New Jersey-2012-A2414-Introduced

An Act concerning the assessment of real property, amending R.S.54:4-35 and R.S.54:3-16, and supplementing chapters 1 and 4 of Title 54 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. R.S.54:4-35 is amended to read as follows:

54:4-35. a. The assessor shall determine his taxable valuations of real property as of October 1 in each year and shall complete the preparation of his assessment list by January 10 following, on which date he shall attend before the county board of taxation and file with the board his complete assessment list, and a true copy thereof, to be called the assessor's duplicate. Such list and duplicate shall include the assessments of personal property reported or determined pursuant to this chapter. They shall be properly made up in such manner and form required by the Director of the Division of Taxation pursuant to section 54:4-26 of this chapter, to be examined, revised and corrected by the board as provided by law.

b. In addition to the assessment list, the assessor shall prepare and file at the same time with the county board of taxation a line item comparison report, which shall list each parcel of real property for which the assessment has been adjusted, either as an increase or a decrease in value, by 20% or more from the assessment for the previous tax year. The report shall also contain a statement of explanation of the reason for the adjustment of the assessment, and the justification for making the adjustment of the assessment.

The Director of the Division of Taxation shall promulgate a model line item comparison report to be used by assessors to meet the requirements of this subsection not later than the first day of the second month next following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf: P.L.1966, c.138, s.9)

2. R.S.54:3-16 is amended to read as follows:

54:3-16. Each county tax administrator, under the supervision and control of the county board of taxation, shall be responsible for the administrative functions of the board, and, pursuant to such supervision and control, shall direct all officers charged with the duty of making assessments for taxes in every taxing district in the county. Such officers shall be subject to, and shall, in making assessments, be governed by directions issued by the county tax administrator pursuant to such rules and orders as shall be issued by the county board, in the enforcement of the objects of this title. Before making any such rules or orders, the county board shall submit them to the Director of the Division of Taxation, and no rule or order shall be considered adopted by the county board until approved by him. Each county board shall, within 90 days of the effective date of this amendatory and supplementary act, promulgate rules governing the conduct and performance of such officers. If such rules are not promulgated within the time set forth herein, the conduct and performance of such officers shall be governed by such rules as the Director of the Division of Taxation shall promulgate, which rules shall be enforced by the county board.

In addition to the other responsibilities set forth in this section, the county tax administrator shall annually review the line item comparison reports provided to the county board of taxation by assessors pursuant to the requirement of R.S.54:4-35, prior to the county board of taxation's performance of its revision and equalization functions required under R.S.54:4-46 and R.S.54:4-47.

(cf: P.L.1979, c.499, s.10)

3. (New section) The Director of the Division of Taxation in the Department of the Treasury, not later than the first day of the fourth month next following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), shall develop a methodology to identify multiple parcels of real property owned by a single entity that appear to have real property assessments lower than comparable parcels of real property in the same municipality. The methodology developed by the director shall use accumulative usable sales data, derived by the division from annual sales and property assessment data, that indicate the ratio of assessment to sale price of real property sold during the previous year, in order to determine whether any real property assessments appear to be questionable.

The director shall immediately forward information about any property assessments that appear to be questionable to the county tax board of the county in which the parcels of real property are located, for investigation to determine if the assessments are appropriate.

4. (New section) Each municipal assessor shall memorialize in writing any negotiated settlement of an assessment on a parcel of real property entered into by the owner of the parcel of real property and the municipality in which the parcel of real property is situate. A negotiated settlement shall contain all of the provisions required by the Director of the Division of Taxation in the Department of the Treasury, shall be signed by the municipal attorney on behalf of the municipality, and a copy of the signed, memorialized settlement shall be maintained in the assessor's office for the entire duration of time required by the director.

5. (New section) Each municipal assessor, in such form as shall be determined by the Director of the Division of Taxation in the Department of the Treasury, shall maintain documentation justifying each tax assessment reduction granted during the preparation of the annual tax list. The documentation required by the director shall include information about the calculation of the true value of each parcel of real property, comparable sales data that support the reduction in the assessment, and shall be maintained in the assessor's office for the entire duration of time required by the director.

6. (New section) The Director of the Division of Taxation in the Department of the Treasury, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) and not later than the first day of the fourth month next following enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), shall promulgate any rules, regulations, procedures or forms necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

7. This act shall take effect immediately.

STATEMENT

This bill would implement the real property assessment reforms recommended by the State Comptroller in his recent investigative report entitled, "Inequitable Tax Assessments in the Borough of Edgewater." This report confirmed allegations that the municipal tax assessor in Edgewater Borough in Bergen County, during the 2008 and 2009 tax years and without any supporting documentation, significantly reduced real property assessments to the benefit of a private developer, while similarly situated property owners in the same development did not receive such significant assessment reductions.

The State Comptroller recommended four statutory changes to preclude further instances of inequitable property assessments.

The State Comptroller's first recommendation concerned the adjustment of certain assessments. The State Comptroller recommended that in addition to filing tax lists with County Tax Boards each year, tax assessors should be required to file a line item comparison report, including only those tax assessments adjusted by 20% or more from one year to the next, together with an explanation and justification for the adjustments. County tax administrators, under the supervision of the county tax boards, should spot-audit a subset of these reports prior to finalizing tax assessments for the tax year.

This bill addresses this recommendation in sections 1 and 2 of the bill by amending R.S.54:4-35 to require that in addition to the assessment list, a municipal assessor must prepare and file at the same time with the county board of taxation a line item comparison report listing each parcel of real property for which the assessment has been adjusted, either as an increase or a decrease in value, by 20% or more from the assessment for the previous tax year. The report must contain a statement of explanation of the reason for the adjustment of the assessment, and the assessor's justification for making the adjustment of the assessment.

The bill also amends R.S.54:3-16 to require that the county tax administrator must annually review the line item comparison reports provided to the county board of taxation by assessors prior to the county board of taxation's performance of its revision and equalization functions required under R.S.54:4-46 and R.S.54:4-47.

The second recommendation concerned the underassessment of multiple properties owned by a single entity. The State Comptroller recommended that the Director of the Division of Taxation should develop a methodology to identify multiple properties owned by a single entity that appear materially underassessed relative to other, similarly situated properties within the same municipality. The State Comptroller recommended that properties identified should be referred to the County Tax Board to determine if the assessments are appropriate.

This bill addresses this recommendation in section 3 of the bill by requiring the Director of the Division of Taxation to develop a methodology to identify multiple parcels of real property owned by a single entity that appear to have real property assessments lower than comparable parcels of real property in the same municipality. The methodology developed by the director must use accumulative usable sales data, derived by the division from annual sales and property assessment data, that indicate the ratio of assessment to sale price of real property sold during the previous year, in order to determine whether any real property assessments appear to be questionable.

The bill also requires the director to immediately forward information about any property assessments that appear to be questionable to the county tax board of the county in which the parcels of real property are located, for investigation to determine if the assessments are appropriate.

The third recommendation concerned negotiated property assessment settlements. The State Comptroller recommended that the Division of Taxation should issue regulations requiring tax assessors to memorialize negotiated settlements and maintain them for a period of time.

This bill addresses this recommendation in section 4 of the bill by requiring each municipal assessor to memorialize in writing any negotiated settlement of an assessment on a parcel of real property entered into by the owner of the parcel of real property and the municipality in which the parcel of real property is situate. A negotiated settlement must contain all of the provisions required by the Director of the Division of Taxation, be signed by the municipal attorney on behalf of the municipality, and a copy of the signed, memorialized settlement must be maintained in the assessor's office for the entire duration of time required by the director.

The fourth recommendation concerned justification for property assessment reductions granted in the course of the preparation of the annual tax list. The State Comptroller recommended that the Division of Taxation should issue regulations requiring tax assessors to maintain documentation justifying, based upon market value, tax assessment reductions they grant in the course of preparing the annual tax list. These regulations should address, for example, the type of documentation necessary to support tax assessment reductions and the length of time the documentation must be maintained.

This bill addresses this recommendation in section 5 of the bill by requiring each municipal assessor, in the format determined by the Director of the Division of Taxation, to maintain documentation justifying each tax assessment reduction granted during the preparation of the annual tax list The documentation required by the director must include information about the calculation of the true value of each parcel of real property, comparable sales data that supports the reduction in the assessment, and must be maintained in the assessor's office for the entire duration of time required by the director.

The bill also requires the Director of the Division of Taxation, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) and not later than the first day of the fourth month next following enactment of the bill, to promulgate any necessary rules, regulations, procedures or forms to effectuate the provisions of the bill.