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ARIZONA Property Tax Update
Updated December 14, 2007

A Property Owner Cannot Contest its Entitlement to an Exemption in Court without Payment of the Tax.

Luz Social Services, Inc. applied for property tax exemption. The Assessor denied the application. Luz then filed a notice of claim with the State Board of Equalization asserting the Assessor had erred. The Board declined to review the Assessor’s decision. Luz then appealed that denial to the Court. In Luz Social Services, Inc. v. Arizona State Board, TX2007-000261, the Court held that the failure to pay the disputed taxes before an appeal was taken of the Board’s actions barred Luz from contesting the Board’s decision in the Court. While the Assessor may have indeed been in error in denying the exemption, and the Board may also have been in error for refusing to review the Assessor’s decision, state law still required Luz to pay the taxes to contest the exemption determination.

The valuation of older industrial properties has been a hot issue across Canada. Assessors traditionally rely upon a depreciated replacement cost approach to value. The Supreme Court in British Columbia and the Supreme Court in Newfoundland and Labrador (in one case a printing plant, in the other case, a brewery), both have found the preferred approach to value is the exchange value supported by adjusted comparative sales data.

In the Province of Newfoundland, the Provincial Government attempted to legislate the application of the replacement cost approach to "special purpose properties".

A landmark legal decision of the Supreme Court in Newfoundland and Labrador struck down the notice of assessment for the Labatts Brewery and the Molsons Brewery based upon the notices of assessment issued by the assessor. The notices said the properties were assessed on their "fair market value" not their "replacement cost". The Court said the taxpayers were entitled to be assessed on fair market value: the price a willing buyer would pay to a willing seller.

The matter has been remitted to the assessment tribunal to determine the fair market value. Only a creative lawyer could achieve this highly desirable outcome.

Assessment Appeal Filing Season in California

The period for filing appeal applications on 2007-08 California property tax assessments closes on November 30. All county assessment appeals boards or county boards of equalization will accept appeal applications through that date except for boards in the following counties, where the appeal filing season has already closed: Alameda, Inyo, Kings, Orange, San Francisco, San Luis Obispo, San Mateo, Santa Clara, Sierra and Sutter. Appeals may be filed on applications available from local boards. Some counties also make appeal applications available on their public internet websites. Applications sent on November 30 should be postmarked by the U.S. Postal Service to insure timeliness. During this regular filing period, taxpayers may also appeal base-year value reassessments caused by changes of ownership or resulting from completion of new construction, but only so long as the change of ownership or new construction completion occurred during the prior three years.

Under Colorado law it is advantageous to have real property classified as an agricultural use because the real property taxes are significantly less than vacant land or commercial property. Land can be classified as agricultural if it is used as either a farming or ranching operation. If the apiary is used simply to manufacture honey, then the use may not qualify as agricultural. On the other hand, if it can be shown that bees “graze” on the land (as opposed to just making honey), then the land will be classified as agricultural and be eligible for the reduced taxes.

For an animal to be a “grazing animal,” it must: need veterinary services; be provided food and shelter; be bought and sold; be susceptible to branding; not be the property of the state; intended to serve humans.

Last January, Superior Court Judge Robert G. Gilligan had occasion to address the appeal of a property owner seeking to overturn the Waterbury assessor’s imposition of the statutory 25% penalty for failing to file a personal property declaration in a timely fashion.

Regardless of whether the delay was one day or some longer period, Judge Gilligan ruled that once the late filing is established, neither the assessor nor the Board of Assessment Appeals has the right to waive the penalty. (Presumably, if the envelope from the assessor’s office containing the declaration form did not arrive or if the property owner’s premises were destroyed by casualty, perhaps an exception could be
judicially created; this was not the case here.)

Interestingly, here the property owner, while filing a late request, to solve its problem sought an extension equal only to the difference between the time elapsed from the initial due date of the declaration and the 45-day period (December 15). This creative approach was rejected by the court.

The editors of Property Valuation Topics find that most assessors are cooperative and understanding when taxpayers cannot complete their personal property declarations on time. Judge Gilligan’s ruling points out that the necessity, however, for seeking an extension properly, and for furnishing good cause in the request before the passage of the basic filing date.

Eylet Crafters, Inc. v. Waterbury, Superior Court, Judicial District of Waterbury, January 25, 2007.

DISTRICT OF COLUMBIA / WASHINGTON D.C. Property Tax Update
Updated December 14, 2007

Federal prosecutors have charged two D.C. real property tax employees, together with others outside the government, with multiple counts of fraud and conspiracy relating to the issuance of false real property tax refund checks over a seven-year period. The government alleges that one of the employees masterminded the scheme and used her family, friends and some fellow employees to assist in the massive fraud estimated to have reached at least $20 million.

The bogus refund checks were made payable to fictitious companies that the conspirators controlled. The conspirators often used slight variations of the names of legitimate businesses and individuals to further their scheme. The government is now attempting to sort out how this fraud, the largest in D.C. history, went unnoticed for such a long period of time.

FLORIDA Property Tax Update
Updated December 14, 2007

Proposed Property Tax Legislation

The Florida Legislature recently approved a proposed amendment to the Constitution affecting property taxes. The amendment goes before voters January 29, 2008 and requires 60% approval to pass.

The amendment would impose a 10% cap on increases in the annual assessment of all properties other than primary residences, which are already subject to a 3% cap on increases. Such properties would only be reassessed at just value after a “qualifying improvement” and may be reassessed after a change of ownership. The cap does not apply to school district levies which are approximately 1/3 of the total tax bill. This is a substantial change from the current law, which requires all properties, except those with a homestead or other exemption, to be assessed at just value each year.

In addition, the amendment creates portability of homestead exemptions and creates an exemption for personal property up to $25,000.

Taxpayers file returns of fair market value as of January 1 by either March 1 or April 1, depending upon the county. In most counties, returns must be received by the taxing authority by the deadline or postmarked by the US Postal Service (NO private meter stamps) by the deadline. Check with each county if postmarks are permitted. Applications for freeport exemption should also be filed at this time.

If you do not file a return, your property is deemed to be returned at last year’s value.
Those who disagree with last year’s value and do not file returns can lose appeal rights.

However, if a value was established by an appeal to arbitration or the Board of Equalization, the value carries forward for the next two years, unless it is returned at a different value or if changes to the property affect its value. If the final value in an appeal is satisfactory for the next year, then do not file a return.

The next regular session of the Idaho Legislature convenes on January 7, 2008. In light of rapidly rising home values in several parts of the state, it appears that property taxes will be one of the hot topics. Assessors have complained that they are unable to keep up with the rising values because Idaho is a “non-disclosure” state. That is, Idaho law does not require disclosure of the price when a property is sold. A disclosure bill died in last year’s legislative session, which has prompted counties to explore their ability to enact disclosure requirements locally. Some legislators, feeling that it is important to maintain a statewide rule, appear ready to support a package deal in which a statewide disclosure requirement is combined with a California-style cap on future increases in homeowners’ assessed values. It remains to be seen how this plays out, but business taxpayers should be on the alert.

New Legislation Governing Evaluation of Assisted Living Facilities
for Lower Income Seniors

The Real Estate Assessment of Assisted Living Facilities for Low Income Seniors has faced a rocky road in Illinois. Over the years, these facilities have been consistently over valued despite the fact that they are the least able to withstand high tax bills.

As prelude to any discussion of the issues involved there is one fundamental valuation principle underlying the process along with a recognition of the organizational structure of assisted living residences.

Crucial to the development of these low income facilities is the equity funding with Section 42 Credits for Low Income Housing.

Over the years certain jurisdictions have assessed the value of the Section 42 Credits and included in their assessment the value of the income derived from the services offered to the residents.

In successive steps, the Legislature has enacted legislation, which clarified the valuation of these facilities. First, the Illinois Property Tax Act (“the Act”) was revised to eliminate the value of the Section 42 Tax Credits from the valuation of the Real Estate. Thereafter, the Act, provided that the most appropriate method of valuing assisted living facility was an income analysis. Finally, a further revision became effective on January 12, 2007. It specifically prohibits the inclusion of revenues received for services provided to residents at low income assisted facilities in the Real Estate Assessment of those properties.

Reassessment of Indianapolis Properties Under Way

In August the Indiana Department of Local Government Finance ordered a reassessment of all real property in Indianapolis (Marion County) after taxpayers protested the significant increases in both assessed values and tax dollars. During the last three months, the County has retained a private assessment firm to assist with the reassessment. The new assessments should be available in March 2008 and tax bills reconciling the 2006 (pay 2007) tax year issued in April 2008. Taxpayers will have a window of only 45 days within which to file an appeal contesting the new assessment. Taxpayers should be aware of changes and new procedures in Indiana and closely review new assessments.

Iowa, like many states, expresses a statutory preference for establishing market value, and ultimately the assessed value, by use of the comparable sales approach. If alternate means of valuation are used, good will or the value of a business using the property is not to be taken into consideration.

This statutory framework most often presents an issue in the assessment appeal of commercial and industrial properties that are of a nature or type that are sometimes sold as part of a business sale with the parties to the transaction then making an allocation of the portion of the sale price to be applied to the real estate. The sale of a small manufacturing business is an example. These allocations are often done without the benefit of a competent real estate appraisal and, by their very nature, tend to include good will and other items of value as a business versus value of the real estate per se.

The improper use of unsupported allocation sales, and the generally resultant inflated value opinion, is a recurring problem in the trial of assessment appeals despite the Supreme Court’s clear pronouncements disapproving the practice. Recently the Supreme Court heard argument in another case where the appraiser was found to have impermissibly considered the value of intangibles such as good will in his work. It is anticipated that the Court will affirm the long-standing rule against inclusion of intangibles in the proper appraisal process.

2007 PAYMENT UNDER PROTEST DATE SOON . Levies are being set and 2007 tax bills will be sent out around November 1, 2007. For those taxpayers that did not file a 2007 appeal in the Spring, a tax protest may be filed on or before December 20 th. The requirements to file include completion of a protest form and payment of at least one-half of the taxes due. Forms can be obtained from the offices of the county treasurer where the property is located or by visiting the web site for the Kansas Board of Tax Appeals: www.Kansas.gov/bota. As always, it is recommended that one consult local tax counsel because strict compliance with the statutes is a jurisdictional requirement.

BIG BOX CASE VICTORY FOR TAXPAYERS: The Kansas Board of Tax Appeals in Docket No. 2004-3806-EQ, Prieb Properties, LLC, Shawnee County , Kansas, held that “build to suit” rent rates and “sale-leaseback” rent rates are not market rents.

A new interpretation by the Kentucky Revenue Department is affecting many public service companies (e.g., electric and gas utilities). Property tax is imposed on the unit value of the company’s “operating property” (KRS 136.120) -- defined as both operating tangible property and intangible “franchise value.” In the past, the Department allocated the franchise among various classes of tangible property – some of which have low state tax rates and local tax exemptions. The Department has now begun taxing the intangible “franchise” at the maximum state and local tax rates for tangible property. This has resulted in enormous additional tax assessments for these companies. The Department maintains that their new interpretation is compelled by KRS 136.120(2)(c), which states the intangible franchise to be taxed “at the same rate as the tangible property of other taxpayers not performing public services.” The language of the statute has not changed, so this represents a shift in policy by the Department. The issue is before the Kentucky Board of Tax Appeals.

The City of New Orleans has seven assessment districts. An elected assessor is responsible for property tax assessments in each district. In order to remedy historic complaints related to a lack of uniformity among and within assessment districts, many of the assessors acted to bring historically low assessments in to line. This move had a major impact on areas of the city not damaged by Hurricane Katrina. Over 5,000 appeals were filed with the Board of Review and the City Council, which is responsible for Board of Review appeals, contacted the appeal process out to a New Orleans law firm. The law firm hired appraisers and consultants to act as hearing officers for the Board of Review appeals. Many adjustments were recommended as a result of the Board of Review hearings, and the City Council adopted the recommended adjustments. In response to the large number of adjustments, affected assessors have filed over 1,500 appeals from the Board of Review to the Louisiana Tax Commission. Following the methodology of the of the New Orleans City Council, the Louisiana Tax Commission has contracted with a different New Orleans law firm to handle the appeals. These appeals will be true evidentiary hearings and appeals from the Louisiana Tax Commission are to the district court limited to the record created before the Louisiana Tax Commission. It is likely that additional challenges will arise in connection with these appeals. It is virtually certain that the use of law firms to handle these appeals will impact the conduct of Louisiana property tax appeals in the future.

Most jurisdictions in Maine sent out their fiscal year 2008 tax bills over this past summer. The assessing date for the fiscal year 2008 tax bills is April 1, 2007. A taxpayer has 185 days from the Commitment Date to file an application for abatement. The Commitment Date is usually within a few weeks before the tax bills are actually sent out. One should always take care to verify the Commitment Date. To be entitled to an abatement the taxpayer must show that the assessment is “manifestly wrong.” The assessor has a statutory defense that if an effort is made to be accurate in his assessment within reasonable limits of practicality, the assessment made may deviate from the assessment ratio by as much as 10%. This means that as a practical matter, absent bad faith, the assessor can be wrong in his assessment by as much as 10%.

Most jurisdictions in Massachusetts will be sending out their fiscal year 2008 property tax bills at the end of December. Most jurisdictions will have either revalued or “trended” their values. In either case the tax bill should be reviewed to see if the assessment reflects the fair market value of the property as of January 1, 2007. In order to preserve the right of appeal this bill must generally be paid by February 1, 2008. The deadline for filing an application for abatement with the local assessors is also generally February 1, 2008. The assessors have three months from that date of filing the application to act on it. If the assessors fail to act within three months of the filing, the application is deemed to be denied. An appeal from a denial may be taken to the State Appellate Tax Board within three months of the date of the denial.

MARYLAND Property Tax Update
Updated October 5, 2007

2007 Decisions and Second Level Appeals

2007 Levy Year Appeal: Initial appeals of the 2007 Levy Year assessments were brought before the State Department of Assessments and Taxation (SDAT) for the first level of administrative review in Maryland. The assessor’s determination is not the final word however. Property owners dissatisfied with the SDAT decision have thirty (30) days from the issuance of the final notice to file for a second level appeal at the Property Tax Assessment Appeals Board (PTAAB). These 3-member independent Board hearings allow for another opportunity to present the merits justifying a reduced assessment. The 2006 second level appeals will conclude by the end of the year, while the 2007 second level appeals will continue throughout the 2008 calendar year.

Timely Payment Required for SBT Credit
2007 is the last year for the Michigan Single Business Tax (SBT). The new Michigan Business Tax (MBT) becomes effective January 1, 2008. However, a refundable credit against the 2007 SBT equal to 15% of Michigan industrial personal property taxes paid in calendar year 2007 remains available.

For property classified as industrial personal property, the 2007 tax must be paid on or prior to December 31, 2007 for the payment to be eligible for the SBT credit. Therefore, it is imperative that the 2007 tax bills for industrial personal property, including the recently issued winter 2007 tax bills, be paid on or prior to December 31, 2007.

Conferring with knowledgeable Michigan tax counsel could pay substantial dividends if you believe that you have industrial personal property but that property does not appear to be classified as such or if you need assistance in determining and filing for this credit.

Minnesota law requires that in November,taxing jurisdictions mail estimates of taxes that will be owed the next payable year. Those Truth in Taxation notices are the county’s best estimate of probable taxes owed for pay 2008. Notices often trigger a realization among managers and owners of property that big tax increases may be in the offing for their property.

The real concern is whether the estimated market value upon which the taxes are dependent is correct. In Minnesota, a fee simple state, the property’s performance as measured by rents and occupancy must be compared to market factors that the assessor considers when placing or defending a value. In Minnesota, like most of the country, tightening credit conditions, corporate contractions, and recessionary pressures are all placing downward pressure on values. It is essential that owners and managers have their properties reviewed in light of these trends.

Pending Missouri real property tax appeals for the 2007 assessed value are considered an appeal also for the year 2008. However, given the vagaries of the system, the prudent course of action is to file an appeal for the year 2008 also. Missouri is on a two year cycle with the valuation date being January 1 of the odd numbered year. If no appeal was filed for the particular property for the year 2007, an appeal should be filed for the year 2008. The standard for the 2008 assessed value will be the value of the property under the economic conditions existing as of January 1, 2007. A simple way to look at it is to file a timely appeal for 2008 whether or not an appeal was filed for 2007 recognizing that the January 1, 2007 value will control the assessment level.

The Nevada property tax appeals season is very compressed. Taxpayers unaware of the deadlines can easily miss an opportunity to challenge their property’s valuation. Most Nevada counties will be mailing out their 2008-09 tax year notices of value between the middle and end of December 2007. Nevada law requires that the values be posted prior to January 1, 2008. A taxpayer dissatisfied with the county assessor’s valuation may file an appeal with the county board of equalization by January 15, 2008. Failure to file a timely appeal bars any further challenge to valuation of the property. State law requires that all county board of equalization hearings must be completed by the last day of February. Taxpayers aggrieved by the county board of equalization’s decision may file an appeal to the State Board of Equalization no later than March 10, 2008.

What Is The Appropriate Equalization Ratio?

In New Hampshire equalization ratios are very important in determining whether or not real estate is fairly assessed. Sometimes the question arises as to what is the appropriate equalization ratio. If the assessors and the taxpayer have not conducted there own ratio studies the ratio studies conducted by the State Department of Revenue Administration are relied upon. The Department of Revenue Administration conducts two different studies, one determines the weighted mean equalization ratio and the other is the median equalization ratio. These two studies can arrive at significantly different figures. The Department of Revenue Administration and the Courts have stated that in real estate tax appeal cases the median equalization ratio is preferred. However, this has not prevented some assessors from arguing the weighted mean equalization ratio is more appropriate. These arguments seem to always arise when the weight mean ratio is higher than the median ratio and not the other way around.

New Jersey law defines municipal revaluations as the systematic valuation by a qualified firm of all parcels of real property in a given taxing jurisdiction. Because revaluations are expensive, it is not unusual for 10 years to pass between revaluations.

It is important that taxpayers employ due diligence during a revaluation. This means meeting with representatives of the revaluation firm and examining the underlying data relied upon in setting market value. Just as importantly, taxpayers need to make certain that the revaluation was performed properly under New Jersey law, yielding a uniform valuation for the entire taxing jurisdiction. A lack of uniformity or erroneous market value should both be evidential of a poorly performed revaluation.

As part of this due diligence process, taxpayers may make an “Open Public Records Act” request to obtain underlying data for the revaluation. This important exercise by taxpayers will pay dividends into the future.

The tentative 2008/09 assessments will be published on January 15 th. Challenges to the new valuations must be filed no later than March 1 st. Income producing properties with assessments less than $750,000 must also have calendar year income and expense statements on Tax Commission forms appended to the Application for Corrections, while larger assessments have until March 24 th to file the income and expense statement. Additionally, statements must be certified by a CPA for those parcels assessed over $1 million.

Only the applicant, or a member or an officer of the entity may sign. Agents and all others must have personal knowledge and also attach a power of attorney in order to sign.

Lastly, failure to file the RPIE form with the Department of Finance in September 2007 will preclude any review of the assessment in 2008.

In a recent ruling reversing a decision in favor of the assessing authority, the North Carolina Court of Appeals has reinforced prior appellate court decisions on the burden of proof. In recent years, observers have noted that the North Carolina Property Tax Commission has been imposing an increasingly stiff burden on taxpayers in hearings before the Commission. The new decision offers some hope of a course
correction.

Under NC law, tax assessments are presumed correct. The presumption of correctness is rebuttable, but the burden is on the taxpayer to rebut the presumption.

.In In Re Appeal of IBM Credit Corporation 650 SE2d 828 (2007), the Court of Appeals reversed a decision of the Commission in favor of Durham County, holding that the burden on the taxpayer is one of production and not persuasion; to meet its burden, the taxpayer must offer competent, material and substantial evidence that tends to show the assessment is incorrect - it does not have to persuade the Commission at that point. Once its burden is met and the presumption of correctness rebutted, the burden then shifts to the county which has the burden of going forward with evidence and of persuasion that its methods would produce true values , and thereafter it is the duty of the Commission to weigh the evidence and make its decision.

The Court of Appeals remanded the decision to the Commission to reconsider the evidence in light of its decision. The County has appealed to the North Carolina Supreme Court.

Now is the time to act upon the well intentioned tax plans envisioned in the past year. Property owners in Ohio have recently or will be shortly receiving their tax bills for 2007. Between January and March 31, 2008 taxpayers have the right to contest their tax assessments.

However, care must be taken in determining whether to file. Tax law varies from state to state and what constitutes a reliable approach in one state may not apply in Ohio. Furthermore, a properly assessed property in one state may be over assessed in Ohio. Taxpayers should also be aware that when a complaint is filed in Ohio there will inevitably be a counter appeal made by the local school district. And it is because of the school district is involved that extra care must be taken.

If a complaint is filed and the property is under assessed then the school district may argue to the county board that the value should be increased. Furthermore, if the complaint is not prepared correctly the school district can and likely will argue that he complaint should be dismissed which can have the effect of prohibiting an appeal of the taxes for up to three years.

Therefore taxpayers should act quickly to ascertain the reasonableness of an appeal and take due care in the filing of the complaint.

Oklahoma imposes a 7% gross production tax on the gross proceeds received from the sale of oil and gas. The gross production tax is in lieu of ad valorem tax, not only upon the oil and gas itself, but also upon equipment used to produce the oil and gas. Historically, the demarcation line between when production is complete and when marketing of the oil and gas begins has been unclear. Ad valorem taxes are local taxes retained by schools and county governments. The gross production tax is a state level tax which goes into the coffers of state government. Counties have been very aggressive in assessing ad valorem taxes by classifying most equipment as marketing related. To avoid the possibility of double taxation, the legislature enacted HB 1485, effective January 1, 2008. This law will allow producers to deduct ad valorem taxes from the gross proceeds used to compute gross production taxes. Refunds are available for the previous three years.

Property tax bills have arrived in the mail and, understandably, you are upset with the amount of taxes you are paying on your real and personal property. You have a right to appeal your property tax assessment to either the local county Board of Property Tax Appeals (BOPTA) or, if you are an industrial taxpayer, directly to the Magistrate Division of the Oregon Tax Court. However, your appeal must be filed by December 31, 2007, to be considered by BOPTA or the Tax Court.

What you are appealing is the property’s assessed value. The assessed value is the lower of the Maximum Assessed Value (MAV) or the real market value (RMV) of the property. To be successful in a property tax appeal, you must prove that the actual price for which you could sell your property is below the assessed value. The best evidence of the property’s actual RMV is an appraisal of the property by a qualified expert for property tax purposes

At present a case in Allegheny County is challenging the long held Pennsylvania standard of using contract rather than market rents to value property. The current system creates an unintended uniformity problem. Currently two theoretical properties can be assessed at drastically different values. The first property is occupied by a net lease tenant enjoying a long-term below market lease. Under present law that tenant should be taxed based on the value attributed to the lease payments.

The second property is owned by a competitor however the competing company owns the property rather than leasing. The current law provides that the owner of real estate be assessed based fair market value. And therefore market rents and market sales of like property would be used to establish value.

This system would have then two competing companies taxed at different amounts interestingly enough the company that enjoys the below market rents would also be taxed at a lower amount. As developments in this matter progresses APTC member firms can help you to plan or fight excessive taxation.

"True and Exact account" must be filed In Rhode Island

In Rhode Island a “true and exact account” must be filed by January 31 st of each year in order to maintain a future valid appeal. The account must contain a complete list of all “ratable” property owned or possessed by the taxpayer with a claimed value as of December 31 st. An extension to file the account will be granted if it is requested by the January 31 st due date. The taxpayer then may bring the account at any time between March 1 st and March 15 th. The reason for the account is to assist the assessors in valuing property for the tax bills that are generally issued during the summer. Failure to comply with the requirements of filing account can be fatal to an appeal. It is incumbent upon the taxpayer to seek out the account forms or to fashion an account form. Taxpayers should take extra care to file a proper account every year.

All property in Tennessee should be valued at its fair market value. Assessment ratios vary, however, depending on the type of property.

A special statute addresses the issue of whether vacant land should be classified as commercial or industrial and assessed at 40% or residential land assessed at 25%. The statute provides that vacant land should be classified according to its “immediate most suitable economic use” which shall be determined after consideration of several factors. Among the factors to be taken into consideration are:

Property owners throughout Texas are currently receiving 2007 tax bills, which are due on January 31, 2008. Although property tax valuations are generally protested before May 31 of the tax year and become final if not protested, relief may still be available.

If an owner’s tax value exceeds the correct value by more than 33%, the owner may file a motion with the county Appraisal Review Board prior to February 1, 2008 to request a value change.

However, this remedy is only available if the owner 1) did not file a protest on the property for the current tax year, or 2) the owner protested the property but did not present evidence at the administrative hearing. Further, the owner must pay the taxes on the property prior to the due date.

Further, if a property owner is dissatisfied with the appraisal review board decision, the property owner may file a lawsuit in district court to contest the decision.

The Utah State Tax Commission issued a decision in November 2007 clarifying how amortization expenses should be accounted for in deriving the cash flow to capitalize in a yield capitalization income model. The Commission stated that if the amortization expense is associated with assets that will be replaced, the amortization should be added to the cash flow, but the addition should be offset by any equivalent replacement capital expenditure. The Commission also ruled that if the amortization expense is associated with an intangible that is not expected to be replaced, i.e. customer lists, an appropriate amount of amortization expense should be added to the cash flow without and offsetting capital expenditure deduction. Typically, the amortization expense associated with an intangible like customer lists declines quite rapidly. Thus, the Commission indicated that the appropriate amount of amortization expense to be added to the cash flow should be the current year’s amortization expense adjusted downward to “reflect the declining pattern” of the amortization expense.

A new Virginia Code provision permits certain jurisdictions in Northern Virginia to impose an additional tax on commercial real estate (multi-family excluded) to fund transportation improvements of up to $0.25/$100 of assessed value.

What jurisdictions have adopted an ordinance allowing it to impose the tax in 2008? Fairfax and Arlington Counties and the City of Fairfax.

What jurisdictions are considering adopting an ordinance effective 2008? Cities of Alexandria and Manassas Park.

What Northern Virginia jurisdictions are not expected to pass an ordinance effective 2008? Counties of Loudoun and Prince William and City of Falls Church. However, they could pass an ordinance that would be effective in 2009.

Should we budget for this tax in 2008? It may be prudent to budget for the imposition of this tax in the following jurisdictions: Arlington and Fairfax Counties and the Cities of Alexandria, Fairfax and Manassas Park.

Property taxes were the agenda for a one-day special session of the Washington Legislature on November 29. The main topic was a one percent limit on annual property tax growth. This limit, which applies at the taxing district level rather than to individual properties, was first adopted when the voters overwhelmingly approved Initiative 747 in November 2001. The special legislative session was called after the Washington Supreme Court struck down Initiative 747 on the theory that it was misleading to the voters. Within days of the court’s 5-4 ruling, however, Governor Gregoire and an overwhelming majority in both houses of the Legislature showed that they had no such doubts about the voters’ wishes – Initiative 747 was re-enacted retroactive to tax year 2002. The court’s decision has an unmistakable political look about it, yet the real politicians wanted no part of the increased taxing authority delivered by the court.

Tax Department's Approaches to Valuation in West Virginia

In light of the very recent decision of the United States Supreme Court in CSX Transportation Inc. v. Georgia State Board of Equalization, 552 US ______ (Dec 4, 2007), a review of West Virginia's case law on choice of methodologies might be of interest. Although by legislative rule, the West Virginia Tax Department asserts that the valuation of both commercial real property and industrial personal property is based on all three traditional approaches to valuation, both the state of West Virginia and the county assessors rely almost exclusively on the cost approach in these valuations. The only general exception to this approach is the valuation of public utility property.

The West Virginia Supreme Court of Appeals has granted the State Tax Department broad discretion to give greatest weight to whichever approach to valuation it elects. The discretion goes as far as to permit the State Tax Department to value an independent coal burning power plant using the cost approach when all other power plants, which are public utilities, are valued using the income approach. In re Tax Assessment Against American Bituminous Power Partners, L.P., 208 W. Va. 250, 539 S.E.2d 757 (2000).

A proposal introduced in the Wisconsin Legislature in November 2007 would limit the ability of property owners (other than manufacturers) to challenge their assessments in de novo proceedings in circuit court.

Under present law, a non-manufacturing property owner must appeal its assessment to the local board of review. If the property owner is not satisfied following the board of review hearing, the property owner can file a claim against the municipality and then file a suit in circuit court, which proceeds as an independent civil action without regard to what occurred at the board of review.

Under the proposed legislation, municipalities will have the option of adopting an ordinance which somewhat expands the procedures before the board of review, and somewhat expands the scope of a certiorari appeal of the board decision to circuit court, in which the court has traditionally been limited to a review of the board of review record with no new evidence permitted. In any municipality which enacts such an ordinance, property owners would be limited to a certiorari appeal and would no longer have the option of filing a de novo refund suit.

The Wisconsin Assembly passed a version of the legislation in December 2007, and the Wisconsin Senate is scheduled to take up the legislation early in 2008. As currently drafted, the legislation would take effect for assessments beginning in 2008.