The Law Office of Michael D. Mirne Announces Information on Winning Your Tax Appeal while Avoiding Seven Common Mistakes

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Unrepresented taxpayers should remember to avoid these 7 common errors when presenting their tax appeals

The county tax boards throughout New Jersey will be soon be starting another year of tax appeal hearings. Tax Appeal hearing dates are grouped by municipality, and there are often several dozens of hearings for a single town scheduled on the same day. Therefore, we very often get an opportunity to hear unrepresented taxpayers presenting their cases while we wait for our own cases to be reached.

While taxpayers do not, in many cases, need attorneys to represent them at the tax appeal hearings, it is crucial for unrepresented taxpayers to become familiar with the tax appeal process before their hearings, in order to avoid problems that may cause them to lose their tax appeals. The following is a list of seven common errors we often hear taxpayers make during their tax appeal hearings, along with some of our recommendations of how to avoid them:

1. Do not attempt to use other assessments as evidence.
Very often, taxpayers will want to talk about their neighbors’ houses, which are larger and nicer than their houses, but with lower tax assessments. The commissioner(s) presiding over the tax appeal hearing, however, will not allow any evidence of other assessments to be introduced in the tax appeal hearing. A lower assessment on a superior house may actually mean that the superior house was under-assessed. But it is not evidence of what the subject property is worth.

Accordingly, evidence and testimony about other people’s tax assessments cannot be allowed in the tax appeal hearing. In order for a taxpayer to prove an over-assessment, he or she should be ready to discuss prices of comparable (i.e.; similar) properties that sold during the appropriate time period. Preferably, the taxpayer should retainer an appraiser, who can testify about comparable properties, as well as the arithmetic adjustments used in the analysis.

2. Do not make your own adjustments to comparable sales
For nearly all tax appeals, the date of valuation will be October 1 of the pretax year (i.e.; the year prior to the year for which the tax appeal is sought). The Tax Board will generally consider sales that occurred up to twelve months prior to the date of valuation, and will generally even consider sales that occurred in October through December of the pretax year, under the theory that the comparable property was probably under contract as of October 1.

There are also a lot of sales that are designated in the tax book with an “NU Code,” which is very often indicative of the assessor’s presumption that the sale price does not reflect the true market value of the property, and hence is “unusable.” Examples of unusable deed transactions include short sales, bank sales, estate sales, and sales to members of the family. In all, there are 33 different NU Codes, which have been historically used to exclude certain “suspect” sales from being used to calculate the Director’s Ratio. However, many of these sales are also excluded from use in a tax appeal.
In some cases, unfortunately, there are not many usable comparable sales, so it is very common for taxpayers to attempt to testify about sales of properties that are not comparable and then try to explain their perceived adjustments for location, size and amenities. However, in these cases, where the properties being offered as evidence are not at all comparable to the subject property, the taxpayer will be precluded from offering any opinion as to the adjustments that may need to be made to the “comparable” sale in order to prove the value of the subject property. That type of evidence would require the taxpayer to submit an appraisal, and have a licensed appraiser present to testify before the Tax Board as to any differences between the properties and the mathematical adjustments that were made. Please also note that in order for an appraisal to be admissible, it must have been prepared for tax appeal purposes, and it must bear the October 1 date of valuation will be allowed as evidence.

3. Make sure your evidence is submitted on time!
Evidence used in property tax appeals can include a variety of different types of documents, usually including appraisals and comparable sales reports, but sometimes photographs, income and expense statements, environmental reports, wetlands delineations, and a myriad of other items are offered to prove that a property is over-assessed. All evidence offered before the Tax Board must be submitted at least 7 days prior to the date of the hearing. Please note that counties that use the electronic filing system for tax appeals (Burlington, Hudson, Monmouth and Union) interpret the 7-day time frame to mean 8-days, since the system does not count the day of submission. In all cases, the Tax Board will reject evidence that was not submitted during the required time frame. We often see taxpayers who want to discuss comparable sales that were not submitted, or submitted late. Unfortunately, the Tax Board will not allow any discussion pertaining to any evidence that was submitted late. Occasionally, even assessors will show up with late evidence. In the interests of fairness to all parties, that evidence should also be rejected. We note that one possible exception may exist for photographs, which are often allowed, even if they were not submitted prior to the hearing.

4. Do not discuss the increase in assessment
Taxpayers often want to discuss their increases in assessments. This is especially common in towns that have recently undergone a revaluation or re-assessment. In those cases, where the municipality had been assessing its properties based on a small percentage of true value, and where the tax rates had been inflated to compensate for the low assessments, some taxpayers erroneously that the substantial increase in assessments will result in large increases in their property taxes. However, this is usually not the case, since an increase in everyone’s assessment will result in a decrease of the overall tax rate and will, therefore, net only nominal changes to the overall tax revenue for the municipality. More importantly, taxpayers should be note that the Commissioners will disregard any discussion of the increase in assessments. The Tax Board will only consider whether the current assessment (or equalized assessment) exceeds the value of the property. The increase in assessment or amount of the prior assessment cannot be considered.

5. Do not discussing the allocation of Land and Improvement
Most taxpayers have noticed that there are two different values listed above their assessments. These represent the land assessment and the improvement (i.e.; building) assessment. The separation of the land assessment and the building assessment serves an administrative function for the tax assessor, but it is not admissible as evidence in a tax appeal proceeding. The only consideration for the Tax Board is whether the total assessment exceeds the total value of the property.

6. Do not talk about taxes during your tax appeal hearing
Unrepresented taxpayers often testify that their taxes are too high and they cannot afford to pay the real estate taxes for their homes. Unfortunately, the amount of taxes being paid is not admissible in a tax appeal hearing. Since real estate taxes are computed by multiplying the tax rate by the assessment, the taxpayer can only reduce taxes by showing that the assessment is incorrect. Any discussion of the tax rate or the total taxes being paid will not be allowed as evidence.

7. Do not rely on just criticizing the municipality’s evidence
In a tax appeal hearing, it is the taxpayer who bears the burden of proving that his or her property is over-assessed. Another way of saying this is that the municipality is afforded the “presumption of correctness.” In the event that the assessor testifies about comparable sales for properties that the taxpayer feels are superior to the subject property, the taxpayer (or the attorney for the taxpayer) should point out the differences between the subject property and the comparable properties. However, many taxpayers rely too heavily on trying to find flaws with the assessor’s evidence, and they lose sight of the fact that it is still the taxpayer’s burden to prove a case. Therefore, while it is often a good idea for a taxpayer to demonstrate to the Tax Board that the Tax Assessor’s evidence is flawed, the taxpayer still cannot prevail unless he or she can prove to the Tax Board that the taxpayer’s evidence is better.

Please keep in mind that Monmouth County Tax Appeals are generally due by January 15, and appeals for the remainder of counties are generally due by April 1. For appeals of added/omitted tax assessments, the deadline is generally December 1.

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Michael Mirne
Law Office of Michael D. Mirne, L.L.C.
+1 (732) 859-8489
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