In an effort to streamline the tax appeal process and address systemic issues affecting property tax assessments, the New Jersey Legislature has introduced three significant bills.
S3967: Revamping Tax Appeal Criteria
The first bill, S3967, proposes revisions to the criteria for filing a tax appeal directly with the Tax Court. Currently, property owners with assessed valuations of $1,000,000 or more can directly file an appeal with the Tax Court. However, this new bill seeks to limit this privilege to specific property classifications. Only Class 4 commercial properties, industrial properties, and apartment buildings or complexes that had a property tax bill of $50,000 or more in the prior tax year would be eligible for direct appeals.
The bill’s intention is to direct more tax appeals to county boards of taxation, offering an alternative process for property owners who do not meet the new criteria. If taxpayers disagree with the county board’s decision, they still retain the right to appeal to the Tax Court.
S3968: Addressing Conclusive and Binding Effect
The second bill, S3968, addresses the conclusive and binding effect of county board of taxation or Tax Court judgments on municipalities. According to the proposed legislation, if a municipality’s assessor implements an annual reassessment or another form of district-wide assessment review approved by the county board of taxation, the conclusive and binding effect of previous judgments would not apply for two additional tax years.
This measure aims to accommodate situations where property assessments are significantly revised to reflect current market values. By offering flexibility in these circumstances, the bill seeks to ensure fair and accurate assessments without being bound by previous judgments that may not be applicable to such unique cases.
S3972: Restructuring Property Assessment Dates
The third bill, S3972, proposes a comprehensive restructuring of the property assessment schedule in New Jersey. Currently, municipal tax assessors file the tax list with the County Board of Taxation, which then sets the local tax rates. Assessment appeals are filed by property owners on April 1 (or May 1 in cases of municipal-wide revaluation/reassessment) and are decided by the County Tax Board by the end of July.
However, this timeline has been problematic, leading to reduced assessments and lower tax bases later in the year. As a result, there are undercollections of property taxes for funding the current year’s operations. The proposed bill suggests rescheduling property assessment appeals to occur before calculating the local property tax rate. By doing so, municipalities can have a more accurate tax rate that aligns with local budgetary needs and reflects the true value of the tax base.
The New Jersey tax reform bills—S3967, S3968, and S3972—present a comprehensive approach to address various challenges in the state’s tax system. While S3967 aims to refine the criteria for tax appeals, S3968 provides flexibility in judgment application, and S3972 tackles the timing of property assessments. Together, these bills strive to create a fairer and more efficient tax system that benefits property owners, municipalities, and the state’s overall fiscal health.
The experts at Ryan will continue to monitor the progress of these bills and the impact they could have on commercial property owners. If you have any questions, reach out to one of our local experts today.
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