Taxation Law Section

When an ‘Error’ Presents an Opportunity: The Impact of William L. Collins 1998 Trust v. Borough of Cresskill

By David B. Wolfe, Esq posted 10-24-2014 14:31

  

Originally published in the Taxation Law Section Newsletter Vol. 34, No. 1/October 2014

When an ‘Error’ Presents an Opportunity:

The Impact of William L. Collins 1998 Trust v. Borough of Cresskill

by David B. Wolfe and Thomas S. Dolan

An Appellate Division decision may expand the availability for relief under the correction of errors (COE) statute in property tax matters. The COE statute, at N.J.S.A. 54:51A-7, allows complaints to correct typographical errors, transposing errors, and mistakes in property tax assessments, which do not involve “matters of valuation, involving Assessor’s opinion or judgment.” Importantly, a COE complaint can be filed at any time within the tax year or subsequent three years of the error, meaning a COE complaint is not bound by the strict filing deadlines associated with other property tax appeals. It is also the only context in which taxpayers can seek retroactive relief in property tax matters and does not require that a taxpayer pay its taxes in order to maintain its appeal. 

In William L. Collins 1998 Trust v. Borough of Cresskill,1 a per curium opinion, the Appellate Division reversed the dismissal of a correction of errors complaint based upon a mistake in the square footage of a residential property. The error was made by a revaluation company, which increased the livable area by 2,633 square feet. This figure was adopted by the tax assessor without further analysis and recorded on the property record card. Upon learning of the mistake, the taxpayer filed a COE complaint seeking retroactive relief for the taxes paid for the square feet that both parties agreed did not exist. In dismissing the COE complaint, the tax court held that the error was not correctable—even though the parties agreed on the error in square footage—because the correct assessment required use of the assessor’s judgment and the correct assessment was not readily inferable.

The Appellate Division reversed the dismissal, relying on the New Jersey Supreme Court’s seminal decision in Hovbilt, Inc. v. Township of Howell.2 In Hovbilt, the Court held that the COE statute should be “liberally” construed to cover “mistakes in assessments that are indisputable, and cannot plausibly be explained on the basis of an exercise of judgment or discretion.”3 However, the Court held that the correct assessment “must readily be inferable or subject to ready calculation” in order for relief to be available under the COE statute.4 The requirement that the correct assessment be readily inferable or subject to ready calculation has been the basis upon which many tax court decisions have declined to allow relief under the COE statute, despite the Court’s holding that the statute be liberally construed.

In William L. Collins 1998 Trust v. Borough of Cresskill, the Appellate Division noted the assessor simply accepted the revaluation company’s incorrect measurement and did not exercise his judgment, expertise or discretion in setting the original assessment. The Appellate Division reasoned the taxpayer’s correct assessment was readily inferable because “all that needs to be done is arithmetic” and to “have the assessor apply the myriad assessment factors already on the property record card to the correct square footage.”5 The Court concluded that the taxpayer “does not contest the multiplier and added values; it merely challenges the underlying square footage used as the basis for the calculations.”6

The Appellate Division’s liberal interpretation of the statute to errors of square footage potentially opens the door for plaintiffs to file complaints under the COE statute for appeals that may have been barred by failure to file or failure to pay taxes. It may also present an opportunity to challenge assessments based solely on square feet and unrelated to value. It is not yet clear how the tax court will interpret the potentially broad reach of this decision, but taxpayers and counsel may want to review appeals and consider their options accordingly. 

David B. Wolfe and Thomas S. Dolan practice in the property tax department at Skoloff & Wolfe, P.C. in Livingston, where they focus their practice on representing taxpayers in significant property tax matters.  

Endnotes

  1. 2013 WL 1858780 (App. Div.), certif. denied, 216 N.J. 14 (2013).
  2. 138 N.J. 598 (1994).
  3. 3.Id. at 618.
  4. 4.Id. at 619.
  5. 5.Id. at *4.
  6. 6.Id. at *5.   

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