NJ Tax Court Clarifies Requirements for Chapter 91 Requests Involving Contiguous Lots

New Jersey senate judiciary committeeThe New Jersey Tax Court recently considered a novel question of interest to both municipalities and commercial landowners — whether a taxpayer that receives two Chapter 91 requests for two separate lots governed by a singular lease agreement has “failed or refused to respond” pursuant to N.J.S.A. 54:4-34 by having submitted income and expense information for both tax parcels albeit in the form of a single response.

The Facts of the Case

Paramus Associates, LLP/Home Depot USA Inc. v. Borough of Paramus involved the assessment of two contiguous lots owned by Paramus Associates, LLP, which contain a retail store and an adjacent parking area. The lots are one economic unit controlled by a singular lease agreement between the plaintiff and Home Depot USA Inc.

The assessor for the Borough of Paramus sent a separate request form for each lot seeking financial information for use in reaching the property tax assessments for 2012, pursuant to N.J.S.A. 54:4-34 (generally referred to as a “Chapter 91 request”). When plaintiff Paramus Associates, LLP prepared and returned the requested Chapter 91 income and expense information for the property using just one form rather than two, the Borough of Paramus moved to dismiss the tax appeal for failure to comply with the statute.

In response, the plaintiff maintained that the two tax parcels are so inextricably intertwined by virtue of being an economic unit controlled by a single lease agreement, it would be impossible to extrapolate the specific income and expense items attributable to each individual tax parcel.

The Court’s Decision

 As explained by the court, the sanction of dismissal is only appropriate when a taxpayer has “failed or refused to respond” to the assessor’s Chapter 91 request. In this case, the court concluded that the plaintiff’s actions do not warrant the harsh sanction of dismissal.

As explained by the court, “If the court accepts the argument that plaintiff’s actions constitute an outright ‘failure or refusal to respond’ it would give rise to a dismissal of the appeal under N.J.S.A. 54:4-34 despite plaintiff’s compliance with the statute in having provided income information for the property.”

“Rather, the court accepts as credible plaintiff’s contention that because Home Depot and the parking lot operate under the lease as an economic unit, the income and expense information is so intrinsically intertwined that the information for each lot could not have been separately provided. And further, that all of the income and expense information was provided for both tax parcels in a timely manner in response to Lot 8, as certified to by plaintiff.”

For more information about the law or the compliance issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.


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