Last year’s appeals were at their highest numbers statewide since the 1992 recession, and county officials and experts say that mark may be equaled or surpassed this year.
The state has seen a four-fold increase in the number of appeals over the past decade. And while the tax boards are trying to keep up with the increased workload, tax lawyers, appraisers and web sites catering to do-it-yourself appeals are doing a booming business.
Every winter, Kathy Zucker gets at least 10 letters from lawyers offering their services to help her save money by appealing her property taxes.
Two years ago, she called one of them. She had recently bought a four-bedroom condo in Hoboken for $787,000, only to discover its appraised value was closer to $1 million. She won her appeal and saved $800 on her taxes — about 7 percent.
“They’re not offering it out of the goodness of their hearts,” Zucker said of the tax lawyers who send her solicitations. “They’re offering it, because they think they can win.”
Last year, a total of 74,228 tax appeals — which includes residential, commercial and industrial properties — were filed statewide, the highest since 1992 and more than triple the number filed in 2007, according to the state Department of Treasury’s Division of Taxation.
Experts say the high number of appeals can be attributed to a still struggling housing market that has, by-and-large, kept home sale prices down. That and the bevy of towns and cities whose assessments are outdated. It’s a combination primed to spur overassessments.
“I think you’re going to have a big year this year when the tallies are completed. And there will probably be another big year next year as well,” said Jeff Horn, a lawyer with the Toms River-based firm Horn, Turbach & Rybar, LLC, which represents clients across the state. “As long as towns are stuck with old assessments and the market is declining, you’re going to have a lot of appeals, and you’re going to have a lot of people winning their appeals. It’s pretty simple.”
State figures show that of the appeals filed last year, about 60 percent of assessments were reduced or settled, meaning they came to an agreement out of tax court. This amounted to a more than $3.2 billion reduction in property assessments.
For tax administrators, like Middlesex County’s Irving Verosloff, it means dealing with mounds of paperwork. He expects when the final tallies come in that his office will handle more than the 5,400 appeals it received last year.
“Every year there’s a flood in the last two weeks,” he said last week.
Despite the big numbers, the process of filing an appeal is not a simple one and only 2.5 percent of residential property owners go through the trouble.
Adam Berkson, co-founder of EasyTaxFix.com, a site that launched in New Jersey in 2009 and charges $80 to help homeowners file their own appeals, says the process can be daunting.
“For the average person, it can be baffling,” he said. “We think that, believe it or not, close to 40 percent of residents could be filing appeals.”
Berkson’s website, one of a number that have sprouted up nationwide in recent years, takes an address and uses recent real estate and county tax data to analyze the potential savings on a tax bill.
The site allows customers to survey a list of recent property sales in their area. This data is then pitted against current county assessments and analyzed to see if the customer could reap tax savings from appealing their assessment.
Joseph Randazzo, an appraiser based in West Orange, said that appeals can be affected by the real estate market in each town. And those markets vary not just town-to-town, but even within different neighborhoods. In other words, what might be good case for an appeal for one homeowner might be bad for another just a few miles away.
“Some places, the markets are stable, and some are increasing in value,” Randazzo said. “Take Montclair, for example. Upper Montclair, that is still a red hot section. The further south you go the more limited the sales are.” The savings that can be achieved through a successful tax appeal are no drop in the bucket. It’s a good business for attorneys, appraisers and web entrepreneurs, but one that can wreak havoc on local budgets.
“We’re bracing for it, because we do know there are attorneys in town who are actively trying to convince residents to file mass appeals,” said Wayne Hamilton, director of finance in Monroe in Middlesex County. “It’s very easy for a tax attorney to team up with an appraiser and rally residents to file appeals. That’s what we’ve seen happening here the last few years.”
This winter, Monroe had to issue a bond to cover a record $5 million in tax appeal refunds last year. Hamilton said most appeals were successful.
“It’s had a devastating impact. We ended the year in a deficit last year. We’re wiping out a lot of reserves and surpluses, because we need to make up that revenue.”
It can also mean higher taxes town-wide.
“Your tax base is a finite number,” explained East Brunswick Tax Administrator L. Mason Neely. “When it shrinks it’s like taking the frosting off a cupcake. When that happens, towns need to make up that revenue and that means the tax rate has to be higher for everyone else.”