Refunds for Environmental Remediation?

by: Anthony F. Della Pelle
1 Feb 2012

Getting a refund from a successful property tax appeal may get a little harder for owners of certain contaminated industrial properties.  State Senate President Stephen M. Sweeney introduced legislation yesterday that would require a property tax refund to be forwarded to the New Jersey Department of Environmental Protection (“DEP”) and applied toward remediation costs, instead of being paid to the owner or lien holders.  Senate Bill No. 1460 would apply to those properties subject to a state or federal order for site remediation.   A companion bill, Assembly Bill No. 2294, was also introduced yesterday in the Assembly by Majority Leader Louis Greenwald.

The impetus for the new legislation was the pending resolution of several years of unresolved tax appeals on Sunoco’s Eagle Point Refinery in West Deptford Township.  The tax appeal may result in the Township having to refund millions of dollars in tax overpayments back to Sunoco.  The Eagle Point Refinery has been closed since 2009 and is under a remediation order that is being overseen by DEP.  The new legislation is intended to ensure that those funds are used for the cleanup of the site.

A favorable result in a property tax appeal will result in a refund of any tax overpayments for the years under appeal.  That refund may be made by direct payment to the property owner, or as a credit toward future tax payments.  In addition, under N.J.S.A. 54:4-134, a municipality is permitted to apply a refund as a setoff of any delinquent property taxes as well as water or sewer payments, or parking or payroll taxes imposed against that property or the owner that property.  This new legislation goes further in that it will set refund money aside for a purpose other than to offset municipally imposed taxes or other charges and require the money to be deposited with an entity other than the municipality.

As of the writing of this post, the bill is not available for public review and it is uncertain as to how the funds will be monitored or allocated.  Moreover, it is unclear whether an innocent purchaser who later files a successful tax appeal, would forfeit its rights to a refund.  We’ll continue to monitor this potentially important legislative development.

“State Senate President Stephen M. Sweeney will unveil cleanup bill”, 1/26/12, Courier Post Online.

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