TAX COURT OF NEW JERSEY. May 1, 2012

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1 TAX COURT OF NEW JERSEY 153 Halsey Street CHRISTINE M. NUGENT Gibraltar Building - 8 TH Floor JUDGE Newark, New Jersey (973) Fax: (973) Henry LaCap, Esq. Crossroads Corporate Center One International Boulevard Suite 400 Mahwah, New Jersey Paul Tannenbaum, Esq. Zipp & Tannenbaum, L.L.C. 166 Gatzmer Avenue Jamesburg, New Jersey May 1, 2012 Re: United Parcel Service v. Secaucus Town Docket No Dear Counsel, This matter comes before the court on defendant s motion to dismiss the complaint on the grounds that the property owner failed to respond to a request for income and expense information made pursuant to N.J.S.A. 54:4-34 ( Chapter 91 ). The motion before the court is opposed. For the following reasons, defendant s relief is denied. Findings of Fact and Procedural History On March 25, 2011, plaintiff United Parcel Service ( UPS ) filed a Complaint, which was a direct appeal to the Tax Court, regarding the assessment for the 2011 tax year for the property located at 493 County Avenue, Town of Secaucus, also known as Block 58, Lot 9.02 (the subject property ). On September 21, 2011, defendant filed a motion to dismiss the appeal for failure to respond to the assessor s Chapter 91 request. *

2 Accompanying the motion papers, defendant provided the certification of the Secaucus assessor, Michael Wm. Jaeger. According to Mr. Jaeger, on or about September 1, 2010, he sent a Chapter 91 request for income and expense information to the owner of the subject property by certified mail and included a copy of the statute, N.J.S.A. 54:4-34. Attached to the certification defendant provided copies of certified mail receipts and an income and expense form which the assessor indicated had been returned to the assessor by the plaintiff in response to the assessor's mailing. 1 There was no income and expense information included with or written on the actual form, instead the words owner occupied had been handwritten under the income section. Although a copy of N.J.S.A. 54:4-34 was not included with defendant s motion papers, the assessor claims that the statute was sent with the Chapter 91 request. Plaintiff opposed the motion because the assessor s request failed to include a copy of the statute, and there was no cover letter or instructions included with the form. Mr. Jaeger filed a supplemental certification and reiterated his claim that a copy of the statute had been provided with the request. He further certified that a copy of the Chapter 91 request sent by his office had been misplaced and could not be located. The assessor provided a copy of a sample request with the supplemental motion papers and certified that the same request is sent to all taxpayers including plaintiff. He stated that the sample request is identical to the request he sent to plaintiff, with two differences. On the top of the sample income and expense statement and the top of the sample cover letter, a label indicating the owner s name and address was affixed which reads: New B:58 L:2 4B PROPERTY LOC: 530 SECAUCUS RD HARTZ MTN % DANIEL YOUNG INT L 1 The court will refer to the form returned by the taxpayer to the assessor and attached to defendant s initial motion papers as the actual form. 2

3 400 PLAZA DRIVE SECAUCUS, NJ Mr. Jaeger claims that the form sent to plaintiff was identical to the sample form except that it read Block 58 Lot 9.02 in the area that requested block and lot information, and the address 493 County Avenue was printed in the area which identified the property. Mr. Jaeger also states that the request was addressed to the owner of record, Bt. Newyo LLC % Tax Department, P.O. Box 28606, Atlanta, GA and mailed to that address. In comparing the actual form, returned by plaintiff to the assessor and included with defendant's original motion papers, and the sample form which was a part of defendant's supplemental submission, it is clear that the two income and expense forms are not the same. The top of the sample form is split into two heading columns. On the left side there are spaces for the financial reporting period, the name of the person completing the form, the title/position, and daytime phone. On the right side there are spaces for block and lot, owner, date the form was completed, and signature. The form then contains instructions for completion followed by numbered sections broken down by parts. The actual form returned to the assessor by the taxpayer is entirely different. It includes a heading which reads Tax Assessor, Municipal Government Center, Secaucus, New Jersey Neither the subject property nor any other property is identified anywhere on the form. The form contains a different set of instructions to the taxpayer and blank lines for the taxpayer to provide specific information, including the block, lot, property location, owner of record, and mailing address. There are no numbered sections. The form reads Income Information, followed by the words Tenant and Lease Commencement Date and then lease information is requested. 3

4 Defendant contends that the information provided by plaintiff on the actual form returned to the assessor is false because the property is not owner-occupied. According to the assessor, plaintiff is a tenant of the property and a party to a lease agreement with Bt. Newyo, LLC, the property owner of record, as the successor-in-interest to Edison Corp. The assessor s belief is based on the case Edison Corp. v. Town of Secaucus, 17 N.J. Tax 178, 180 (Tax 1988), which makes reference to a lease between UPS, as tenant at the subject property, and Edison Corp., as the property owner, dated December 10, Plaintiff contends that (1) its response is not false because the property is, in fact, owneroccupied, and (2) the assessor's request was defective because it did not include a copy of N.J.S.A. 54:4-34 or include any cover letter or instructions stating the relevant period for which the information was sought. In support of its contention that the subject property is owneroccupied, plaintiff submitted the certification of Michael A. Hazen, attorney for UPS. Mr. Hazen states that BT Newyo, LLC is a wholly owned subsidiary of UPS from whom UPS leases the subject property, and that both entities have the same mailing address. According to Mr. Hazen, defendant and the assessor were aware of this fact and the assessor listed the property as owner-occupied in his records. He further asserts that the tax appeal covers Block 58 Lot 9.02, as well as Block 59 Lot 1.02, yet the motion papers, including the Jaeger certifications, address the first Block and Lot only. Plaintiff provided the certification of the UPS property manager, Mohammed F. Siddiqui, appended to Mr. Hazen s certification. Mr. Siddiqui states that the request received by UPS did not have a copy of the statute, a cover letter, or any other instruction sheet. There was a form provided but it did not indicate a time frame or financial reporting period for which the income and expense information was sought. In fact, the form did not even contain a blank space for 4

5 inclusion of a time period. Had a copy of the statute or a clear instruction sheet been provided, Mr. Hazen argues plaintiff may have thought differently or restated its response. Mr. Hazen also argues that the sample request attached to Mr. Jaeger s first certification cannot establish defendant s claim that a routine practice of strict compliance with the statute was followed in this matter. The sample request included a label for a different property location and different addressee in the upper right hand column, and it was accompanied with a cover letter with the same mailing label, and a copy of N.J.S.A. 54:4-34 was included with the sample request. While defendant claims the sample request is identical to what the assessor sent to plaintiff (the only difference being that the form he sent to plaintiff had a mailing label attached that corresponded to the subject property s location and owner of record), the sample form and the actual form are not the same. Relying on Cassini v. Orange City, 16 N.J. Tax 438 (Tax 1997), plaintiff asserts that defendant did not establish that the request was made in clear and unequivocal language nor did the assessor strictly comply with the statute in making the request. Findings of Law The purpose of the Chapter 91 request is to assist the assessor s collection of information for use in establishing value for income producing property, which value is generally determined by the capitalization approach. Terrace View Gardens v. Twp. of Dover, 5 N.J. Tax 469 (Tax 1982), aff d o.b., 5 N.J. Tax 475 (App. Div.), certif. den., 94 N.J. 559 (1983). The governing statute, N.J.S.A. 54:4-34, reads as follows: Every owner of real property of the taxing district shall, on written request of the assessor, made by certified mail, render a full and true account of his name and real property and the income therefrom, in the case of income-producing property... and if he shall fail or refuse to respond to the written request of the assessor within 45 days of such request... the assessor shall value his property at such amount as he may, from any information in his possession or available to him, reasonably determine to be the full 5

6 and fair value thereof. No appeal shall be heard from the assessor s valuation and assessment with respect to incomeproducing property where the owner has failed or refused to respond to such written request for information within 45 days of such request.... The income and expense information is requested for use in setting the assessment and is designed to assist the assessor in the first instance, to make the assessment and thereby... to avoid unnecessary expense, time and effort in litigation. Ocean Pines, supra, 112 N.J. at 7, quoting Terrace View Gardens, supra, 5 N.J. Tax at By statute, no tax appeal shall be heard in the case of a taxpayer who fails to respond to a Chapter 91 request. N.J.S.A. 54:4-34. Given the severity of the sanction, the courts require strict adherence to the statutory requirements. The property owner must be adequately notified of its obligations. Great Adventure, Inc. v. Twp. of Jackson, 10 N.J. Tax 230, 233 (App. Div. 1988) ( the severity of the penalty for noncompliance provided by N.J.S.A. 54:4-34, namely, the taxpayer s loss of his right to appeal the assessment, requires a strict construction of the statute. ) As part of the assessor s obligation, the request must be framed in language that is both clear and unequivocal so that the taxpayer may understand its obligation to respond. Cassini, supra, 16 N.J. Tax 438. As the court in Cassini explained: N.J.S.A. 54:4-34 confers authority upon the tax assessor to determine the scope of information to request from a taxpayer and a corresponding duty to give the taxpayer clear and unequivocal notice of the specific information which must be submitted. Tax assessors are experts in the field of real estate valuation while the owners of income producing properties include not only substantial business enterprises but also small business persons who may have difficulty reading complex and confusing forms and may lack ready access to legal advice. Consequently, the assessor s request notice to the taxpayer must be clear cut. [Cassini, supra, 16 N.J. Tax at 447, citing Summerton Shopping Plaza v. Manalapan Twp., 15 N.J. Tax 173, 177 (App. Div. 1995).] 6

7 Recent Tax Court decisions addressing Chapter 91 have emphasized the burden on assessors and municipalities rather than the burden on taxpayers. Town of Phillipsburg v. ME Realty, LLC, 26 N.J. Tax 57, 67 (Tax 2011), citing Tri-Martin Assocs. II, LLC v. City of Newark, 21 N.J. Tax 253, 261 (Tax 2004); Green v. East Orange, 21 N.J. Tax 324, ; Thirty Mazel, LLC v. City of East Orange, 24 N.J. Tax 357, 362 (Tax 2009) ("'strict obligations' on the assessor"). The failure of a property owner of income producing property to adequately respond to a tax assessor s Chapter 91 request within the forty-five day period will trigger a sanction limiting the right of appeal. See Ocean Pines Ltd. v. Borough of Point Pleasant, 112 N.J. Tax 1 (1988). In the instant matter, plaintiff does not deny that the property owner received a copy of a mailing from the assessor, in fact, plaintiff returned the form. However, plaintiff contends that the request was defective, and as such, the appeal should not be dismissed. That defendant did not retain and include a copy of the request sent to plaintiff does not defeat the motion to dismiss in the absence of some basis by plaintiff for denying the motion. But, the assessor is required to provide the taxpayer with a copy of the statute, and the parties here disagree whether the requirement was met. Further, plaintiff claims that the actual request was not clear and unambiguous, as required under Cassini, because it did not specify the time period for which the information was sought and no other instructions were provided. The actual form also did not identify the property for which the information was sought. While the assessor certified that it sent identical requests to all of the taxpayers, the actual form sent to plaintiff and the sample form produced by the assessor are not the same form, which is proof that the assessor did not send a copy of the sample form to this taxpayer. In fact, the assessor relied on the information submitted by the taxpayer on the actual form to support the 7

8 within motion thereby contradicting the assertion that he used the sample form when requesting plaintiff's financial information. This further undermines defendant s assertion that the assessor sent identical requests to all taxpayers and that he included a copy of N.J.S.A. 54:4-34 in the request to plaintiff. Instead the proofs lend credibility to plaintiff s claim that a copy of the statute was not in fact provided with the request. The court accepts plaintiff s contention that this discrepancy defeats any claim by defendant that it had established a routine practice of strict compliance with the requirements of the statute. In addition, the form that the taxpayer returned to the assessor does not identify the property nor does it provide the time period for which the information is sought, and it makes no reference to the statute. Plaintiff states that no other cover letter or instructions were provided, and defendant has produced no evidence to rebut that claim. This court finds that the mailing failed to provide the taxpayer with notice of its obligations under the statute. As espoused by the court in Cassini, the government must speak in clear and unequivocal language where the consequence of non-compliance is the loss of the right to appeal assessments. The taxpayer should not bear the burden of divining the assessor s intent or purpose in sending a Chapter 91 request. Cassini, supra, 16 N.J. Tax at 453. See also, Green v. East Orange, 21 N.J. Tax 324 (Tax 2004) (the court denied the defendant s motion to dismiss for failure to respond to the Chapter 91 request, in part, because the assessor failed to properly identify the property.) Defendant argues that the taxpayer submitted false information regarding the status of the property and should be barred from proceeding on the complaint in reliance on SKG Realty Corp. v. Twp. of Wall, 8 N.J. Tax 209 (App. Div. 1985). There the property owner was the wholly-owned subsidiary of a parent corporation. Id. at 211. The property owner did not respond to a Chapter 91 request on the theory that the property was effectively owner-occupied 8

9 and did not produce income. Ibid. The Appellate Division affirmed the order of the Tax Court granting the municipality s motion to dismiss under Chapter 91. Ibid. The court explained that: [w]here real property is owned by one entity and occupied by a related entity, the manner in which they order their fiscal relationship may reduce the usefulness of the income accounting required by the statute. But, some or all of it may have utility, and it is up to the assessor and not the taxpayer to decide whether to consider the information furnished. [Ibid.] Based on the certification of plaintiff s counsel, Michael A. Hazen, Esq., because plaintiff UPS leases the subject property from its wholly owned subsidiary, BT Newyco, LLC, a full response to the income and expense request may have been required; the failure of which could have resulted in dismissal of plaintiff s tax appeal. See SKG Realty Corp, supra, 8 N.J. Tax 209. However, because the assessor sent a form that did not identify the property, failed to include a cover letter or clear instructions regarding what information was requested and why, and did not supply the taxpayer with the statute, the mailing did not constitute a valid request under N.J.S.A. 54:4-34. As such the complaint is not subject to dismissal for plaintiff's failure to provide financial information in the manner required by N.J.S.A. 54:4-34. Defendant s motion to dismiss is denied. An order is enclosed. Very truly yours, Christine M. Nugent, J.T.C 9