Bounty Hunting in New Jersey

By:  John Garippa, as published in Real Estate New Jersey, May 2001

Most people believe that the days of the bounty hunter in the Old West have long since passed.  The image of the isolated cowboy riding out to collect a reward is something that exists only on a movie set.  Yet, that arcane symbol is alive and well in New Jersey's tax system.

Few people are aware of the law that allows one taxpayer in a county to file a tax appeal against any other taxpayer in order to raise that taxpayer's assessment.  As incredible as it may seem, this system of tax bounty hunting has existed in New Jersey for many years, and has been approved and supported by the New Jersey Tax Court.

Recently we had a chance to see the impact of this unjust legislation first hand.  A disgruntled taxpayer in Freehold, NJ, decided to file tax appeals on the tax assessments of the Freehold Raceway Mall.  The appeals were filed against the mall developer, as well as the four large anchor department stores.  The tax assessment of Freehold Raceway Mall was larger than that of the disgruntled taxpayer who filed the appeal.  In fact, this particular range war was started by a single-family homeowner.

A municipal revaluation had taken place several years before and all of the parcels in the township were revalued at the time.  Over the intervening several years, the assessor dutifully certified all of the assessments each year as indicative of market value.  The tax assessor's legal responsibility is to review all of the assessments in the taxing jurisdiction each year and to certify that those assessments are proper.  This responsibility includes the determination of uniformity of assessment practices within the jurisdiction.

Of the many thousands of tax parcels in Freehold, only this small group of properties was chosen for appeal.  As a result, these innocent owners of large parcels had to hire attorneys and real estate appraisers.  The Tax Court of New Jersey allowed the filing of this bounty-hunting tax appeal.  The courts defend such practices by maintaining that all property should be assessed at its fair market value, and these large property owners have the ability to file tax appeals against other undervalued parcels in the township.  This notion of jurisprudence has all of the earmarks of a range war.

In the Freehold Twp. example, the mall developer, after lengthy and expensive litigation, was forced to pay hundreds of thousands of dollars in increased tax obligations.  The anchor stores are still involved in the active defense of the case.

It seems absurd to hand over the reins of tax policy within a taxing jurisdiction to a private individual.  Any taxpayer with a private grudge against another person or corporation can commence an appeal process that could result in major financial loss.

Experience has shown that at any given time there are always disparities in tax assessments within a given jurisdiction.  Tax assessment practice is not a perfect science, and there will always be some disparity in a uniformity of value.  The tax assessor should be the only individual who can set tax practice.  Only when there is an unbiased taxing authority, acting on behalf of all of the governed, can there be perceived equity.

Perhaps the most damaging side issue in these bounty-hunting appeals is that once the appeal is filed, that disgruntled taxpayer is allowed full and open access to all of the financial records of the victimized property owner.  All of the income and expense statements, rent rolls, tenant lists and appraisals have become available to the bounty hunter.  In the Freehold example, the New Jersey Tax Court has even ordered corporate officials, in disparate locations throughout the U.S. to come to New Jersey for depositions.

In fact, there have been several instances over the years where tax bounty hunters have agreed to accept private payments in order to dismiss their tax appeals.  In these situations, some taxpayers determined that they would be better off paying the vigilante than to accept a long-term increase in assessment.

This extremely horrendous debasement of tax policy cries out for legislative relief.  Hopefully, as taxpayers learn of this injustice, they will begin to work with the state legislature to turn back this remnant of injustice from a time gone by.

John Garippa is the senior partner of the law firm of Garippa, Lotz & Giannuario, with offices in Montclair, NJ and Philadelphia.  He is also president of the American Property Tax Counsel, the national affiliation of property tax attorneys.