Proper Preparation for Tax Appeal Hearings

Before filing an appeal, it is strongly recommended the taxpayer check facts and discuss the assessment with the local municipal assessor

A taxpayer filing an appeal should consider the following questions:

1. What is the true market value of my property on the preceding assessment date of October 1?
2. Can I support my conclusion of true market value with credible evidence?
3. Is my property assessed in excess of its true market value if a reassessment or revaluation was implemented in the current tax year?
4. In an non revaluation or non-reassessment year, does the ratio of my property assessment to its true market value exceed the upper limit of the common level range?

Important Facts:

1. Tax appeals are on assessments only, not taxes.
2. Tax appeals must be timely filed on/or before April 1 (December 1 for Added or Omitted Assessments) of the tax year
3. You must know and prove the true market value of the appealed property as of October 1, pretax year.
4. True Market Value is determined by:
   1. Sales Comparison
   2. Capitalization of Income
   3. Replacement Cost
5. Municipal Tax Assessors or their representatives are required to perform a physical inspection of each property under appeal prior to a hearing and to be preset to testify as to their findings.   

In order for an assessment to be deemed excessive or discriminatory, a taxpayer must prove that an assessment does not fairly represent one of two standards:

All assessments must represent 100% of true market value as of the previous October 1, in a year following a revaluation or reassessment.

 In a non-revaluation or non-reassessment year, The assessment must exceed the common level range determined for your municipality.

The October 1 pretax date is called the annual “assessment date.”

All evidence submitted in a tax appeal should precede the assessment date, especially property sales used as comparable.

To understand the common level range you must consider what happens following a revaluation.

Once a revaluation is completed, factors such as inflation, appreciation and depreciation cause property values to increase or decrease at varying rates. Other factors may also contribute to changes in property values. Obviously, if assessments are not adjusted annually, a deviation from 100% of true market value may occur.

The New Jersey State Division of Taxation, with the assistance of local assessors, annually conducts a fiscal year sales survey, investigating property transfers that occurred in your community.  This sales data is compared individually to corresponding assessments to determine an average level of assessment in a municipality. An average ratio, sometimes referred to as the Director’s ratio, is developed to represent the assessment level in every community.

In any year, except the year in which a revaluation or reassessment is implemented, the common level of assessment is the average ratio of the district in which your property is situated, and is used by the Tax Board to determine the fairness of your assessment.

In Morris County, in a revaluation or reassessment year, the common level is 100% and is used by the Morris County Board of Taxation to determine the fairness of your assessment.

In 1973, the New Jersey Legislature adopted a formula known as Chapter 123 to test the fairness of an assessment. Once the Tax Board has determined the true market value of a property during an appeal, they are required to use this formula and automatically compare the true market value to the assessment.

If the ratio of the assessment to true value exceeds the average ratio by 15%, then the assessment is automatically reduced to the common level.

However, if the assessment falls within a common level range, + or – 15%, of the average ratio, no adjustment will be made.

If the assessment to true value falls below the common level range, the Tax Board may increase the assessment to the common level!

This test can only be conducted when the taxpayer supplies sufficient evidence to enable the Morris County Board of Taxation to determine the true market value of the property subject to the appeal.

You should inquire into your district’s average ratio before filing a tax appeal. This ratio changes annually on October 1, for use in the subsequent tax year.

EXAMPLE:

• Director’s Ratio = 85%
• Common Level Range = 72.25% - 97.75%
• True Value = $95,000
• Assessments = $90,000
• Ratio = 94.74% ($90,000/$95,000)
• Judgment = No Change

A tax appeal hearing is a public meeting presided over by a tax commissioner or commissioners. The Morris County Board of Taxation consists of 5 members appointed by the governor. The Tax Board Commissioners are appointed primarily to hear disputes involving assessments.

Once you have filed your tax appeal, a hearing before the Morris County Tax Board is scheduled. The municipality is the opposing party and will be represented by the municipal attorney. The assessor or an appraiser may also appear at your hearing as an expert witness.

At the hearing, taxpayers are required to present their opinion of true market value as of October 1 of the pretax year.

Yes, a hearing is always necessary.

If the assessor, municipal attorney, and taxpayer agree to a settlement or the issues are otherwise resolved, it may not be necessary for you to attend your hearing, particularly if a signed settlement stipulation is submitted to the Tax Board for their approval, prior to the hearing.

Tax appeal hearings are generally held after the April 1^st and December 1^st (for added and omitted assessments only) annual appeal filing deadlines.

Hearings are scheduled during the work week starting at 9:30 A.M. Adjournments are generally denied. It is suggested that you make every attempt to attend your hearing. If you miss your hearing and have not received a postponement, the case will be dismissed for “lack of prosecution”. Judgments made for “lack of prosecution” are final for the current year and may not be further appealed to the Tax Court.

The most credible evidence is comparable sales of other property of a similar type in your neighborhood. Remember, if you are going to discuss comparable sales, a listing of 3 to 5 sales must be attached to all copies of your appeal at the time of filing. Your assessor must receive complete details of your comparables at least 7 days in advance of your hearing in order for them to be discussed.

Comparable means that most of the characteristics between your property and the neighboring sale are similar. You should be knowledgeable of the conditions of the sales you cite and be able to give a full description of the properties. Some of the characteristics that would make a similar property comparable are:  sales price, similar square footage of living area measured from the exterior, similar lot size or acreage, proximity to your property, the same zoning and same use (e.g. duplex in a duplex zone), and the same age of the structure.

The taxpayer must be persuasive and present creditable evidence. Creditable evidence is evidence supported by fact, not assumptions or beliefs. Photographs of both the subject property (the property subject to the appeal) and comparables are useful in illustrating your argument. Factual evidence concerning special circumstances is necessary. For example, if the property cannot be further developed for some reason, evidence to that effect must be provided.

It is necessary for the taxpayer to prove at the onset that the assessment is in error. It is also necessary for the taxpayer to suggest a more appropriate value. This is accomplished by telling the Tax Board the market value of the property as of October 1, of the pre-tax year.

You cannot appeal the taxes on your property since the taxes are the result of the local budget process. Nor will other assessments be compared to yours. You must pay the collector all taxes and municipal charges up to and including the first quarter of taxes due for the current year in order to be granted a hearing. Remember, the burden is on you, the appellant, to prove that your assessment is unreasonable, excessive, or discriminatory. 

Yes, but it is not the sole determinate to value and does not mandate a change in assessment.

An assessment is an opinion of value.

Uniformity of treatment dictates that minor adjustments not be made simply due to a recent sales price. For various reasons the subject’s sale price may not be either conclusive evidence of the property’s value or binding on the Tax Board. An examination of the circumstances surrounding a sale is always important.

No. All meetings of the Morris County Board of Taxation are open and public meetings.

Yes. Commercial property and properties which derive rental income from four or more units must supply an income statement on special forms provided by the Tax Board. Since the income generated by a property has a direct bearing on the property’s marketability and value, this evidence may be useful in arguing both sides of an appeal.

If the petitioner is a legal entity, such as a corporation, partnership, LLC, trust etc., the appeal must be prosecuted by an Attorney-At-Law admitted to practice in the State of New Jersey, unless the subject property’s prior year taxes were less than $25,000, in which case the petitioner can appear on his, her, or its own behalf.

Your municipal assessor and any New Jersey licensed or certified appraiser is considered an expert as to valuation of real estate, to the limits of the licensing or certification status from the State of New Jersey. Other appraisers may qualify as experts before the Board of Taxation, subject to the Board’s discretion as to the appraiser’s education, experience, professional association affiliation and other factors.

If you intend to rely on expert testimony at your hearing, you must supply one copy of an appraisal report to the assessor, and five copies of the appraisal report to the Morris County Board of Taxation, at least 7 days in advance of the scheduled hearing. The appraiser who completes the report must be available at the hearing to give testimony and to afford the municipality an opportunity to cross-examine the appraiser.

The Morris County Board of Taxation will usually render a decision 6 to 8 weeks after hearing. Once judgment is rendered, the Tax Board loses its jurisdiction in these matters.

Yes. If you are dissatisfied with the judgment rendered by the Morris County Board of Taxation, you will have 45 days from the date your judgment was mailed to file a further appeal with the Tax Court of New Jersey, P.O. Box 972, Trenton, NJ 08625-0972. Telephone number: (609) 815-2922.