United States

New Jersey rulings address taxpayer procedural responsibilities

TAX ALERT  | 

The New Jersey Tax Court has issued two rulings highlighting the importance of understanding and complying with the state’s procedural rules and deadlines. The takeaways from a procedural standpoint should come as no surprise. If you do not show up when and where you are supposed to, you will lose. If you meet the statutory deadlines, you create an opportunity to present your case. Most importantly, the best facts and arguments in the world do not mean anything if you do not follow the right procedure to get your facts seen and arguments heard.

In the first ruling, the tax court considered a narrow procedural issue that is shockingly common. The taxpayer in the case appealed against his property tax assessment, and did not show up for his hearing before the Somerset County Board of Taxation. The board dismissed his claim for failure to appear, and the taxpayer appealed to the tax court seeking an order for a new hearing. The taxpayer argued that he did not appear in person at the hearing because of the COVID-19 pandemic, and it was the responsibility of the board to schedule a video hearing. The tax court dismissed this argument, noting that it is the taxpayer’s responsibility to either show up or request a change in date or venue.

In the second ruling, the tax court again considered a narrow issue that happens altogether too often. The taxpayer received a denial judgment related to a Franklin Township property tax assessment from the Somerset County Board of Taxation and paper-filed an appeal with the tax court on Aug. 23, 2019. On Aug. 29, 2019, the Tax Court Management Office issued a deficiency notice, informing the taxpayer that the office could not accept the paper appeal, and the taxpayer had 10 days to refile the appeal electronically. However, the office did not actually mail the letter until Sept. 4, 2019. The taxpayer received the notice on Sept. 13, 2019, immediately contacted the office and refiled the appeal as instructed. Franklin Township sought to have the appeal dismissed for failure to file in a timely manner, but the tax court disagreed, noting that the appropriate date to start running the applicable 10-day limitations period was Sept. 4, the date the office’s notice was mailed, and not Aug. 29, the date the notice was issued.

Get proactive with state and local controversy

State and local tax controversy is difficult in the best of circumstances. State and local tax authorities often have the advantage, benefiting from their regulatory power, judicial deference and a web of presumptions that place many of the factual and legal burdens on taxpayers. On top of that, taxpayers are faced with navigating an immense variety of procedural rules that differ in important ways from state to state, locality to locality and tax to tax. Fail to meet any of these procedural requirements, even in a small and seemingly insignificant way, and the matter is over, regardless of the facts and legal arguments supporting the taxpayer’s position.

Taxpayers, whether individuals or businesses, should protect themselves against this type of harsh result, and obtaining the services of a general tax advisor may not be enough. They key is to get the right tax advisor involved early in the controversy. Insist on working with a dedicated state and local tax professional with experience in the jurisdiction and a deep understanding of its procedural rules and nuances. Approaching audits and other controversy proactively can save substantial time and liability in the long run. 

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