New Jersey Law

DIVISION OF LOCAL GOVERNMENT SERVICES (DLGS) ISSUES ADVICE ON TAX DEADLINES, INTEREST AND PENALTIES

The DLGS issued an advice memorandum to municipalities concerning the real estate tax payment due date, as well as local authority with respect to reductions in delinquent tax interest payments and penalties. There is no authority for a municipality to extend the due date or the grace period for the quarterly payment of real estate taxes which are set by statute. According to the DLGS any such change would not be permitted by current law.

However, the DLGS advises that a municipality may change the interest that accrues on delinquent payments. The applicable statute sets maximum rates. The DLGS advice memo sets forth a number of negative financial implications if a municipality lowers or sets the interest rate at 0%. Most importantly, if a 0% rate is set, effectively a municipality would give taxpayers an artificial grace period to make tax payments. The fiscal problem would be that tax levy payments would still be due to schools and counties. Also any change in the interest rate would require notice to all taxpayers by statute, and the cost of mailing and providing such notice may be a prohibitive additional expense. The memorandum identifies other detrimental effects from lowering or zeroing out the interest rate, for example relative to tax sales and tax redemptions. 

For more information on this Advice, or other matters relating to real estate tax, contact: Martin Allen, Esq., Chair of the Firm’s Real Estate Taxation Department.