“Interests of Justice” Provision Does Not Aid Tax Appeal Plaintiffs Who Did Not Pay Subject Taxes Timely

Dover-Chester Associates v. Randolph Tp., 419 N.J. Super. 184 (App. Div. 2011).  The procedural history of these consolidated appeals was somewhat convoluted, but the legal issue was straightforward, as Judge Espinosa phrased it for the Appellate Division: “whether relaxation [of the requirement of N.J.S.A. 54:51A-1(b) that a taxpayer be current in its tax obligations for the year under review “[a]t the time that a complaint has been filed with the Tax Court” seeking review of a judgment of a county tax board] is required in the ‘interests of justice’ under this statute if the tax payment requirement is satisfied before the return date of a motion to dismiss [the] complaint.”  The panel determined that relaxation is not required.

Judge Espinosa noted the standard of review of decisions of the Tax Court.  The Appellate Division “take[s] into account the special expertise of Tax Court judges in matters of taxation.”  However, “a Tax Court’s interpretation of a tax statute is not entitled to special deference and is review de novo by an appellate court.”  Applying that standard, the panel affirmed the decision of the Tax Court that the “interests of justice” provision of N.J.S.A. 54:51A-1(b) did not allow appeals by taxpayers who had not timely paid the taxes at issue.

“The principle that taxes must be paid when due as a condition to litigating liability for the amount alleged due is firmly embedded in our law.”  That has been so at least since 1977, when the Legislature changed the statute to require expressly that an appellant be current in tax payments notwithstanding the pending appeal.  Amendments to the statute in 1999 did not alter that rule.  And, even though tax appeals under N.J.S.A. 54:3-27 give taxpayers more time to pay the taxes than does the regime of N.J.S.A. 54:51A-1(b), the Legislature did not choose to adopt that more liberal scheme when it amended the latter statute in 1999.  While “not dispositive,” that fact “reflects an acceptance of that distinction as consistent with [the Legislature’s] intent.”

Finally, Judge Espinosa rejected the taxpayers’ argument that the distinction in this regard between the N.J.S.A. 54:3-27 and N.J.S.A. 54:51A-1(b) regimes was irrational and therefore violated equal protection.  A prior decision, Schneider v. City of East Orange, 196 N.J. Super. 587 (App. Div. 1984), aff’d o.b., 103 N.J. 115 (1986), had resolved this issue against taxpayers.  The Appellate Division “remain[ed] satisfied that, even after the 1999 amendments,” there was a rational basis for the distinction.