What Is “Good Cause” for Granting an Abatement of Real Estate Taxes?

NHRSA 76:16, I(a) provides that “Selectmen or assessors, for good cause shown, may abate any tax, including prior years’ taxes, assessed by them or by their predecessors, including any portion of interest accrued on such tax. . . .” For many years, municipal attorneys and tax assessors in New Hampshire have proceeded in the belief that the only grounds for abatement of real estate taxes were disproportionality and poverty or inability to pay. A case decided by the New Hampshire Supreme Court in May 2017, Robert Carr et al. v. Town of New London, held that “good cause” for granting an abatement is not limited to those two grounds, that RSA 76:16 “provides selectmen a liberal tax abatement framework to promote equitable resolutions.” 

In that case, the taxpayers’ property had been struck by lightning and burned to the ground on July 1, 2014, so that the taxpayer could not use the property for 272 of the 365 days of the 2014 tax year (April 1, 2014 – March 31, 2015). The Town had denied the taxpayers’ timely filed application for abatement under RSA 76:16 on a number of grounds, including:

1. The condition of the property as of April 1, 2014, (before the fire) governed its assessment for the 2014 tax year; 
2. RSA 76:21, which allows prorated assessments for buildings damaged by fire, was the exclusive remedy for prorating or abating taxes on buildings damaged by fire; and 
3. Disproportionality and poverty/inability to pay were the only grounds for granting an abatement

The Court rejected all three arguments, finding:

1. Damages to property occurring after April 1 of the tax year may constitute “good cause” for an abatement;
2. RSA 76:21 is not the exclusive remedy for abating taxes on buildings damaged by fire during the tax year; and
3. Disproportionality and poverty/inability to pay were not the sole reasons for granting an abatement

The Court upheld the trial court’s decision that the taxpayers had shown “good cause” for an abatement under RSA 76:16. Thus, the Carr case established that selectmen have broad power to grant abatements—that “if justice requires an abatement, that would be good cause for the selectmen to [abate the property tax].” The Court failed, however, to set forth a bright-line test for determining when “justice requires an abatement” under RSA 76:16.

Future cases will provide guidance as to what is and what is not “good cause” for granting an abatement.