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Lucent Technologies, Inc. v. Township of Berkeley Heights

201 N.J. 237, 989 A.2d 844 (2010)

TAXATION; CHAPTER 91 — The 180 day deadline for moving to dismiss a tax appeal for failing to comply with Chapter 91 requests applies to the time for filing a dismissal motion based on a taxpayer’s submission of false or fraudulent information, but the taxpayer can still challenge the reasonableness of an assessor’s valuation based on the data available and the reasonableness of the underlying data.

In 2001, an owner transferred its property’s title to a wholly owned single member limited liability company and entered into a leaseback agreement. Pursuant to N.J.S.A. 54:4-34, a municipality is authorized to request an accounting of income derived from an income-producing property, and the owner’s response must be received within forty-five days. Beginning in 2003, the municipality sent the owner such “Chapter 91” requests for information about the property’s income so that the municipality could calculate a tax assessment. Each time the owner responded by claiming that the property was owner-occupied with the exception of a small portion of the property occupied by another tenant. In 2005, the owner-tenant appealed the property’s tax assessment in Tax Court. The municipality served interrogatories and the owner revealed, for the first time, that it had conveyed the property to its wholly owned entity and that it was not the record owner of the property. The interrogatories also revealed that there were four subtenants, not one. In 2006 and 2007, the owner filed tax appeals. The municipality moved to have the tax appeals for all three years dismissed. The municipality claimed that the tax appeals rested on the owner’s responses to the municipality’s Chapter 91 requests, and that the taxpayer was not entitled to relief since its responses to the Chapter 91 requests were false or fraudulent. The Tax Court dismissed the owner’s tax appeals for 2006 and 2007, but declined to dismiss the tax appeal for 2005 because of the municipality’s delay in filing its motion to dismiss. Its refusal was based on Court Rule 8:7(e) which affords a municipality 180 days to file a dismissal motion. The Court found that the municipality’s motions to dismiss the 2006 and 2007 tax appeals were timely, but the motion to dismiss the 2005 tax appeal was not.

The Appellate Division granted the municipality’s leave to appeal, concluding that neither the relevant statute nor Rule 8:7(e) limited the time within which a municipality has to move to dismiss a tax appeal based on false or fraudulent information. Therefore, it remanded the matter to the Tax Court, telling it to dismiss the 2005 tax appeal, but the New Jersey Supreme Court reversed and remanded. The Supreme Court noted that the issue was whether the 180 day deadline for moving to dismiss a tax appeal for failing to comply with Chapter 91 requests applied to the time for filing a dismissal motion based on a taxpayer’s submission of false or fraudulent information. The Court found that statute was unambiguous in that it provides that if a taxpayer responds to a Chapter 91 request by providing false or fraudulent information there is no appeal from the tax assessment. The Court also noted that Rule 8:7(e) provides the guidelines for enforcing the statute and imposes a 180-day deadline for filing a dismissal motion. However, the Court noted that the rule explicitly states that the time limit does not apply in cases where the taxpayer provided false or fraudulent information. Therefore, the Court found that the 180-day deadline did not prevent the municipality from seeking to dismiss the tax appeal. The Court, however, found that even though the owner was barred from appealing the tax assessments for 2005 through 2007 because it provided false or fraudulent information, that did not end the discussion. The statute provides that a taxpayer who fails to respond within 45 days of a Chapter 91 request, or provides false or fraudulent information, cannot challenge the tax assessment. However, the taxpayer can still challenge the reasonableness of the assessor’s valuation based on the data available or the reasonableness of the underlying data. Therefore, the Appellate Division’s dismissal of the tax appeals was improper. As a result, the Court remanded the matter to the Tax Court for the limited purpose of conducting a reasonableness hearing.


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