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Carlson Family Foundation Inc. v. Borough of Paramus

008902-2011 (N.J. Tax Ct. 2011) (Unpublished)

TAXATION; CHAPTER 91 — Regardless of a taxpayer’s reporting period for income tax purposes, the taxpayer must furnish income and expense information for the period of October 1 through September 30 if the tax assessor so requires.

In order to assist a tax collector’s collection of information for use in establishing the value of income producing properties, N.J.S.A. 54:4-34 requires property owners of income producing properties to provide the tax assessor with an accounting of income derived from that property. The request for information is commonly known as a Chapter 91 request. If an owner fails or refuses to respond to a Chapter 91 request within 45 days, the owner is barred from appealing its tax assessment for that year.

A property owner filed a tax appeal. The tax assessor moved to have the appeal dismissed because the owner had failed to respond to the tax assessor’s Chapter 91 request. The owner argued that the Chapter 91 request was defective, and therefore the motion should be denied. The owner claimed that, under Internal Revenue Service rules, a taxpayer must either select a calendar year or a fiscal year for income reporting. However, the tax assessor required income reporting for the period of October 1 through September 30. According to the owner, the average taxpayer whose income and expenses are reconciled annually could not produce the information required by the tax assessor within 45 days. It argued that the only owners who could reasonably comply with the tax assessor’s request are those owners who report on a fiscal year ending September 30. Any other owner would find it ambiguous as to how to respond, by proving income for the last full calendar year, or to create a special statement to conform to the tax assessor’s request.

The Tax Court rejected the owner’s argument. It found that regardless of a taxpayer’s reporting period for IRS purposes, a taxpayer has the income and expense information sought by the tax assessor. The statute does not require the tax assessor to fashion a notice request to coordinate with a taxpayer’s IRS reporting requirements. The tax assessor’s only obligation is to make a Chapter 91 request that is clear and unambiguous and that requests information that is not impossible to produce. The tax assessor is not required to fashion its request so that it is convenient for each taxpayer. The Court found that, in any event, the statute required the owner to either provide the information or respond to the tax assessor’s request and convey the basis of its inability to provide the information, within 45 days. The taxpayer could not simply choose not to respond.

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