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Town of Phillipsburg v. ME Realty, LLC

26 N.J. Tax 57 (2011)

TAXATION; CHAPTER 91 REQUESTS — If a municipality’s Chapter 91 request does not clearly and unequivocally indicate what information is sought, a taxpayer’s failure to respond does not bar it from appealing the related tax assessment.

A municipality sued a taxpayer, alleging that the taxpayer’s property assessment was artificially low due to a typographical error. The taxpayer filed an answer and a counterclaim challenging the assessment; however, the municipality moved to dismiss the counterclaim under N.J.S.A. 54:4-34 (Chapter 91) and New Jersey Court Rule 8:7(e).

Nine months before the suit was filed, the taxpayer had received a Chapter 91 request, from the municipality, to provide financial information about its real property, but the taxpayer did not respond. On that basis, the municipality argued that N.J.S.A. 54:4-34 precluded the Tax Court from even hearing the taxpayer’s counterclaim because the taxpayer had failed to answer the Chapter 91 request. It asks that the counterclaim be dismissed.

The taxpayer responded that the Chapter 91 request was statutorily deficient because: (1) it did not specify what information was sought, making it vague and ambiguous; (2) it failed to state the consequences for not responding; (3) it failed to provide a copy of N.J.S.A. 54:4-24; and (4) it failed to clearly identify the subject property. The taxpayer also argued that the municipality’s motion to dismiss was untimely filed under R. 8:7(e), and therefore the Court had to deny it.

The Court agreed that the municipality’s Chapter 91 request was statutorily deficient. Municipalities need to provide taxpayers with fair notice of their Chapter 91 requirements, using clear and unequivocal language. The Court analyzed previous cases and concluded that there was a two step approach to addressing a taxpayer’s obligation. First, it must be determined if the taxpayer responded to the Chapter 91 request and, secondly, whether the taxpayer had “good cause” for delaying or failing to give the requested information. If the taxpayer makes some sort of response to the Chapter 91 request, then courts deny a municipality’s motions for dismissal. However, where a taxpayer makes no response, courts will grant dismissals with only certain exceptions. The Tax Court previously held that an appeal may not be dismissed for failure to timely respond if a property owner receives a Chapter 91 request, and a response is impossible to complete, or if it is unclear what kind of response is sought. Therefore, when challenging a Chapter 91 request, taxpayers must affirmatively assert their objections. However, if the Chapter 91 request is ambiguous as to what it is looking for, then courts will be more lenient and allow appeals to proceed even when taxpayers do not respond.

In this case, the Court found that the municipality’s Chapter 91 request was deficient because it did not clearly and unequivocally indicate what information was sought. The municipality had requested information for the tax years ending December 2008/2009 and the Court found this to be ambiguous because it was subject to multiple interpretations. The Court concluded that it was impossible to answer because of how the request was interpreted. Because of the ambiguity of the request and the harsh consequence for not responding, justice required that the taxpayer be given the benefit of the doubt. Therefore the taxpayer’s failure to respond did not bar it from appealing the assessment.

Next, the Court addressed the taxpayer’s argument that the municipality filed its motion to dismiss in an untimely manner. New Jersey court rules provide that motions to dismiss for refusal or failure to comply with a Chapter 91 request must be filed no later than 180 days after the filing of the complaint, or 30 days before the trial date. The municipality filed its motion to dismiss more than 180 days after it filed its complaint. The Court looked to the plain language of the Rule, and the Rule very specifically pinpoints the filing of the complaint as the relevant reference point. Therefore the municipality’s motion to dismiss was untimely.

The Court declined to relax the Court Rule. Under New Jersey Court Rules, it is only appropriate to relax a rule if adherence to it would result in an injustice. In this case, adherence to the rule would not have resulted in an injustice. The municipality had ample time to move to dismiss the counterclaim.

Consequently, the municipality’s motion to dismiss the counterclaim was denied.

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