New Hampshire Supreme Court Provides Guidance as to “Reasonable Cause and Not Willful Neglect” Standard for Tax Abatement Applications

By: Trevor J. Brown
June 12, 2020

The New Hampshire Supreme Court recently vacated and remanded a decision of the New Hampshire Board of Tax and Land Appeals (the “BTLA”), and in doing so provided additional guidance as to the interpretation of the BTLA’s Administrative Rules.

In the Appeal of Keith R. Mader 2000 Revocable Trust, et al., a group of eighteen petitioners appealed a decision of the BTLA dismissing their appeal of the Town of Bartlett’s denial of real estate tax abatement applications.  No. 2019-0061, 2020 N.H. LEXIS 107 (June 5, 2020).  

The petitioners all owned property in a condominium development in Bartlett.  Counsel for the petitioners timely filed abatement applications with the town, with counsel signing on behalf of the petitioners.  Bartlett denied the abatement applications and a timely appeal was filed with the BTLA.  The BTLA then requested the petitioners provide “written proof” that they – the taxpayers – “signed the abatement applications” filed with the town pursuant to the BTLA’s Administrative Rules.  The relevant Administrative Rule, Tax 203.02, requires the application include “[t]he taxpayer’s signature…certifying that the application has a good faith basis and the facts stated are true.”  Tax 203.02(b)(4).  The Rule goes on to state that the “taxpayer shall sign the abatement application,” that an attorney or agent “shall not sign the abatement application for the taxpayer,” and that the lack of the taxpayer’s signature “shall preclude” an appeal to the BTLA “unless it was due to reasonable cause and not willful neglect.”  Tax 203.02(d).  Filing a timely abatement application is a prerequisite to an appeal of the municipal assessment to either the BTLA or the Superior Court.

The petitioners acknowledged to the BTLA that they had not personally signed the abatement applications, but argued the omissions were “due to reasonable cause and not willful neglect.”  Id.  The petitioners noted that all but one of them lived out-of-state and that counsel had not been formally retained until close to the filing deadline.  Following his retention, counsel had prepared the abatement applications promptly upon his return from vacation and submitted them to meet the statutory deadline.  Further, the petitioners filed a motion seeking exception from Tax 203.02’s requirements.

The BTLA denied the motion for exception and dismissed the petitioners’ appeals, finding that they failed to comply with the controlling Rule and had not shown the failure was “due to reasonable cause and not willful neglect.”  Following the BTLA’s denial for a motion for rehearing, the petitioners appealed to the Supreme Court.

The Supreme Court began its analysis by noting the importance of construing the BTLA’s rules liberally in order to advance the “rule of remedial justice” which serves as the bedrock to the tax abatement scheme.  GGP Steeplegate v. City of Concord, 150 N.H. 683, 686 (2004).  The Court went on to conduct an extensive analysis, reviewing related statutory language, decisional law, Federal Court decisions, and Treasury Regulations in order to interpret the “reasonable cause and not willful neglect” exception under Tax 203.02.  Recognizing the federal authorities as “highly persuasive,” the Supreme Court held that the statutory language “‘reasonable cause and not willful neglect’ must refer not simply to whether the taxpayer acted voluntarily in the sense of acting consciously, but also to whether the filer’s reason for so acting was objectively reasonable under the circumstances.”  Gerald B. Lefcourt, P.C. v. United States, 125 F.3d 79, 84 (2d Cir. 1997).  As such, the Court held that Tax 203.02(d)’s “reasonable cause and not willful neglect” exception permitted abatement appeals to the BTLA despite the lack of a taxpayer’s signature and certification if the taxpayer can show that it was not reasonably possible to submit the application with the taxpayer’s signature and certification despite “exercising ordinary business care and prudence” and that the taxpayer “was not recklessly indifferent to the signature and certification requirement in preparing the application.”

Accordingly, the Supreme Court vacated the BTLA’s dismissal of the appeals and remanded for further review in light of its construction of Tax 203.02.  A copy of the decision can be found here.

The Supreme Court’s decision in the Appeal of Keith R. Mader 2000 Revocable Trust, et al., provides important new guidance regarding the procedural requirements to pursue a tax appeal under New Hampshire law.  Companies and individuals need to stay abreast of these requirements in order to ensure that their tax appeals can be resolved successfully and on the merits.

The attorneys at Sulloway & Hollis understand the challenges of navigating tax abatement proceedings at the municipal level, before the BTLA and in the New Hampshire court system.  If you have questions about this decision or other tax abatement matters, please contact Robert Lanney, Director of Business Development, at rlanney@sulloway.com or (603) 223-2800.