From the Law Library - A busy week in New Jersey Tax Court - Part 2

Our second installment from the Tax Court’s busy first week of 2021 is a twist on an exemption opinion penned by Presiding Tax Court Judge Mala Sundar, P.J.T.C. The case, Township of Freehold v. Centrastate Healthcare Services, Inc., Nos. 000047-2016 & 000048-2016 (Tax Court January 5, 2021) marks further fallout from the Tax Court’s opinion in AHS Hospital v. Morristown, 28 N.J. Tax 456 (Tax 2015), though this time falling in the favor of the taxpayer. Let’s dig in a little to this one. 

First, a bit of history. The subject property was transferred to a for-profit entity in 2008, though still used as a clinic for indigent patients. The municipality filed an appeal from the “failure to impose” an omitted assessment for 2014 and 2015. The municipality initially moved for summary judgment on the grounds that a for-profit entity was not eligible for a tax exemption. The Tax Court initially denied that motion, and then later granted it, leaving open the issue of valuation for trial. After a change in counsel, the taxpayer moved for reconsideration of the grant of partial summary judgment rescinding the exemption on the grounds that the Tax Court’s decision in another hospital exemption case mandated a dismissal, namely Borough of Red Bank v. RMC-Meridian Health, 30 N.J. Tax 551 (Tax), motion for leave to appeal den., 238 N.J. 455 (2019). In that case, the Tax Court found that a similar municipal appeal had to be dismissed, as the court lacked jurisdiction to consider the appeals. The court held that the municipality should have filed an appeal under N.J.S.A. 54:3-21 from the original assessment, and not from a failure to impose an omitted assessment. 

With that background, the outcome of the case was straightforward. Because the statute for the termination of an exemption requires the omitted assessment to be imposed in the year that the change prompting the termination occurs, the court found that there was no basis for reliance upon the standard omitted assessment procedure in a subsequent year. Rather, since the exemption had been granted for that tax year, there was no other change at the property and the township had not filed a timely appeal, the taxpayer was entitled to rely on that exemption. Since the valuation claims could also not survive, the Tax Court directed the entry of judgment dismissing the appeals with prejudice.