Every year, owners of commercial and multifamily residential real estate in New Jersey may receive letters from their municipal assessors requesting income and expense information. These information requests, commonly called “Chapter 91” requests after the law authorizing them, are permissible and there may be consequences for failing to respond. The question becomes – how should a property owner respond to the tax assessor’s request for income and expense information?
One important consideration is the potential consequences of ignoring the request. Failing to respond to a Chapter 91 request may result in a severe limitation on your ability to challenge the property’s tax assessment in the year after the request is made. This is crucial to remember, particularly if your town is planning a revaluation. If your property is over-assessed in the revaluation, you may lose the ability to effectively challenge that figure for a year. Even if your town isn't planning a revaluation, with ever increasing property tax bills, losing the ability to appeal even one year can have significant tax consequences.
Another important consideration is how you should respond to the request. Many Chapter 91 requests are looking for every detail possible about your property. What is really required for a sufficient response? Is your property actually owner occupied, or will the Tax Court consider it to be income producing? Is the request actually a valid Chapter 91 request? The answers to these questions will determine whether you can safely shortcut a burdensome request, or whether you need to provide more information.
Finally, always remember the time limitation. There must be some response within 45 days of the date of the Chapter 91 request. If the final response can’t be provided within 45 days, there must be a good reason. That reason must also be communicated to the tax assessor within those 45 days.
Ultimately, how you handle your tax assessor’s request for income and expense information could be determinative as to your tax liability for the following year. The Englert Law Firm offers no-cost consultation on responses to Chapter 91 requests to help property owners respond efficiently while preserving their appeal rights.