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The Tax Court of New Jersey issued a precedent-setting decision which will have far-ranging impacts in that it clarifies which party has the burden of proof in challenging a real property tax exemption. In 2011, a number of residents of the Borough of Princeton filed a complaint in the Tax Court of New Jersey challenging the tax-exempt status for real property taxation purposes of Princeton University. Typically in property tax matters, the original assessment is entitled to a presumption of correctness, and the taxpayer challenging an assessment has the burden of overcoming that presumption. Princeton University sought a declaration in the case as to which party has the burden of proof, in this case the residents who filed the complaint, or the university. A burden also attaches to exempt status: A property owner seeking exempt status has the burden of proof to establish eligibility to an exemption. The Tax Court described the burden to establish a property tax exemption as "stringent" because the "fundamental approach...is that ordinarily all property shall bear its just and equal share of the public burden of taxation." The court went on to say, "Statutes granting exemption from taxation represent a departure, and consequently they are most strongly construed against those claiming exemption."
The university argued that placing the burden on it to defend its exemption erroneously burdens the municipal defendant and abolishes the presumption of validity. The Tax Court concluded that the university's arguments "defy firmly established precedent." The court noted that there is a clear difference between the process for valuation assessments and that for exemption determinations. An exemption determination, it reasoned, "is an evaluation based...on the reliability of representations made by the applicant in the paperwork submitted in support of the application for exemption, and of the actual use of the property for which a tax exemption is claimed." The exemption determination is "one of statutory and case law" rather than one requiring any special expertise of the assessor. Statutory construction, the court reasoned, is ultimately a judicial function. Therefore, the presumption of correctness of assessments does not apply to exemption determinations.
The court went on to say the burden of proof does not shift from the university to the residents challenging the exemption status. It concluded that the burden is always on the entity claiming the exemption. It found that "more compelling public policy concerns rest squarely on the side of the taxpayer's right to challenge the exemption, and for Princeton [University] to prove it meets the criteria for the exemption."
The Tax Court's decision clearly places the burden on those claiming an exemption, arguably making exemption challenges by residents easier to prosecute.
The case is Estate of Lewis v. Trustees of Princeton University, 2015 N.J. Tax Lexis 17 (Tax Ct. Nov. 15, 2015) (approved for publication).Day Pitney Alert
On June 2, at the CBIA's 2022 Energy & Environment Conference, Day Pitney Environmental and Land Use partner Harold Blinderman is moderating the panel, "A New Release-Based Clean-Up Program: Status, Process & Next Steps," and Elizabeth C. Barton, partner and Chair of the Environmental practice, is a panelist, along with speakers from CT DEEP's Environmental Quality Branch and Water Protection and Land Use division and BL Companies.
On May 18, Day Pitney New Jersey Real Estate Partner Peter Wolfson was a panelist on the "P3 Partnerships: A Path for Progressive Development," panel at a CoreNet NJ event.
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Miami-based Real Estate Partner Sandra M. Ferrera is speaking on the University of Miami School of Law's Hispanic Law Students Association panel, "Legal Series Tournament: Practice Area Battle Royal: Team Litigation vs. Team Transactional."
Day Pitney Press Release
Day Pitney Hartford Attorney Ashley Membrino has been elected to the Board of Directors for the Hartford County Bar Association (HCBA).
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Day Pitney Environmental Partner Todd Terhune was featured by Law360 Pulse in a Q&A article discussing his arrival to the firm and his position as Vice Chair of the Environmental practice.
Environmental partner Todd Terhune's arrival to Day Pitney was featured in Real Estate NJ article, "Day Pitney Adds Terhune as Partner, Vice Chair of Environmental Team."
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