In a January 8, 2013 opinion, the Tax Court of New Jersey addressed the issue of whether roll-back taxes may be imposed upon loss of an agricultural assessment, when the subject property undergoes no change in use.  The case involved a Raritan Township property which benefited from a reduced agricultural assessment for many years, despite the fact that the property failed to qualify for agricultural assessment. Flemington Trade Center v. Township of Raritan, Docket No. 016363-2009. Properties of five (5) acres or more, which are actively devoted to agricultural or horticultural use for at least the two-preceding successive years, producing an average income of at least $500.00 per year, may apply for agricultural assessment (N.J.S.A. 54:4-23.2-5).  The property in issue contained only 4.842 acres, and its owner was unable to provide credible evidence of meeting the $500.00 income threshold for any of the preceding years.  Upon submitting a 2009 application to continue the farmland assessment, the newly appointed assessor caught the error, and denied the reduced assessment.  The assessor also sought to impose roll-back taxes for the prior years during which the property failed to qualify. The Court’s opinion explained that, “roll-back taxes cannot be used to ameliorate the effects of an assessor’s incorrect decisions to grant a farmland assessment….”.  Rollback taxes may only be imposed when land: 1) is in agricultural or horticultural use; 2) is being valued, assessed and taxed under an agricultural assessment; and 3) is then applied to a use other than agricultural or horticultural (N.J.S.A. 54:4-23.8).  The municipality bears the burden of proving, by a preponderance of the evidence, that the property has undergone such a change in use, to justify imposition of roll-back taxes. Roll-back taxes are instead intended to discourage speculation and development of agricultural land, by requiring payment of back taxes upon changing the land use.  Therefore, mere loss of the assessment, alone, whether it be due to a past mistake in qualification, a new failure to meet the income threshold or another criteria for qualification, does not allow imposition of roll-back taxes.  Change is use must also be demonstrated. © Shanahan & Voigt, LLC 2014 BE ADVISED that these comments are not legal opinions and are not to be relied upon as legal advice. If you need legal advice, contact your county bar association; most of which have referral services.

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