Tennessee Property Tax Update Archive

UPDATED december 2023

The Importance of Proper Representation

Many taxpayers ask their property tax attorneys to take over appeals after an unsuccessful hearing with the county board of equalization. 

In one recent case, an unrepresented taxpayer introduced into evidence excerpts from an appraisal report, but failed to provide the entire appraisal or have the appraiser appear for cross examination.  In his decision, the administrative judge reluctantly affirmed the assessor’s value, while stating that “additional evidence could possibly support a significant reduction in value.”  In other words, the taxpayer’s property warranted a reduction in value, but the evidence was not properly presented.  Unfortunately, the taxpayer did not timely appeal further, and the case was not preserved.

Taxpayers should engage counsel early in the process when seeking a property tax reduction, because there are many pitfalls in the appeal process that can deprive them of the tax savings they deserve.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED september 2022

Values Can Increase Mid-Year for New Construction

Tennessee Taxpayers developing new property may be surprised to receive a value increase notice late in the year, well after the deadline for assessors to certify their January 1 values.  By statute, Tennessee assessors are allowed to add the value of newly constructed improvements to the tax rolls during the current year so long as the improvements are “substantially complete” before September 1.  In that case, the assessor’s value will be prorated between the January 1 value and the value of the property as-of the date of completion.

The term “substantially complete” leaves much discretion in the hands of the county assessors, who may be aggressive about deciding when a property should come on the tax rolls.  An assessor who sees that the exterior shell of a building is enclosed may not bother to inspect the interior before deciding the building is “substantially complete.”  That building could still be several months away from producing its first revenue.  An appeal to the State Board of Equalization would be required to remedy the situation.

Additionally, assessors do not always issue their new construction increases timely.  The proration statute does not give them a deadline, but a Tennessee Attorney General’s opinion points to September 1 of the following year.  A Taxpayer who receives a value increase in October of the following year may not see a basis to challenge the value because it is fair or low.  However, they have a strong argument that the entire assessment is illegal and should be void.

Tennessee’s system of increasing values mid-year for new construction denies Taxpayers the opportunity to appeal those increases to the county boards of equalization, whose appeal deadlines have generally passed.  It creates a number of potential pitfalls that Taxpayers can avoid by acting quickly and consulting with experienced local counsel as soon as the notice is received.

Andrew M. Raines
Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED June 2022

Truth in Taxation Explained

There is often confusion among taxpayers surrounding Tennessee’s “truth in taxation” statutes.  The statutes require assessors to certify the “total assessed value” of taxable property, new construction and improvements not on the previous tax roll and deletions from the tax roll within the jurisdiction to the governing body of the jurisdiction.  The governing body must then certify a tax rate “which will provide the same ad valorem revenue for that jurisdiction as was levied during the previous year.”  In other words, if total assessments go up, the tax rate must come down. 

This provision leads many taxpayers to mistakenly believe that overall property taxes cannot increase.  Unfortunately for taxpayers, these statutes do not prevent a taxing jurisdiction’s ability to increase both the tax rate and assessments in the same year.  The statutory exception that makes this “double-dip” possible provides that any governing body may levy a greater tax rate so long as it (1) advertises its intent to exceed the certified rate in a newspaper for 30 days, and (2) adopts a resolution levying a tax rate in excess of the certified tax rate. 

This exception swallows the rule.  Taxing jurisdictions may merely give lip service to maintaining the status quo while being free to raise tax rates and assessments in the same year.  This is authorized by law despite the potential windfall to the government and hardship on the taxpayers.  A taxpayer’s only real protection is to challenge the value of their property if they believe it is overvalued.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED december 2021

Paying Taxes on Properties Under Appeal in Tennessee

Taxpayers in Tennessee are often faced with tax payment deadlines prior to the conclusion of appeals filed to the Board of Equalization. Are taxpayers in Tennessee required to pay the taxes by the delinquency date even if the appeal is not concluded?

In Tennessee, taxes based on assessments under appeal at the County and State Boards of Equalization are not deemed delinquent while the appeal is pending, so long as the undisputed portion of tax has been paid by the delinquency date. The taxpayer may pay the amount of taxes that would be owed if the appeal is successful. Even if the taxpayer loses the appeal, the payment of the undisputed portion allows taxpayer to pay the balance due at a favorable interest rate (two points below the composite prime rate) instead of the punitive statutory rate (18% per annum).

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED september 2021

No Distinct Drug Store Market In Tennessee

The proper methods of valuing single-tenant buildings occupied by creditworthy drug store tenants has been at issue in Tennessee for several years.  Without much guidance from the State Board of Equalization, the potential pitfalls in preparing for drug store appeals have been numerous.  However, the State Board recently clarified the types of comparable sales and rents that drug store appraisers may use in a decision on September 28, 2021, when an administrative judge ruled that “the fact that drugstores may be advertised for investment purposes as a distinct category does not mean that they are not general retail.  Therefore, for market valuation purposes, the most relevant comparables are a mix of general retail, including, but not limited to drug stores.”  The judge also rejected the Assessor’s build-to-suit rents and sale-leaseback comparables, and imposed a requirement of affirmative proof that such comparables represent market value in ruling that “[d]rug stores are primarily built or purchased as part of build-to-suit or sale-leaseback transactions.  Built-to-suit rent may not reflect market rent and may be used as a financing vehicle.  Similarly, sale-leasebacks may not reflect market value and are typically financially driven.  Purchase price and rent negotiated by the investor and the ‘credit tenant’ as well as the capitalization rate indicated by the transaction may not reflect market norms and could be unduly influenced by the credit-worthiness of the seller/tenant and term of the lease.  The reliance on either build-to-suit or sale-leasebacks as comparables must be supported by evidence that the terms reflect market rent, rather than a contract rent that reflects financing constraints.”

Drew Raines
Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED june 2021

Missed Deadlines

There are many deadlines in the property tax appeal process. While it is natural to assume that missing one of these deadlines would extinguish the ability to challenge an assessment, this is not always the case.

For example, when taxpayers miss the deadline for appealing a county board of equalization decision to the state board of equalization, there may be a statutory remedy. Tennessee law provides that, in certain circumstances, taxpayers can still file a state board appeal, despite missing the appeal deadline, if they can show “reasonable cause” for their failure to file an appeal.

Taxpayers should contact counsel when seeking a property tax reduction even if they believe that a deadline may have been missed. There are many nuances in the appeal process, and engaging proper counsel is the only way to maximize the chances of achieving tax savings.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED december 2020

The Role of Equalization in Tennessee Property Tax Appeals

Equalization is a concept that is meant to ensure that property assessments are equitable so no one taxpayer is unfairly taxed on their property compared to their neighbor with comparable property.

In Tennessee, however, equalization arguments are generally insufficient to achieve value reductions. The standard for valuation in Tennessee is 100% of market value. The State Board of Equalization does not see reductions to below market value as consistent with that standard. Taxpayers are told that if the neighbor’s comparable property is appraised below 100% of its market value, then the only remedy is to raise the value of the neighbor’s property.

To prevail on an equalization argument in Tennessee, the taxpayer must show proof that the entire surrounding area of comparable property benefitted from systematic undervaluation, and that the taxpayer’s property somehow avoided that benefit. If a taxpayer believes that they have a strong equalization argument, they should seek the counsel of a property tax attorney.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED June 2020

The Importance of Proper Representation

Many taxpayers ask their property tax attorneys to take over appeals after an unsuccessful hearing with the county board of equalization.  

In one recent case, an unrepresented taxpayer introduced into evidence excerpts from an appraisal report, but failed to provide the entire appraisal or have the appraiser appear for cross examination.  In his decision, the administrative judge reluctantly affirmed the assessor’s value, while stating that “additional evidence could possibly support a significant reduction in value.”  In other words, the taxpayer’s property warranted a reduction in value, but the evidence was not properly presented.  Unfortunately, the taxpayer did not timely appeal further, and the case was not preserved.

Taxpayers should engage counsel early in the process when seeking a property tax reduction, because there are many pitfalls in the appeal process that can deprive them of the tax savings they deserve.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED march 2020

Correction of Error

Taxpayers must file a timely appeal to the local board of equalization or lose the right to contest their property tax assessment.Taxpayers must file a timely appeal to the local board of equalization or lose the right to contest their property tax assessment.

An exception to the requirement of filing to the local board is that the taxpayer may seek relief from the assessor under the “correction of error” statute.  If the assessor refuses to correct the error, the taxpayer may file an appeal directly to the Tennessee State Board of Equalization.  Assessors may correct “errors” which are defined as “obvious clerical mistakes, involving no judgment of or discretion by the assessor” which are “apparent from the face of the official tax and assessment records.”  For example, the Tennessee State Board of Equalization has held that the Assessor’s erroneous classification and valuation of a department store as a strip shopping center was a correctable error.

The deadline for the taxpayer to request a correction of error is March 1st of the second year following the tax year in question.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED december 2019

Tax Relief for Damaged Property

Taxpayers should be aware of relief provided for damaged property under Tennessee law.  Tennessee assessors value property in its condition as of January 1st, regardless of its condition during the rest of the year.

An exception to this general rule exists if, before September 1st, an improvement is demolished, destroyed, or substantially damaged.  If it is not restored and nothing else is constructed before September 1st, then the assessor must value the property in its damaged condition from the date of damage until December 31st.  The value is then prorated between the January 1st value and the date of damage value.

It is important to note that if damaged improvements are repaired or rebuilt before September 1st, then there is no relief.  The January 1st value will remain on the property all year, though the property may not have been in service for several months.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED september 2019

Truth in Taxation Explained

There is often confusion among taxpayers surrounding Tennessee’s “truth in taxation” statutes.  The statutes require assessors to certify the “total assessed value” of taxable property, new construction and improvements not on the previous tax roll and deletions from the tax roll within the jurisdiction to the governing body of the jurisdiction.  The governing body must then certify a tax rate “which will provide the same ad valorem revenue for that jurisdiction as was levied during the previous year.”  In other words, if total assessments go up, the tax rate must come down. 

This provision leads many taxpayers to mistakenly believe that overall property taxes cannot increase.  Unfortunately for taxpayers, these statutes do not prevent a taxing jurisdiction’s ability to increase both the tax rate and assessments in the same year.  The statutory exception that makes this “double-dip” possible provides that any governing body may levy a greater tax rate so long as it (1) advertises its intent to exceed the certified rate in a newspaper for 30 days, and (2) adopts a resolution levying a tax rate in excess of the certified tax rate. 

This exception swallows the rule.  Taxing jurisdictions may merely give lip service to maintaining the status quo while being free to raise tax rates and assessments in the same year.  This is authorized by law despite the potential windfall to the government and hardship on the taxpayers.  A taxpayer’s only real protection is to challenge the value of their property if they believe it is overvalued.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

Paying Taxes on Properties Under Appeal in Tennessee

Taxpayers in Tennessee are often faced with tax payment deadlines prior to the conclusion of appeals filed to the Board of Equalization.  Are taxpayers in Tennessee required to pay the taxes by the delinquency date even if the appeal is not concluded?

In Tennessee, taxes based on assessments under appeal at the County and State Boards of Equalization are not deemed delinquent while the appeal is pending, so long as the undisputed portion of tax has been paid by the delinquency date.  The taxpayer may pay the amount of taxes that would be owed if the appeal is successful.  Even if the taxpayer loses the appeal, the payment of the undisputed portion allows taxpayer to pay the balance due at a favorable interest rate (two points below the composite prime rate) instead of the punitive statutory rate (18% per annum).

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED MARCH 2019

Missed Deadlines

There are many deadlines in the property tax appeal process.  While it is natural to assume that missing one of these deadlines would extinguish the ability to challenge an assessment, this is not always the case.    

For example, when taxpayers miss the deadline for appealing a county board of equalization decision to the state board of equalization, there may be a statutory remedy.  Tennessee law provides that, in certain circumstances, taxpayers can still file a state board appeal, despite missing the appeal deadline, if they can show “reasonable cause” for their failure to file an appeal.

Taxpayers should contact counsel when seeking a property tax reduction even if they believe that a deadline may have been missed.  There are many nuances in the appeal process, and engaging proper counsel is the only way to maximize the chances of achieving tax savings.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED december 2018

The Role of Equalization in Tennessee Property Tax Appeals

Equalization is a concept that is meant to ensure that property assessments are equitable so no one taxpayer is unfairly taxed on their property compared to their neighbor with comparable property.

In Tennessee, however, equalization arguments are generally insufficient to achieve value reductions.  The standard for valuation in Tennessee is 100% of market value.  The State Board of Equalization does not see reductions to below market value as consistent with that standard.  Taxpayers are told that if the neighbor’s comparable property is appraised below 100% of its market value, then the only remedy is to raise the value of the neighbor’s property. 

To prevail on an equalization argument in Tennessee, the taxpayer must show proof that the entire surrounding area of comparable property benefitted from systematic undervaluation, and that the taxpayer’s property somehow avoided that benefit.  If a taxpayer believes that they have a strong equalization argument, they should seek the counsel of a property tax attorney.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED september 2018

High Taxpayer Expectations For New Shelby County, Tennessee Assessor

On September 1, 2018, Melvin Burgess Jr. took office as the new Assessor of Property for Shelby County, Tennessee. He succeeds Cheyenne Johnson, who has served as Assessor for the past 10 years. Burgess new job: to fairly assess all taxable property in the largest county in Tennessee. Shelby County encompasses the City of Memphis, with the highest property tax rate in the state. Good decisions by the Shelby County Assessor are crucial, as the tax burden is heavy.

What do we know about the new Assessor? He served for 8 years on the County Commission. He has a background in accounting and was the director of internal audit for Shelby County Schools. He previously served on the Industrial Development Board of Memphis and Shelby County, which grants PILOT (payment-in-lieu-of-tax) incentives.

What do the Taxpayers of Shelby County want from the new Assessor? Fairness in the tax appeal process is vital, so we hope for an Assessor that will not attempt to use his influence to deny fair process to the Taxpayer. We hope for an Assessor that will not appeal value reductions made by the Shelby County Board of Equalization. We hope for an Assessor who does not contend values higher than his original valuation in retaliation for Taxpayer appeals. We hope for an Assessor that will encourage a culture of fairness and openness, and who will listen to and consider the input of Taxpayers. We hope for an Assessor who wants to arrive at the right answer, instead of defending his valuation at all costs.

We have high expectations for the new Assessor, and we will be watching his performance to decide whether or not he meets them.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED June 2018

What is a Newspaper Printing Press Worth in the Internet Age?

In an interesting recent decision, a Tennessee chancellor took on the issue of how to value a newspaper printing press in the age of the internet. In Memphis Publishing Co. v. Tenn. State Bd. of Equalization, No. 15-1073-III(I) (Ch. Ct. Dist. 20, April 25, 2018), the taxpayer was the operator of The Commercial Appeal, the primary print newspaper in Memphis. They owned a large amount of personal property in their newspaper printing plant, including a printing press. The original cost of this property was around $24 million. The Shelby County Assessor argued that the property should be valued using “standard valuation,” which would apply statutory depreciation factors to the original cost, resulting in values around $11, $10 and $9 million over the three tax years at issue. The taxpayer argued that the property should valued using a “non-standard valuation,” which would break away from the statutorily-prescribed depreciation factors. The taxpayer further argued that the property should be valued at its “value-in-exchange,” i.e. the value that the taxpayer could get for the property on the open market. The chancellor agreed with the taxpayer and reduced the value of the property by nearly 99% to $134,000, $124,000, and $113,000 over the three tax years at issue. This case illustrates that taxpayers must be aware of the potential for property tax savings that could result from technological advances and shifting economies.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED March 2018

Key Dates

Tennessee taxpayers should be familiar with key dates throughout 2018 so that appeals and payments will be timely.  Some dates vary by county.

January 1

Statutory assessment date.  Property is valued “as of” that date.

March 1

Deadline to file personal property schedules in Tennessee counties. 

May 20

Assessors certify values and, in the case of an increase, send out Notices of Assessment.

June 1

County Boards of Equalization convene to hear appeals.  Taxpayers may lose their appeal rights if they do not appeal to the County Board.

August 1

General deadline for appeals to the Tennessee State Board of Equalization, or 45 days from the date the notice of the county board action was sent, whichever is later.

October 1

The majority of property taxes are due in most jurisdictions. 

It is important for taxpayers to be aware of the specific dates for timely compliance, appeals, and payments in their particular county.

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Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED September 2017

Correction of Error

Taxpayers must file a timely appeal to the local board of equalization or lose the right to contest their property tax assessment.

An exception to the requirement of filing to the local board is that the taxpayer may seek relief from the assessor under the “correction of error” statute.  If the assessor refuses to correct the error, the taxpayer may file an appeal directly to the Tennessee State Board of Equalization. 

Assessors may correct “errors” which are defined as “obvious clerical mistakes, involving no judgment of or discretion by the assessor” which are “apparent from the face of the official tax and assessment records.”  For example, the Tennessee State Board of Equalization has held that the Assessor’s erroneous classification and valuation of a department store as a strip shopping center was a correctable error.

The deadline for the taxpayer to request a correction of error is March 1st of the second year following the tax year in question.

Andy Raines
Evans Petree PC
American Property Tax Counsel (APTC)

UPDATED JULY 2017

Tax Relief for Damaged Property

Many Tennessee properties have been damaged by severe weather over the past year.  A recent storm in Memphis knocked out power for 188,000 customers of MLGW, the city’s utility provider, and caused serious damages to many properties.  Taxpayers should be aware of relief provided for damaged property under Tennessee law.

Tennessee assessors value property in its condition as of January 1st, regardless of its condition during the rest of the year.

An exception to this general rule exists if, before September 1st, an improvement is demolished, destroyed, or substantially damaged.  If it is not restored and nothing else is constructed before September 1st, then the assessor must value the property in its damaged condition from the date of damage until December 31st.  The value is then prorated between the January 1st value and the date of damage value.

It is important to note that if damaged improvements are repaired or rebuilt before September 1st, then there is no relief.  The January 1st value will remain on the property all year, though the property may not have been in service for several months.

The Tennessee legislature has also approved special one-time property tax relief for properties damaged by the Gatlinburg wildfires in November 2016.  This measure will allow certain properties to have their damaged values prorated even though the damage occurred after September 1.    Property owners must apply for this relief by June 30, 2017.

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Evans Petree
American Property Tax Counsel (APTC)

 

UPDATED MARCH 2017

Truth in Taxation Explained

There is often confusion among taxpayers surrounding Tennessee’s “truth in taxation” statutes.  The statutes require assessors to certify the “total assessed value” of taxable property, new construction and improvements not on the previous tax roll and deletions from the tax roll within the jurisdiction to the governing body of the jurisdiction.  The governing body must then certify a tax rate “which will provide the same ad valorem revenue for that jurisdiction as was levied during the previous year.”  In other words, if total assessments go up, the tax rate must come down. 

This provision leads many taxpayers to mistakenly believe that overall property taxes cannot increase.  Unfortunately for taxpayers, these statutes do not prevent a taxing jurisdiction’s ability to increase both the tax rate and assessments in the same year.  The statutory exception that makes this “double-dip” possible provides that any governing body may levy a greater tax rate so long as it (1) advertises its intent to exceed the certified rate in a newspaper for 30 days, and (2) adopts a resolution levying a tax rate in excess of the certified tax rate. 

This exception swallows the rule.  Taxing jurisdictions may merely give lip service to maintaining the status quo while being free to raise tax rates and assessments in the same year.  This is authorized by law despite the potential windfall to the government and hardship on the taxpayers.  A taxpayer’s only real protection is to challenge the value of their property if they believe it is overvalued.

Andy Raines
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated December 2016

Major Tennessee Reappraisals in 2017

After the “Great Recession,” assessors across Tennessee used mid-recession data in their mass appraisal models.  As a result, many taxpayers have enjoyed several years of undervaluation as their property values have appreciated during the economic recovery.  How long can these taxpayers expect to avoid full taxation at current market value?

The counties in Tennessee are required by statute to have 4, 5 or 6-year reappraisal cycles, depending on various factors, such as population.  The four biggest counties are on 4-year cycles: Davidson (Nashville), Hamilton (Chattanooga), Knox (Knoxville) and Shelby (Memphis).  The last reappraisal for these counties was in 2013, based primarily on data from 2011 and 2012, but all four counties will reappraise again in 2017 based primarily on data from 2015 and 2016.  Several other counties will also reappraise in 2017.

The Tennessee real estate market has steadily improved over the past few years, and the assessors’ reappraisals in 2017 will reflect this.  Many properties that previously enjoyed a low tax burden due to recession-based data will see drastic increases in their tax bills.  To the extent that the tax burden affects the net income of a property, the 2017 reappraisals could put the brakes on growth in the Tennessee real estate market.  Taxpayers should be prepared for “sticker shock” in 2017.

Andy Raines
Evans Petree PC 
American Property Tax Counsel (APTC)

 

Updated September 2016

Paying Taxes on Properties under Appeal in Tennessee

Taxpayers in Tennessee are often faced with tax payment deadlines prior to the conclusion of appeals filed to the Board of Equalization.  Are taxpayers in Tennessee required to pay the taxes by the delinquency date even if the appeal is not concluded?

In Tennessee, taxes based on assessments under appeal at the County and State Boards of Equalization are not deemed delinquent while the appeal is pending, so long as the undisputed portion of tax has been paid by the delinquency date.  The taxpayer may pay the amount of taxes that would be owed if the appeal is successful.  Even if the taxpayer loses the appeal, the payment of the undisputed portion allows taxpayer to pay the balance due at a favorable interest rate (two points below the composite prime rate) instead of the punitive statutory rate (18% per annum).

Andy Raines
Evans Petree PC 
American Property Tax Counsel (APTC)

 

Updated June 2016

Missed Deadlines

There are many deadlines in the property tax appeal process. While it is natural to assume that missing one of these deadlines would extinguish the ability to challenge an assessment, this is not always the case.

For example, when taxpayers miss the deadline for appealing a county board of equalization decision to the state board of equalization, there may be a statutory remedy. Tennessee law provides that, in certain circumstances, taxpayers can still file a state board appeal, despite missing the appeal deadline, if they can show “reasonable cause” for their failure to file an appeal.

Taxpayers should contact counsel when seeking a property tax reduction even if they believe that a deadline may have been missed. There are many nuances in the appeal process, and engaging proper counsel is the only way to maximize the chances of achieving tax savings. 

Andy Raines
Evans Petree PC 
American Property Tax Counsel (APTC)

 

Updated March 2016

The Role of Equalization in Tennessee Property Tax Appeals

Equalization is a concept that is meant to ensure that property assessments are equitable so no one taxpayer is unfairly taxed on their property compared to their neighbor with comparable property. In Tennessee, however, equalization arguments are generally insufficient to achieve value reductions. The standard for valuation in Tennessee is 100% of market value. The State Board of Equalization does not see reductions to below market value as consistent with that standard. Taxpayers are told that if the neighbor’s comparable property is appraised below 100% of its market value, then the only remedy is to raise the value of the neighbor’s property. To prevail on an equalization argument in Tennessee, the taxpayer must show proof that the entire surrounding area of comparable property benefitted from systematic undervaluation, and that the taxpayer’s property somehow avoided that benefit. If a taxpayer believes that they have a strong equalization argument, they should seek the counsel of a property tax attorney.

Andy Raines
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated December 2015

The Importance of Proper Representation

Many taxpayers ask their property tax attorneys to take over appeals after an unsuccessful hearing with the county board of equalization. In one recent case, an unrepresented taxpayer introduced into evidence excerpts from an appraisal report, but failed to provide the entire appraisal or have the appraiser appear for cross examination. In his decision, the administrative judge reluctantly affirmed the assessor’s value, while stating that “additional evidence could possibly support a significant reduction in value.” In other words, the taxpayer’s property warranted a reduction in value, but the evidence was not properly presented. Unfortunately, the taxpayer did not timely appeal further, and the case was not preserved. Taxpayers should engage counsel early in the process when seeking a property tax reduction, because there are many pitfalls in the appeal process that can deprive them of the tax savings they deserve.

Andy Raines
Evans Petree
American Property Tax Counsel (APTC)

 

Updated June 2015

Payment of Taxes With Appeal Pending

Taxpayers in Tennessee should be familiar with the requirements of paying taxes while an appeal is pending before the Boards of Equalization.  Taxpayers have two options.

First, a taxpayer may pay the entire amount of taxes as billed.  If the appeal is successful and the assessment reduced, then the government is required to refund the excess taxes paid, plus interest as provided under Tennessee law.

Alternatively, a taxpayer may pay only the undisputed amount of taxes.  If, at the conclusion of the appeal, additional taxes are owed, then those taxes, plus interest at the same rate the government pays on refunds, must be remitted.

Taxpayers should comply with Tennessee law regarding the payment of taxes pending the resolution of an appeal.  Failure to comply may result in the imposition of interest and penalty at a rate of 18 percent per year.

Andy Raines
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated March 2015

Tennessee Property Tax Deadlines

Tennessee taxpayers should be familiar with key dates throughout 2015 so that appeals and payments will be timely.

January 1
Statutory assessment date. Property is valued “as of” that date.

March 1
Deadline to file personal property schedules in Tennessee counties.

May 20
Assessors certify values and, in the case of an increase, send out Notices of Assessment.

June 1
County Boards of Equalization convene to hear appeals. Taxpayers may lose their appeal rights if they do not appeal to the CountyBoard.

August 1
General deadline for appeals to the Tennessee State Board of Equalization, or 45 days from the date the notice of the county board action was sent, whichever is later.

October 1
The majority of property taxes are due in most jurisdictions. The taxes become delinquent on February 28 of the following year.

It is important for taxpayers to be aware of these key dates for timely compliance, appeals, and payments.

Andy Raines
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated December 2014

Golf Courses Are Struggling

The popularity of golf in the United States has taken a hit recently.  The World Golf Foundation estimates that, between 2005 and 2013, the number of golfers in the U.S. dropped from 30 million to 25 million, and the number of rounds played dropped from 550 million to 465 million.  Experts have noted many potential reasons for the decline, including the recession, the struggles of Tiger Woods, and a lack of interest from millennials.  Golf courses have seen the effects of this decline.  According to the National Golf Foundation, there were 4,500 new golf courses opened in the U.S. from 1986 to 2005, but more courses have closed than opened in each of the last eight years since then, including 157 closures and 14 openings in 2013.  Owners of golf courses need to make sure that assessors are taking note of golf’s struggles when valuing their property.

Will Raines, Esq.
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated September 2014

Will Low-Income Housing Tax Credits Continue to Be Valued in Tennessee?

In its last session, the General Assembly considered Senate Bill 1671/House Bill 1390.  The summary of the bill states: “As introduced, requires the assessor, upon application of an owner of property that qualifies for federal low-income housing tax credits, to value the property based on actual income derived from the property without consideration of any value attributable to the low-income housing tax credits. - Amends TCA Title 67, Chapter 5.”  Currently Tennessee is one of only a handful of states that may consider the value of low-income housing tax credit (LIHTC) when valuing property for property tax purposes.  The Tennessee Advisory Committee on Intergovernmental Relations is making a recommendation on the bills to the General Assembly late this year.  The bill will be taken up again by the General Assembly in its next session.

American Property Tax Counsel (APTC)

 

Updated March 2014

Tax Relief for Damaged Property

Many Tennessee properties were damaged in extreme weather during this unusually cold winter. Taxpayers should be aware of relief provided under Tennessee law.

Tennessee assessors value property in its condition as of January 1st, regardless of its condition during the rest of the year.

An exception to this general rule exists if, before September 1st, an improvement is demolished, destroyed, or substantially damaged. If it is not restored and nothing else is constructed before September 1st, then the assessor must value the property in its damaged condition from the date of damage until December 31st. The value is then “pro-rated” between the January 1st value and the date of damage value.

It is important to note that if damaged improvements are repaired or rebuilt before September 1st, then there is no relief. The January 1st value will remain on the property all year, though the property may not have been in service for several months.

American Property Tax Counsel (APTC)

 

Updated September 2013

The Relevance of Historical Performance in Apartment Value Cases

Apartment owners in Tennessee often rely on the historical income performance of their properties when presenting income approaches in property tax appeals. However, the Tennessee State Board of Equalization recently reminded taxpayers in a Williamson County decision that performance prior to the assessment date alone is not a sufficient indicator of a property's worth.

The administrative judge found that the taxpayer's focus on the property's prior three years of performance in determining gross income for the analysis was flawed. The taxpayer failed to stabilize income based on the reasonably foreseeable trends in income and expenses.

The judge's ruling should theoretically work in the taxpayer's favor where income will foreseeably drop, perhaps based on declining occupancy or more liberal concessions. Tennessee taxpayers should seek representation that is both knowledgeable of the rule and experienced in identifying justifications for downward stabilization of income and upward stabilization of expenses in income analyses.

Will Raines
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated June 2013

Paying Taxes on Properties Under Appeal in Tennessee

Taxpayers in Tennessee are often faced with tax payment deadlines prior to the conclusion of appeals filed to the Board of Equalization. Are taxpayers in Tennessee required to pay the taxes by the delinquency date even if the appeal is not concluded?

In Tennessee, taxes based on assessments under appeal at the County and State Boards of Equalization are not deemed delinquent while the appeal is pending, so long as the undisputed portion of tax has been paid by the delinquency date. The taxpayer may pay the amount of taxes that would be owed if the appeal is successful. Even if the taxpayer loses the appeal, the payment of the undisputed portion allows taxpayer to pay the balance due at a favorable interest rate (two points below the composite prime rate) instead of the punitive statutory rate (18% per annum).

 

Updated March 2013

New Values for 2013 Beginning to Come Out

Many counties in Tennessee, including the four largest counties, are in the midst of a reappraisal for 2013. New values have already begun to trickle out. Shelby County, for example, plans to mail all reappraisal notices by April 20, 2013.

Assessors are faced with a very difficult task this year. Most counties last reappraised all property in 2009, while the country was still reeling in the aftermath of an economic collapse. Despite the recession, property values mostly increased as they had in every reappraisal for many years.
While in the past a reappraisal meant increased assessments across the board, 2013 will likely see many properties assessed at lower values than in 2009. This potential decrease in assessed values will lead to a reduction in revenue for local governments, which will force local politicians to consider unpopular property tax rate increases.

 

Updated December 2012

2013 Reappraisal in Full Swing

Counties in Tennessee are on four- to six-year reappraisal cycles, and in 2013 several counties are undergoing reappraisal, including the four biggest counties in Tennessee. These reappraisals often result in increased assessments. Property owners should file appeals for any parcels that they believe have been overvalued.

Beginning on June 1, county boards of equalization will meet and sit in regular session for 2013; regular session lasts from a few days in small counties to thirty (30) days in large counties. Taxpayers must appeal to the county board of equalization prior to final adjournment of the regular session. If the taxpayer desires to appeal further, he or she must appeal to the Tennessee State Board of Equalization on or before August 1 of the tax year in question or within forty-five (45) days of the date notice of the local board of equalization action was sent, whichever is later.

 

Updated September 2012

The Role of Equalization in Tennessee Property Tax Appeals

Equalization of property assessments is a concept that extends throughout the property tax laws of the United States. These laws adopt protections that ensure property assessments are equitable so no one taxpayer is unfairly taxed on their property compared to their neighbor with comparable property. If a taxpayer's property is appraised at 100% of its fair market value by the assessor, but the neighbor's comparable property is appraised at 75% of its fair market value, equalization might allow a value reduction to bring the taxpayer's value ratio in line with the neighbor's.

In Tennessee, however, equalization arguments are generally insufficient to achieve value reductions. The standard for valuation in Tennessee is 100% of fair market value. The State Board of Equalization does not see reductions to below market value as consistent with that standard, regardless of comparable properties' appraisals. Taxpayers are told that if the neighbor's comparable property is appraised below 100% of its market value, then the only remedy is to raise the value of the neighbor's property.

To prevail on an equalization argument in Tennessee, the taxpayer must show proof that the entire surrounding area of comparable property benefited from systematic undervaluation, and that the taxpayer's property somehow avoided that benefit when it was appraised at 100% of fair market value. It is very unusual to have such clear proof, however, if a taxpayer believes that they have a strong equalization argument, they should seek the counsel of a property tax attorney to evaluate the merits of the case.

Drew Raines
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated March 2012

Meeting Evidentiary Standards in Tennessee Property Tax Appeal Cases

When clients have a property tax appeal that is unresolved as of the tax payment deadline, they often have this question: should I pay my property taxes? The first answer is easy. Yes, Tennessee taxpayers should pay their property taxes timely to avoid the accrual of penalties and interest as well as the risk that the appeal will be dismissed. However, this leads to a second question: how much should I pay?

In Tennessee, taxes based on assessments under appeal at the county and state boards of equalization are not deemed delinquent while the appeal is pending, so long as the undisputed portion of tax has been paid. This can result in huge relief! For example, if a taxpayer owns property valued ten times too high but has filed an appeal, payment of one tenth of the tax is sufficient to stave off penalties and interest until the appeal is over. Even if the taxpayer loses, the good faith belief in a lower value will have transformed the punitive statutory interest rates into the composite prime rate (minus two points). Thus, there is no incentive to pay the entire amount shown on the tax bill, only the undisputed portion.

Taxpayers have at their disposal a potent arsenal of tools for avoiding unfair assessments, but those tools are narrowly defined and can be easily misapplied. There is no substitute for years of experience, and taxpayers should seek counsel to navigate the complicated world of property tax appeals.

 

Updated September 2011

Meeting Evidentiary Standards in Tennessee Property Tax Appeal Cases

Many taxpayers come to Evans Petree and ask us to take over their property tax appeals after an unsuccessful hearing with the relevant county's Board of Equalization. Sometimes, our later success at the state level results not from a more complicated analysis of the valuation issues, but from a full showing of the evidence that the taxpayer's argument was based on.

In one recent state board appeal, the taxpayer introduced into evidence excerpts from an appraisal report, but failed to provide the entire appraisal or have the appraiser appear for cross examination. In his decision, the administrative judge "reluctantly" affirmed the assessor's value based on the presumption of correctness of the local Board of Equalization's decision. The judge stated that his reluctance "stems from the recognition that additional evidence could possibly support a significant reduction in value." In other words, the taxpayer's property warranted a reduction in value, but the evidence was not properly presented. Unfortunately, the taxpayer did not appeal further, and the case was not preserved.

Taxpayers should engage counsel when seeking a property tax reduction, because there are many pitfalls in the appeal process that can deprive them of the tax savings they deserve. The evidence standards are just one example.

Drew Raines
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated June 2011

Tax Relief for Damaged Property

Recent flooding significantly damaged many Tennessee properties. Taxpayers should be aware of relief provided under Tennessee law. Tennessee assessors value property in its condition as of January 1st, regardless of its condition during the rest of the year.

An exception to this general rule exists if, before September 1st, an improvement is demolished, destroyed, or substantially damaged by, among other things, flooding. If the property is not restored and nothing else is constructed before September 1st, then the assessor shall value the property in its damaged condition from the date of damage until December 31st. The January 1st value will be used until the date of damage. The value is then "pro-rated" between the January 1st value and the date of damage value.

It is important to note that if damaged improvements are "restored" before September 1st, then there is no provision for relief. The January 1st value will remain on the property all year, though the property may not have been in service for several months.

Andy Raines
Nancy Hunt
Evans Petree PC
American Property Tax Counsel (APTC)

 

Updated March 2011

Truth in Taxation Explained

There is typically much confusion among taxpayers surrounding Tennessee’s “truth in taxation” statutes.  The statutes require county assessors to certify the “total assessed value” of taxable property, new construction and improvements not on the previous tax roll and deletions from the tax roll within the jurisdiction to the governing body of the jurisdiction.  The governing body must then certify a tax rate “which will provide the same ad valorem revenue for that jurisdiction as was levied during the previous year.”  In other words, if total assessments go up, the tax rate must come down. 

This provision leads many taxpayers to mistakenly believe that overall property taxes cannot increase.  Unfortunately for taxpayers, these statutes do not prohibit, or even significantly restrict, a taxing jurisdiction’s ability to increase both the tax rate and assessments in the same year.  The statutory exception that makes this “double-dip” possible provides that any governing body may levy a greater tax rate so long as it (1) advertises its intent to exceed the certified rate in a newspaper for thirty days, and (2) adopts a resolution levying a tax rate in excess of the certified tax rate. 

This exception swallows the rule.  Taxing jurisdictions may merely give lip service to maintaining the status quo while being free to raise tax rates and assessments in the same year by following two easy steps.  This so called double-dip is authorized by law despite the windfall to the government and sometimes a real hardship on the taxpayers.  A taxpayer’s only real protection is to challenge the value of their property if they believe it is overvalued.

 

Updated September 2010

Correction of Error

Taxpayers must file a timely appeal to the local board of equalization or lose the right to contest their property tax assessment.

An exception to the requirement of filing to the local board is that the taxpayer may seek relief from the assessor under the "correction of error" statute. If the assessor refuses to correct the error, the taxpayer may file an appeal directly to the Tennessee State Board of Equalization.

Assessors may correct "errors" which are defined as "obvious clerical mistakes, involving no judgment of or discretion by the assessor" which are "apparent from the face of the official tax and assessment records." For example, the Tennessee State Board of Equalization has held that the Assessor's erroneous classification and valuation of a department store as a strip shopping center was a correctable error.

The deadline for the taxpayer to request a correction of error is March 1st of the second year following the tax year in question.

 

Updated June 2010

Tax Relief for Damaged Property

Recent flooding significantly damaged many Tennessee properties. Taxpayers should be aware of relief provided under Tennessee law.

Tennessee assessors value property in its condition as of January 1st, regardless of its condition during the rest of the year.

An exception to this general rule exists if, before September 1st, an improvement is demolished, destroyed, or substantially damaged by, among other things, flooding. If the property is not restored and nothing else is constructed before September 1st, then the assessor shall value the property in its damaged condition from the date of damage until December 31st. The January 1st value will be used until the date of damage. The value is then "pro-rated" between the January 1st value and the date of damage value.

It is important to note that if damaged improvements are "restored" before September 1st, then there is no provision for relief. The January 1st value will remain on the property all year, though the property may not have been in service for several months.

 

Updated December 2009

Tennessee Property Tax Deadlines

As the new year approaches, Taxpayers should be familiar with key dates throughout 2010 so that appeals and payments will be timely.

January 1
Statutory assessment date. Property is valued "as of" that date.

March 1
Deadline to file personal property schedules in Tennessee counties.

May 20
Assessors certify values and, in the case of an increase, send out Notices of Assessment.

June 1
County Boards of Equalization convene to hear appeals. Taxpayers may lose their appeal rights if they do not appeal to the County Board.

August 1
General deadline for appeals to the Tennessee State Board of Equalization, or 45 days from the date the notice of the county board action was sent, whichever is later.

October 1
The majority of property taxes are due in most jurisdictions. The taxes become delinquent on February 28 of the following year.

It is important for taxpayers to be aware of these key dates for timely compliance, appeals, and payments.

 

Updated September 2009

Truth in Taxation Explained

There is typically some confusion among taxpayers surrounding Tennessee's "truth in taxation" statutes. The statutes require county assessors to certify the "total assessed value" of taxable property, new construction and improvements not on the previous tax roll and deletions from the tax roll within the jurisdiction to the governing body of the jurisdiction. The governing body must then certify a tax rate "which will provide the same ad valorem revenue for that jurisdiction as was levied during the previous year." In other words, if assessments go up, the tax rate must come down.

This provision leads many taxpayers to mistakenly believe that overall property taxes cannot increase. Unfortunately for taxpayers, these statutes do not prohibit, or even significantly restrict, a taxing jurisdiction's ability to increase both the tax rate and assessments in the same year. The statutory exception that makes this "double-dip" possible provides that any governing body may levy a greater tax rate so long as it (1) advertises its intent to exceed the certified rate in a newspaper for thirty days, and (2) it adopts a resolution levying a tax rate in excess of the certified tax rate.

This exception swallows the rule. Taxing jurisdictions may merely give lip service to maintaining the status quo while being free to raise tax rates and assessments in the same year by following two easy steps. This so called double-dip is authorized by law despite the windfall to the government and hardship on the taxpayers. A taxpayer's only real protection is to challenge the value of their property if they believe it is overvalued.

 

Updated June 2009

Equalization Relief

Tennessee taxpayers are entitled to equalization relief even though Tennessee is a market value state. The equalization is based on a sales ratio determined for each county by the Tennessee State Board of Equalization. The purpose of the sales ratio study is to establish the median level of valuation. In a reappraisal year, the ratio is presumed to be 1.00. Davidson, Shelby, Knox and Hamilton, the most populous counties, are among the counties undergoing reappraisal this year.

The State Board has recently completed the sales ratio study for 2009 and determined the proper ratio for each county. These ratios can be found on the State Board of Equalization's website at http://www.tn.gov/comptroller/sb/ratio09.htm.

Taxpayers in each county have the right to be valued at that county's ratio. For example, Williamson County's (Brentwood and Franklin) equalization ratio is 0.8683. A taxpayer's property in Williamson County should be valued at no more than 86.83% of its fair market value. If the actual fair market value of a property in Williamson County is $10,000,000, then its value for property tax purposes should be no more than $8,683,000.

Taxpayers should be aware equalization relief is available in Tennessee and should understand how it works.

 

Updated March 2009

2009 Reappraisal – Taxpayers are in shock!

Countywide reappraisal often results in increased assessments because Tennessee counties are only reappraised every four- to six-years. The four largest Tennessee counties where last reappraised in 2005, and are among the counties undergoing reappraisal in 2009. In light of recent years' economic and market conditions, most taxpayers expected values to decrease in 2009. To the shock of many taxpayers, values have increased as much as 18% in certain areas. Although some residential property values have slightly decreased in value or remained flat, commercial property values have largely increased.

Property owners should file appeals for any parcels they believe have been overvalued. Beginning on June 1, county boards of equalization will meet and sit in regular session for 2009; regular session lasts from a few days in small counties to thirty (30) days in large counties. Taxpayers must appeal to the county board of equalization prior to final adjournment of the regular session. If the taxpayer desires to appeal further, he must appeal to the Tennessee State Board of Equalization before August 1 of the tax year in question or within forty-five (45) days of the date notice of the local board of equalization action was sent, whichever is later.

 

Updated December 2008

Non-Payment of Taxes

Taxpayers' right to appeal an assessment to the Tennessee State Board of Equalization is conditioned upon payment of the undisputed portion of the tax levied and payment of any delinquent tax. There has been much confusion in the administrative arena as well as the courts as to the practical implications of this "condition." Traditionally, where this condition had not been satisfied, the State Board would merely hold the appeal in abeyance until the Taxpayer paid the past due amount.

Tennessee Taxpayers should be aware that the General Assembly amended the statute that imposes this condition on a Taxpayer's appeal rights. The condition remains, but the statute now provides that "[f]ailure to pay the undisputed portion of the tax or any other property tax delinquency, or both, that have accrued on that property by the time of the hearing shall result in the appeal being dismissed without any further right to administrative appeal." As a result of this amendment, Taxpayers appeals will be dismissed if taxes are not paid by the hearing date.

According to at least one administrative judge, delaying the hearing of a case until the condition for appeal has been met, would frustrate the purpose of the legislation. For that reason, it seems likely that in Tennessee a Taxpayer who has unpaid property taxes as of the hearing date will lose his administrative appeal rights, and asking for the hearing to be rescheduled to allow the Taxpayer time to pay the taxes, will likely be denied.

 

Updated September 2008

Reasonable Cause

Taxpayers in Tennessee may challenge their property tax assessments by filing an appeal to the county board of equalization. If taxpayers are not satisfied with the county board's decision, they may file an appeal to the Tennessee State Board of Equalization. The appeal to the State Board must be filed before August 1st of the tax year, or within forty-five days of the date notice of the county board decision was sent, whichever is later.

The State Board of Equalization generally does not have jurisdiction if the taxpayer did not file an appeal to the county board. Tennessee law provides an exception to the requirement that an appeal must first be filed to the county board, known as "reasonable cause". The taxpayer has the right to a hearing to show reasonable cause for the failure to file an appeal with the county board.

There is a time limit in which to base an appeal on reasonable cause. The taxpayer must file the appeal on or before March 1st of the year subsequent to the tax year.

 

Updated June 2008

Equalization Ratios

Tennessee taxpayers are entitled to equalization relief even though Tennessee is a market value state. The equalization is based on a sales ratio determined for each county by the Tennessee State Board of Equalization. The purpose of the sales ratio study is to establish the median level of valuation.

The State Board has recently completed the sales ratio study for 2008 and determined the proper ratio for each county. The ratios in selected counties are:

Shelby 93.30%
Hamilton 92.73%
Madison 92.15%
Knox 90.94%
Davidson 87.80%
Williamson 86.83%

Taxpayers in each county have the right to be valued at that county's ratio. For example, a taxpayer's property in Shelby County (Memphis) should be valued at no more than 93.30% of its fair market value. If the actual fair market value of a property in Shelby County, for example, is $10,000,000, then its value for property tax purposes should be no more than $9,330,000.

Taxpayers should be aware equalization relief is available in Tennessee and should understand how it works.

 

Updated March 2008

Tax Relief for Damaged Property

Recent tornadoes significantly damaged many Tennessee properties. Taxpayers should be aware of relief provided under Tennessee law.

Tennessee assessors value property in its condition as of January 1st, regardless of its condition during the rest of the year.

An exception to this rule exists if, before September 1st, an improvement is demolished, destroyed, or substantially damaged. If it is not restored and nothing else is constructed before September 1st, then the assessor shall value the property in its damaged condition from the date of damage until December 31st. The January 1st value will be used until the date of damage. The value is then "pro-rated" between the January 1st value and the date of damage value.

It is important to note that if damaged improvements are repaired or rebuilt, before September 1st, then there is no provision for relief. The January 1st value will remain on the property all year, though the property may not have been in service for several months.

 

Updated December 2007

Assessment Ratio of Vacant Land in Tennessee

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:

• Immediate prior use
• Location
• Zoning
• Size
• Availability of utilities
• Legal restrictions on use

Developers owning vacant land should be aware of the ramifications of a commercial or industrial classification as opposed to a residential classification.

 

Updated September 2007

Payment of Taxes with Appeal Pending

Taxpayers in Tennessee should be familiar with the requirements of paying taxes while an appeal is pending before the Boards of Equalization. Taxpayers have two options.

First, a taxpayer may pay the entire amount of taxes as billed. If the appeal is successful and the assessment reduced, then the government is required to refund the excess taxes paid, plus interest as provided under Tennessee law.

Alternatively, a taxpayer may pay only the undisputed amount of taxes. If, at the conclusion of the appeal, additional taxes are owed, then those taxes, plus interest at the same rate the government pays on refunds, must be remitted.

Taxpayers should comply with Tennessee law regarding the payment of taxes pending the resolution of an appeal. Failure to comply may result in the imposition of interest and penalty at a rate of 18 percent per year.