Reverse Tax Appeals in NJ and PA - 9 Questions Answered for When the Tax Man Comes For You

“Reverse tax appeal” is the term used for when a taxing district appeals a taxpayer’s property tax assessment. This can be a municipality or, in Pennsylvania, a school district. Targets of these reverse appeals are usually commercial properties, but there is no limitation on the kind of property that can be the subject of a reverse tax appeal. Below are some common questions that come up concerning reverse appeals.

 1) Can my town appeal my property’s tax assessment?

Yes. New Jersey law allows a municipality to challenge the tax assessment of any real estate in the taxing district, just like a property owner challenging their own assessment. In Pennsylvania, school districts also participate in tax appeals and have the right to challenge property tax assessments.

2) How will I know if my town is appealing my assessment?

Like any other lawsuit, basic due process entitles the party being sued to notice of the suit, and the opportunity to be heard by the court in their own defense. Notices of appeals are typically sent to the address on file, which is the same address to which assessment cards and tax bills are sent. However, since mail is often unreliable, if you think your property may be the subject of an appeal, you can contact your local county board of taxation (or similar body in Pennsylvania) or the New Jersey Tax Court Clerk’s office if your property’s assessment is over $1,000,000 to determine if an appeal was filed. 

3) Why would a town appeal a property’s tax assessment? Doesn’t the town’s tax assessor already set the assessments?

Yes, tax assessors set the assessments, but towns technically don’t control the tax assessor. In New Jersey, the assessor is hired and paid by the town but acts as an agent of the state. In theory, this allows the assessor to be neutral when he or she sets your tax assessment. The appeal is the only direct way for the town to have a say in the assessment. In Pennsylvania, where assessments are done by county, assessors are even farther removed from the local taxing authority.

4) Can I oppose a reverse appeal?

Yes. Just like the town can defend against a taxpayer trying to have a property’s assessment lowered, a property owner can defend against the town’s attempt to increase the assessment. 

5) I’m a tenant in a commercial property, and I pay property taxes. Can I oppose a reverse appeal?

Possibly, yes. Tenants paying a large share of property taxes can have standing to file an appeal in NJ, and, if a landlord isn’t inclined to defend a reverse appeal because they don’t pay the taxes, that tenant may want to step in. However, unless you receive tax bills directly, you probably won’t receive the notice of the appeal. Instead, you’ll have to get the notice from your landlord. A good property tax lease provision will require that the landlord provide the tenant with a copy of any such notice.

6) How do I defend against a reverse appeal?

A reverse appeal is just like a regular appeal with the roles reversed. The plaintiff must prove that the assessment is wrong and give evidence of the correct value of the property. The defendant doesn’t necessarily have to prove what the value of the property is; instead, they show that the town’s evidence is not good enough for the county board or court to grant relief.

7) What happens if the town successfully appeals my tax assessment?

If the town wins the appeal, your assessment for the tax year appealed will go up, and you will be required to pay additional property taxes for that year. Typically, such additional taxes would be paid within sixty days of the date of the final judgment.

8) Will my taxes increase permanently?

A tax appeal only addresses one year, and certain laws “freezing” an assessment from an appeal judgment can only be used by the property owner. So, a permanent increase is not automatic. It is within the tax assessor’s independent authority to increase the assessment going forward, but there is no legal obligation upon the assessor to make that change.

9) I recently purchased my property and I’ve been offered a settlement at the sale price. Should I accept?

It depends. A sale price may or may not be the best way to evaluate a property’s value for tax purposes. For example, New Jersey’s Tax Court typically determines value for investment property, such as apartment buildings, office buildings and shopping centers, by the property’s income. Sales prices involving unusual motivations, such as in an estate sale, short sale or sales between related parties are also viewed as suspect. Consult an experienced property tax appeal attorney for advice on whether to accept any settlement.

The Englert Law Firm defends against reverse assessment appeals. Reach out for a free consultation.