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Sun Pipe Line Co. v. Township of West Deptford

25 N.J. Tax 466 (2010)

TAXATION; APPEALS — The Tax Court is not authorized to reduce or suspend a taxpayer’s real property tax obligations while an appeal is pending even though taxes had already been paid with respect to the property.

The owners of an oil refinery contested their property’s tax assessment. They had purchased the property in 2004 for $111,000,000. In 2010, the municipality’s average assessed ratio was 0.5562 of true value, so that the assumed marked value of the property was approximately $223,000,000. In addition, pursuant to N.J.S.A. 54:4-1, the machinery and equipment used in processing the oil were also subject to taxation. The equipment was assessed at approximately $26,000,000 and the market value of the machinery and equipment was approximately $47,000,000.

In October 2009, the owners announced that they would cease all operations at the refinery in order to reduce business losses, and as of November 2009 all processing units at the refinery were shut down. In January 2010, the owners sent a letter to the municipal tax assessor advising him that they ceased refining activities prior to December 31, 2009 and therefore they should not be subject to the additional tax on the machinery and equipment as it was no longer in use. The assessor did not respond to the owners and did not reduce the tax assessment for 2010.

The owners filed tax appeals challenging the assessments for calendar year 2010. At the time the complaints were pending, the owners paid all of the taxes and charges due for the properties. They then made a motion for an order reducing their taxes on the property while the appeals were pending, beginning with the tax payment due August 1, 2010. The Tax Court denied their application. The owners’ request was based on two statutes. The N.J.S.A. 54:51A-1, which provides that, at the time a tax appeal is filed, all taxes then due and payable for the year in which a review is sought must be paid. It also provides that the Tax Court may relax the tax payment requirement and fix the terms of payment as interests of justice require. The second statute, N.J.S.A. 54:3-27, was similar, and allows the county tax board to relax the tax payment requirement in connection with a tax appeal and allows the court to hear the tax appeal without the taxes being paid, if it is in the interests of justice.

The Tax Court noted that the statutes require a taxpayer to pay its real estate taxes while an appeal in pending in order to assure the flow of tax revenue to the municipalities while appeals are pending. Local governments would have difficulty budgeting and could not function properly if tax revenue was being withheld while taxes were being appealed. The statutes provide a measure of relief and allow the relaxation of the payment requirements as a prerequisite for appealing taxes in the interests of justice. However, the owners here had already paid the taxes as required and instead were seeking to use the statutes to reduce their tax obligations while the appeal were pending. This was not permitted within the plain meaning of the statute.


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