you should not shrug off the additional tax burden without giving thought to whether a formal or informal appeal of the added or omitted assessment should be made. As the December 1st deadline is rapidly approaching, now is a very apt time to consider whether the property is over-assessed and if you are paying too much in taxes.

By law, the municipality must provide notice to the property owner to the address on file with the municipality. N.J.S.A 54:4-63.7, -63.19 and -63.35. The notice may take the form of a letter and an additional tax bill, or just a tax bill. In either case, the added assessment will be clearly identified. These notices would have gone out in October, but it is not too late to formally challenge the assessment and file an appeal.

In order to appeal an added or omitted assessment, a petition must be filed by December 1, 2016, or thirty days from the bulk mailing of tax bills for added or omitted assessments, whichever is later. “Filing” means that the petition of appeal must be received by the County Board of Taxation at its offices by the close business on December 1 or, if December 1 is on a Saturday, Sunday or legal holiday, the next business day. This year, the deadline is Thursday, December 1, 2016.

The filing costs for an appeal are relatively modest at $150.00 or less. The Petition requires a submission of data on the property and a list of sales the taxpayer believes are comparable. However, with income-producing property, the value of the property is typically determined by an income approach which means that a qualified valuation witness must provide a written report utilizing the income and operating costs from a property and a capitalization rate applied to the net operating income. Usually, this witness is an appraiser who will use comparable leases and properties to come up with a market value based on data from several properties that may be different from the actual operating experience of the property under appeal. The appraiser may also rely on comparable sales for such properties or owner-occupied properties.

Handling an added assessment appeal can be tricky business because of the compressed timeframe within which an appeal is filed and when the County Board of Taxation hears the case and issues a judgment. Under ordinary circumstances, that is completed before year’s end and, in many cases, before Christmas. The evidence of value that a taxpayer needs to submit to support the appeal must be received by the County Board of Taxation seven days before the hearing date. Thus, an astute taxpayer must act quickly to challenge an added or omitted assessment. Depending on the complexity of the matter, an experienced tax-appeal attorney and an appraiser should be utilized. If a result is unfavorable, the taxpayer can file a Complaint to the Tax Court with 45 days of the mailing of the Board’s judgment.

Why bother to appeal? The tax bite for the added assessment alone may seem to be relatively modest, especially if it is for less than six months. However, it sets the total assessment for the next tax year and the taxes in some cases will double or even triple from previous levels. November, December, and early January are the best times to seek an adjustment of the 2017 tax assessment informally. If successful, the tax reduction is immediate and there is no need to file a tax appeal by April 1, which is the deadline for 2017 formal tax appeals.

Experienced tax appeal attorneys such as the tax appeal attorneys at Stark & Stark are very adept at these negotiations or, if necessary, filing and prosecuting formal appeals on the 2017 property assessments. Thus, the added assessment bill needs to be reviewed in terms of the anticipated tax bite for 2017 which likely will be substantially more than the tax bill for the added assessment alone.