Recently, many municipalities have performed revaluations in order to make certain that all their assessments reflect the current market value of the properties located in their municipality. When a property owner files a tax appeal to challenge a tax assessment after a revaluation, who bears the burden of proving whether the new assessment is correct – the tax assessor or the property owner? The answer is the property owner by virtue of the “presumption of correctness”.
When appealing a tax assessment, it is very important to understand how the presumption of correctness works. Once a tax assessor imposes an assessment, the County Tax Board and Tax Court are required to presume that the tax assessment is valid and the taxpayer is required to rebut the presumption by cogent evidence. The New Jersey Tax Court has held that in order to overcome the presumption, the taxpayer must produce evidence that is “definite, positive and certain in quality and quantity.” This is a difficult standard to comprehend, but clearly requires a good showing by the property owner.
The presumption of correctness permits a tax assessor to win a tax appeal without producing any evidence at all, a tactic used by many revaluation companies in defending tax appeals. For example, if a taxpayer presents sales that are not very comparable because they are too old, not in the same town, or otherwise not very similar to the property under appeal, the tax assessor or revaluation company can merely argue that the presumption of correctness has not been overcome and the assessment cannot be changed. If the taxpayer produces “pretty good” comparable sales, the tax assessor or revaluation company can but merely challenge the comparability of the sales offered by the property owner and argue that once again the taxpayer has not produced sufficient evidence to overcome the presumption. This is very frustrating to property owners because they end up losing a tax appeal without the tax assessor or revaluation company submitting any evidence of value.
It is very important to understand that the tax assessor and revaluation company have no obligation to come forward with comparable sales and can merely rely upon the presumption of correctness in defending a tax appeal. Since the presumption is a hurdle that is somewhat difficult to overcome, it is a good idea to appear before the Tax Board or Tax Court with a competent appraiser. However, depending upon the size of the tax assessment, it may not be cost effective to pay for an appraisal. If a property owner chooses to proceed without an appraiser, it must come armed with very good evidence in order to over come the presumption of validity.
A recent Appellate Division case, which was decided on January 22, 2007, provides a good discussion of the presumption of validity. You can view the case here.