UPDATED March 2018

Alabama Legislature Requires Disclosure of Additional Information for Sales Comps in Tax Appeals

In March 2018, the Alabama Legislature passed a bill requiring certain disclosures for those intending to offer sales or lease comparables in tax appeals. SB182, which will be codified as Ala. Code (1975) §40-3-27, requires any party (taxpayer or taxing jurisdiction) introducing a sales or lease comparable in a tax appeal to disclose the following:

(1) whether the proposed comparable property was occupied or unoccupied at the time of the transaction; and

(2) whether the proposed comparable property was subject to any use, deed, or lease restriction at the time of the transaction that prohibits the property, on which a building or structure sits, from being used for the purpose for which the building or structure was designed, constructed, altered, renovated, or modified.

Under the new statute, the party introducing the sales or lease comparable must disclose this information at the time it offers the comparable into evidence. Failing to disclose the information carries a harsh penalty, resulting in the comparable being deemed inadmissible.

The new bill is effective immediately upon execution by the Governor, so taxpayers, counsel and appraisers must diligently review their sales and lease comps to ensure compliance with the new act.

Aaron D. Vansant, Esq.
DonovanFingar, LLC
American Property Tax Counsel (APTC)

UPDATED July 2017

Rooftop Solar Systems Cannot be Assessed by the Arizona Department of Revenue

In a unanimous published opinion at the Arizona Court of Appeals, the Court held that rooftop solar systems cannot be assessed or taxed by the Arizona Department of Revenue (“ADOR”).  Starting in 2013, ADOR reversed years of practice by unilaterally deciding that it could assess and tax rooftop solar systems owned by companies that lease and install the systems on customers’ properties.  ADOR argued that the panels were subject to assessment as equipment involved in the operation of an electric generation facility.  Taxpayers – represented by Mooney, Wright & Moore, PLLC – sued for declaratory relief in the Arizona Tax Court, arguing that ADOR did not have authority to assess the rooftop solar systems because they were not part of an electric generation facility.  Taxpayers also argued that the systems had no value for property taxation purposes pursuant to A.R.S. 42-11054(C)(2) because they were designed primarily for on-site consumption. 

Taxpayers sought a quick resolution, filing a motion for summary judgment within thirty days of filing the lawsuit.  Through various discovery delays, however, ADOR did not respond to the motion for summary judgment for over seven months.  Ultimately, ADOR responded with a cross-motion for summary judgment, arguing that ADOR had the authority to tax the solar systems and that, alternatively, A.R.S. 42-11054(C)(2) was unconstitutional and the systems should be assessed by local counties.  The Tax Court issued a declaratory judgment agreeing with Taxpayers that ADOR had no authority to assess the rooftop solar systems.  The Tax Court further ruled, however, that the rooftop systems were assessable locally by the counties and that A.R.S. 42-11054(C)(2) was unconstitutional. 

Both parties appealed.  In a complete victory for Taxpayers, the Court of Appeals (Division 1) affirmed the Tax Court’s ruling that ADOR did not have authority to assess or tax the systems.  The Court also reversed the Tax Court’s ruling that A.R.S. 42-11054(C)(2) was unconstitutional (under either the Exemptions Clause or Uniformity Clause).  The Court also reversed the ruling that the counties in Arizona should be taxing such equipment.  The also reversed the Tax Court’s denial of attorneys’ fees to Taxpayers – holding that the Tax Court abused its discretion by failing to grant Taxpayers their fees and costs as the prevailing party pursuant to A.R.S. 12-348.  Finally, the Court granted Taxpayers request for attorneys’ fees on appeal.  The opinion represents a victory for all taxpayers in curtailing an overreach by ADOR and a significant victory for the solar industry in Arizona.  It can be found at SolarCity Corp. v. Arizona Dept. of Rev., No. 1 CA-TX 15-0008 (May 18, 2017) (2017 WL 2180393).

 
Mooney, Wright & Moore, PLLC
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

Property Tax Appeal Filing Season Opens in California

The season for filing Assessment Appeal Applications on 2019-2020 property tax assessments opens on July 2. In most of California’s 58 counties, taxpayers have until December 2 to file their appeals. In ten counties, however, appeals must be filed by September 16. Those counties include San Francisco, Alameda, Santa Clara, San Luis Obispo and Ventura, as well as five smaller and less populous counties. Applications must be postmarked by the U.S. Postal Service on or before these due dates to be timely. Assessment Appeal Applications are available on the websites for the county assessment appeals board or, for smaller counties, county board of supervisors’ websites. For most counties, the appeal applications can be filled-in on-line and, in some cases, the applications can even be submitted electronically. Note also that most counties require a filing fee be paid at the time the Assessment Appeal Application is submitted.

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Greenberg Traurig, LLP
American Property Tax Counsel (APTC)

Updated July 2017

New Rules in Ontario

The Assessment Review Board (“ARB”), which provides the first and only level of administrative law review of assessment appeals in Ontario, has changed its rules.

The ARB new rules are effective April 1, 2017. There are 122 rules and several Practice Directions.  Most significantly, all appeals will be grouped as either “General” or “Summary”.  General proceedings have a detailed schedule to be adhered to unless it is altered by the parties with the consent of the ARB. All appeals are deemed to be general proceedings unless they are specified as summary proceedings.  The details include specified hard dates for inspections, productions, examinations for discovery, motions, exchange of witness statements and reports.

All of this means that the litigation before the ARB will be increasingly complex and rule-bound. It is not an area for amateurs. 

J. Bradford Nixon
Nixon Fleet & Poole LLP
American Property Tax Counsel (APTC)

Updated March 2015

Colorado Begins Its 2015 Reassessment

Bi-annually, Colorado Assessors perform a revaluation/reappraisal for purposes of assessing the value of Colorado property using a “base period” method. In tax years 2013 and 2014, nonresidential property values were based on sales, income and cost data from a “base period” commencing on January 1, 2011 and ending on June 30, 2012. A new “base period” with its likely higher values now comes into play. 2015 is a revaluation year in which Colorado County Assessors will reappraise the value of real property. Under Colorado law, 2015 and 2016 nonresidential property values will be based on sales, income and cost data from a base period commencing January 1, 2013 and ending June 30, 2014.

Given the general upward trend in real estate values since the last base period ending June 30, 2012, many property owners may expect to see an increase in their property values and consequently, their property taxes for 2015 and 2016. The assessors are required by law, absent significant changes in the property after the base period, to use the same value for tax years 2015 and 2016. Even if an appraised value does not increase, budget demands will likely incentivize cities, counties and other taxing entities to maximize tax revenues by increasing the mil levies that determine the assessed value and the resulting tax, to the extent permissible by a Colorado Constitutional Amendment that limits tax increases called the "Tabor Amendment".

Beginning May 1, 2015, County Assessors will mail the 2015 Notices of Valuation for real property. The property owner will have a very short period of time to evaluate these notices and protest the value set on the property. Protests of valuation for most Colorado counties must be filed by May 31, 2015. Protests of valuation for Denver County properties must be filed no later than November 15, 2015. Our property tax attorneys know the critical legal and business factors that affect real property values and classifications. We are prepared to meet with property owners to assist in evaluating their property tax situation and, when appropriate, plan their strategies for their 2015 property tax protests.

Larry R. Martinez, Esq.
Berenbaum Weinshienk PC
American Property Tax Counsel (APTC)

UPDATED September 2017

Delaware Court Unlocks Opportunities to Reduce Property Tax Burden

Managing expenses is one of the best ways to ensure the long-term profitability of investment properties.  Owners of real property know that achieving reductions in property tax assessments can be challenging under the best of circumstances, and distinctions between state tax systems can make minimizing the real estate tax burden across a commercial or industrial portfolio a daunting task.  But a recent decision by the Delaware Supreme Court provides taxpayers with a new, yet surprisingly familiar, opportunity to reduce the burden of property taxes on their properties in The First State.

Delaware’s tax assessment system shows its age
Under Delaware Law, property must be valued at its “true value in money,” a term interpreted to mean the property’s “present actual market value.”  However, in order to implement the Delaware Constitution’s mandate of tax uniformity, Delaware applies a base year method of assessing property, meaning that all property in a jurisdiction is assessed in terms of its value as of a certain date, then that value remains on the property indefinitely until the jurisdiction performs a general reassessment.  For Delaware’s northernmost county, New Castle County, the last reassessment occurred in 1983, so all property in the County is valued as of July 1, 1983.

A major challenge to contesting property tax assessments in Delaware is that a taxpayer must determine the property’s market value in 1983.  Determining what a property is worth today is not always easy, but proving a property’s value three decades ago has proven increasingly difficult.  Furthermore, because the County makes no regular adjustments to a property’s assessed value, the County asserts that a property should be valued as it existed in 1983 or, if it was built after 1983, as if it is new and undepreciated.

Delaware’s courts have explained that taxpayers have two options in assessment appeals: they can use data from the base year (by, for example, finding sales of comparable properties in or around 1983, or using prevailing market rents and capitalization rates from 1983) or they can calculate the current market value of the property and “trend back” that amount to 1983.  The County Board of Assessment Review has expressed a near-absolute preference for 1983 data, and rarely finds a taxpayer’s trending formula acceptable.

The inequities of this system are blatant.  Under the county’s interpretation of the base year system, a 34-year-old building located next door to a similar new building should be assessed and taxed at the same level, despite that buyers, sellers, and tenants might value the buildings quite differently.  If the owner of the 30-year old building wanted to contest its assessment, the owner would have to identify data for new buildings in 1983.  Of course, as time marches on and years turn to decades, relevant data from the base year becomes increasingly difficult to find.

Taxpayers highlight the system’s obsolescence
Taxpayers have raised many challenges to Delaware’s assessment system, but most successful challenges are fact-specific, and no recent court has gone so far as to order Delaware’s counties to complete a reassessment.  But after several attempts, the taxpayers in Commerce Associates LP v. New Castle County Office of Assessment underscored the largest flaw in the system.

One Commerce Center is an office condominium building in Wilmington, Delaware.  Each office condominium was originally assessed by the County upon construction in 1983.  After keeping the same tax assessment for decades, the owners of several of the condominiums challenged their assessments in 2015.

Before the County Board of Assessment Review, the owners presented five different analyses: two relied on comparable sales transactions (one using 1983 sales of buildings that were about 32 years old, and one using modern asking prices trended back to 1983 using the Consumer Price Index); two relied on income (one using 1983 data, and one using 2015 data trended back to 1983 using CPI); and a cost approach using the original construction costs and reflecting depreciation.  These approaches showed that the properties were overassessed by more than 40%.

The County presented evidence of the condominiums’ sale prices in 1985, when each unit was relatively new.  The County also presented an income approach using 1983 data and a cost approach reflecting no depreciation.  The County’s approaches all supported the original assessed values, and the Board ultimately denied the taxpayers’ appeals.

Delaware’s Court approves a decrease in value
After having their appeals denied by the Superior Court, the taxpayers brought their challenge to the Delaware Supreme Court.  In a tersely-worded decision, the Supreme Court reiterated that all relevant factors bearing on the value of a property in its current condition must be considered.  While the County argued that no depreciation was needed because the properties were brand new in 1983, the Court noted that the properties were, in reality, more than 34 years old.  Failing to account for their age and the resulting depreciation (or appreciation) resulted in a flawed value.

Although the Court’s decision has yet to be implemented by the County, its effects will likely be widely felt.  Most properties in New Castle County built after 1983 are assessed without any depreciation.  Because each tax year brings with it a new opportunity to challenge an assessment, property owners can bring a new appeal to the Board every year reflecting the property’s current depreciation.  Ultimately, this could result in the downfall of the decades-old base year assessment, as the County finds it necessary to update assessments for a larger number of properties.

A number of questions remain unanswered by the Court’s ruling.  How should properties be valued in areas that were rural in 1983 but are now highly developed?  How can appreciation and depreciation be quantified and reconciled?  Future cases will need to resolve these questions, but for now, owners of Delaware property should evaluate their portfolios and determine whether opportunities exist to improve profitability by reducing property taxes.

Benjamin A. Blair
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

A Charitable Purpose May Be Broader Than You Think

A Florida court recently ruled that a charitable purpose does not have to be a benevolent purpose to qualify for a tax exemption under the Florida Statutes. In so ruling, the court reinforced a basic tenet that the property appraiser may not extend, modify or limit an unambiguous statute.

The issue before the court arose when the Alachua County property appraiser denied the Gainesville Area Chamber of Commerce a tax exemption from ad valorem taxation. The Chamber argued that it was entitled to the exemption under the Florida Statutes, which exempts property used predominantly for charitable purposes from taxation.

According to the Florida Statutes, a charitable purpose means a function or service which is of such a community service that its discontinuance could legally result in the allocation of public funds for the continuance of the function or service. The property appraiser argued that tax exemptions for charitable purposes must be limited to benevolent purposes, such as providing material assistance to the needy. The property appraiser further argued that the Chamber’s stated purpose of promotion of business and economic development was not traditionally understood as a charitable activity and not inherently benevolent. The court disagreed with the property appraiser’s position, finding that the statutes are unambiguous and do not limit the exemption to “benevolent” purposes. The court reasoned that because legal public funds could be allocated for the Chamber’s stated purpose (and in fact had been in the past), that was sufficient to entitle the Chamber to the tax exemption.

Daniel Wolfe Esq.
Rennert Vogel Mandler & Rodriguez P.A.
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

Foreclosure Sale - Arm's Length or Not?

In DeKalb County Bd. of Tax Assessors v. Astor Atl, LLC, 2019 Ga. App. LEXIS 215, 826 S.E.2d 685 (April 1, 2019), the Georgia Court of Appeals held that a bank foreclosure sale pursuant to deed under power can be an arm’s length bona fide sale. The county board of tax assessors was precluded from valuing properties at fair market values higher than the amounts paid at the public auctions for the tax year subsequent to the year of purchase, pursuant to O.C.G.A. § 48-5-2(3). The fact that the sale may not be at true fair market value is irrelevant; the fact that the sale results in financial loss is irrelevant as well.

Lisa F. Stuckey
Ragsdale, Beals, Seigler, Patterson & Gray, LLP
American Property Tax Counsel (APTC)

Updated JUNE 2019

A Fresh Look at Idaho Property Tax Rules

The State Tax Commission’s Property Tax Rules Committee has been busy reviewing all Idaho property tax rules to determine which ones to eliminate. This is part of a general review of all Idaho administrative rules. Idaho has an unusual system whereby the legislature must vote on whether to continue rules forward each year; if they do not, all rules expire at the end of June. The 2019 legislative session failed to pass this annual “drop dead” bill, thus handing Gov. Brad Little an opportunity to streamline regulations and choose which temporary rules he will adopt until the legislature convenes again in 2020.

Committee Co-chair Kathylynn Ireland says that most property tax rules will become temporary rules on July 1. Rules that are not needed will find a new home in a manual; though no longer binding regulations, they will continue to exist as guidance and will be available online.
 
Michelle DeLappe and Norm Bruns
Garvey Schubert Barer, P.C.
American Property Tax Counsel (APTC)

Updated March 2015

The Story of Real Estate Taxes - 2015

Chicagoans should be wary about their 2015 Real Estate Tax Bills. Up to now, Chicago Taxpayers have fared much better than their suburban neighbors when it comes to real estate taxes. Tax Year 2015 may well mark the beginning of a “Perfect Tax Storm” in Chicago.

In 2015, all property lying within Chicago will be re-valued. It seems very clear that the Assessor has determined that the Great Recession has become an event of history and that most segments of the real estate market are well on the way to recovery.

Thus far, new valuation Notices have only been sent to the property owners in one of the eight townships that comprise the City of Chicago. We have been able to review the new values. On average, the assessed values in that township have increased approximately fifteen (15%) percent. Multi-family residential properties have increased beyond twenty (20%) percent, single family residences and condominiums have risen to triple digit increases in some cases. Based on what we have seen in the first townships, we have to forecast even greater increases for most of the other townships.

Real estate values are only one component in the calculation of real estate taxes. The other critical component is the Tax Rate. The Tax Rate is determined by dividing the total budgets of all the Municipal and County agencies which provide services to the public by the total taxable value of the service area. That will include school districts, police, fire, park districts and more.

In 2015 and 2016, the pension deficits of the City agencies are about to reach catastrophic proportions. The Mayor’s staff is looking to Real Estate Taxes to reduce these deficits.

A PERFECT TAX STORM!

James P. Regan
Fisk Kart Katz Regan & Levy, Ltd.
Telephone:  (312) 726-1833
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

2019 Changes to Property Tax Assessment Laws by the Indiana General Assembly

The following grid provides a summary of various provisions impacting property tax assessments that passed in the 2019 session of the Indiana General Assembly.

BILL                             2019 Legislation - Notes

HB1001

• Sections 102-104 add IC §§ 6-1.1-3-26 to -28:  Requires development of a personal property tax online submission portal to provide a single point for submission and review of returns and related information.  It shall be available for taxpayer use no later than January 1, 2021.

HB1056

• IC § 6-1.1-15-1.1, -1.2, -2.5, -3, -4, -5, eff. 1/1/20:  Provides notice to and expands authorized participation by the county auditor for appeals involving matters within the auditor’s discretion.
• Section 6 (IC § 6-1.1-15-4), eff. 1/1/20:  Authorizes notice to the party or its representative.
• Section 8 (IC § 6-1.1-15-6), eff. 1/1/20: IBTR must file notice of completion of certified record within 45 days of a petition’s filing; requires explanations for delays in filing; allows for revised due date to file or, if delay due to cause within petitioner’s control, dismissal of petition.
• Section 17 (IC § 6-1.5-3-4.5), eff. 1/1/20: Removes this section requiring IBTR to recommend settlement or mediation in certain appeals.

HB1305

• Provides for a $25 penalty for late filing of schedules by owners or their agents of oil and gas interest, as well as 10% penalty for failure to file within 30 days of due date.

HB1345

• Section 1 (IC § 6-1.1-4-12), eff. 1/1/20: “Land in inventory” acquired by a for-profit entity from a school corporation or local governmental unit shall be assessed at the ag rate as of the next assessment date following acquisition.
• Section 2 (IC § 6-1.1-10-48), eff. upon passage and applies to assessment dates starting 1/1/17:  Adds an exemption for property (i) owned by an Indiana non-profit public benefit corporation exempt from tax under IRC 501(c)(3), (ii) used in the operation of a nonprofit health, fitness, aquatics and community center, and (iii) funds have been in part provided under the regional cities initiative.

HB1405

• Section 1 (IC § 6-1.1-10-44), eff. 7/1/19:  Increases the required investment for Indiana data centers from $10 Million to $25 Million in real and personal property; eliminates need for property to be located in a “high technology district area.”

HB1427

• Section 13 (IC § 6-1.1-4-12), eff. 1/1/20: Similar to HB 1345, Sec. 1; if acquired from a local government unit, it applies only if the unit “has held the land for not less than three (3) years prior to the date on which the for-profit land developer acquires it from the local unit of government.”
• Section 17 (IC § 6-1.1-11-3), eff. upon passage:  Adding subsection (i), allows a person seeking an exemption under IC § 6-1.1-10-16 to file an application up to 30 days after the deadline, if the person pays the lower of (i) a late-fee of $25 for each day after the deadline or (ii) $250.
• Section 30 (IC § 6-1.1-15-1.1), eff. 7/1/19:  New June 15th appeal deadlines starting with 1/1/2019 assessments apply only to real property; for personal property, appeals must be filed within 45 days of assessor’s mailing of the change of assessment notice (for modified assessments or the addition of personal property).
• Section 31 (IC § 6-1.1-15-4), eff. 7/1/19:  Requires IBTR to conduct a hearing within 1 year; limits extensions for IBTR to issue final determination to 180 days; excludes from calculation of days various actions by parties; requires party to request an IBTR hearing before seeking a direct appeal to the Tax Court and to wait at least 60 days.
• Section 62 (IC § 6-1.1-31-9), eff. 7/1/19: New DLGF rules may not apply to the assessment of a property contemporaneously being conducted under a county’s reassessment plan

SB 233

• Section 2 (IC § 6-1.1-3-7.2), eff. 7/1/19 (applies first to 1/1/20 assessment) – expands the exemption for personal property from $20,000 to $40,000 of acquisition cost.  (Section 3 eliminates the optional $50 service fee.)

 SB 582

• Section 1 (IC § 6-1.1-15-1.1), eff. 7/1/17 (retroactive).  Adds subsection (h), prohibiting a taxpayer from challenging the legality or constitutionality of a (i) a user fee, (ii) any other charge, fee or rate imposed by a political subdivision, or (iii) any tax other than a property tax.
• Section 2 (IC § 33-23-1-10.5), eff. 12/1/15 (retroactive).  Defines and lists various “user fees.”
• Assigns jurisdiction to user fee challenges to local courts.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Tax Court has jurisdiction over challenge to Storm Water charges, which Court held constituted a tax – not a user fee.

Name:  Daw, Hoback, Co-Trustees of Sagacious Sentinel Sycamore Revocable Trust v. Hancock County Assessor

Date Issued: December 5, 2018

Property Type: 54 acres of land, with 37 acres leased to a farmer

Assessment Date: January 1, 2016

Point of Interest:  Court had jurisdiction to hear claims regarding storm water charges, as the Court considered the charges to be taxes and not user fees. IBTR’s ruling that it lacked jurisdiction to hear Taxpayer’s annexation and storm water claims was a final determination that could be appealed.  

Synopsis: Taxpayer appealed the $88,400 assessment of their 54.05 acres of land.  37 acres of the property was leased to farmer who used no-till practices.  Before the IBTR, Taxpayer argued that (i) its tax bill was incorrect, because the subject property had been annexed to the Town of McCordsville pursuant to an invalid ordinance, (ii) it did not owe storm water charges and penalties imposed by the Town’s improper imposition of tax, and (iii) the assessment of the land was excessive. IBTR ruled that it lacked jurisdiction over the annexation and storm water claims.  The Board further found that 1.05 acres of land should have been assessed as non-tillable land but no other changes were warranted.

Tax Court has jurisdiction over “original tax appeals,” which are cases that (i) arise under Indiana’s tax laws and (ii) are appeals of final determinations of the IBTR. (citing ind. code§ 33-26-3-1).  Taxpayer claimed they were contesting the Town’s unauthorized attempt to collect special benefit taxes.  Assessor argued the storm water charges were user fees and not taxes, and further asserted the IBTR had not issued a final determination.

The Court first determined the charges constituted a tax.  The Court first noted that it “should consider the character, operation, and effect of the charge rather than merely its label.” Traditionally, the Court observed, “amounts collected to build, operate, and maintain a special taxing district’s local public improvement (e.g. a sewer system) have been traditionally characterized as taxes in Indiana.” In addition, taxes are compulsory, not optional.  In contrast, user fees are optional and represent a charge for the use of a publicly-owned or publicly-provided facility or service.  Here, the Town imposes the storm water charges on all property within its corporate boundaries, and they are billed on a monthly or bi-annual basis (with the Spring and Fall property tax statements).  The charges are compulsory – property owners cannot decline the storm water services or control the extent of the use of the service. 

Moreover, benefits received from the charges are not limited to the properties or the owners of the properties. “Indeed, [i] improved water quality, [ii] avoiding penalties for improper discharge, and [iii] creating a mechanism to remove excess water from the property and prevent flooding are goals that benefit all the Town’s residents and do not necessarily enhance the value of property.” 

Taxpayer raised defenses to the collection of a tax, and their claims satisfied the “arising under” requirement for purposes of determining the Court’s subject matter jurisdiction.

Taxpayer appealed a final determination of the IBTR. Because the Board had not reached the merits of Taxpayer’s annexation and storm water claims, Assessor argued they had not appealed a final determination. A final determination is an “order that determines the rights of, or imposes obligations on, the parties as a consummation of the administrative process.” (quoting Grandville Co-op., Inc. v. O’Connor, 25 N.E.3d 833, 837 (Ind. Tax Ct. 2015)). The Board determined it had no jurisdiction over Taxpayer’s claims, which ruling ended the administrative process with respect to those claims. Taxpayer was compelled to appeal to the Tax Court at that point. Taxpayer therefore satisfied the final determination requirement.

In addition, the Court explained, this case involved the imposition of a tax, not primarily the allocation of property tax revenues. 

Taxpayer did not show assessment reduction was warranted – valuation method did not comport with generally accepted appraisal principles.  An assessment prepared under the Indiana Real Property Tax Assessment Guidelines is presumed to be correct. Taxpayer claimed its assessment should be reduced to about $61,860 to reflect its decreased productivity.  The Board concluded, “nothing within the certified administrative record demonstrates that [Taxpayer’s] evidence actually converts the decreased crop production capacity into a value or that their valuation method comports with generally accepted appraisal principles.” 

Court may not consider evidence from outside the record. The Court also noted that it did not consider several articles regarding soil productivity of agricultural land that Taxpayer identified, explaining that “[b]ecause the evidence was not presented to the Indiana Board during the course of the administrative proceedings in this case, the Court may not consider it on appeal.” (citing State Bd. of Tax Comm’rs v. Gatling Gun Club, Inc., 420 N.E.2d 1324 (Ind. Ct. App. 1981)).

Appeal remanded to IBTR. While the IBTR lacked authority to determine the validity of the annexation and storm water ordinances at issue, the Court remanded the case to the Board to make factual findings for the Court to use in resolving the matter. The Board was directed to consider whether the Town or any other entity should be joined as a party under Ind. Trial Rule 19, to conduct another hearing on the annexation and storm water claims (allowing additional evidence), and to enter specific findings of fact. The Court ordered the certified record of the supplemental proceedings to be filed as expeditiously as possible.

Taxpayer failed to follow statutory steps to challenge annexation; Town as Intervenor permitted to raise new arguments on rehearing.

Name:  Daw, Hoback, Co-Trustees of Sagacious Sentinel Sycamore Revocable Trust v. Hancock County Assessor and Town of McCordsville

Date Issued: March 8, 2019

Property Type: 54 acres of land, with 37 acres leased to a farmer

Assessment Date: January 1, 2016

Point of Interest: Taxpayer failed to take the proper statutorily prescribed steps to challenge annexation; on rehearing, Town as intervenor was permitted to raise new arguments.

Synopsis:  Following the Court’s December 5, 2018 decision, the Town of McCordsville intervened and filed a petition for rehearing. The Court granted rehearing, but not as to the issue of whether the storm water charges are taxes.  On rehearing, the Town argued that further proceedings were unnecessary because it was too late for Taxpayer to challenge the annexation.  The Court observed that “[a]nnexation is an essentially legislative function that is subject to judicial review only as provided by statute.” (citing Bradley v. City of New Castle, 764 N.E.2d 212, 2015 (Ind. 2002) (citation omitted).  There are two methods for challenging a town’s annexation: (i) remonstrance (“the exclusive manner for landowners of the annexation area to obtain relief from annexation proceedings”); and (ii) a declaratory judgment suit (“available only to taxpayers of the annexing town”). (citing Deaton v. City of Greenwood, 582 N.E.2d 882, 885 (Ind. Ct. App. 1991), internal brackets omitted). 

Taxpayer failed to properly challenge the annexation.  Taxpayer conceded it did not remonstrate. Instead, it sought relief via a declaratory judgment action. But Taxpayer was not entitled to initiate such an action, because “it generally is available to taxpayers of the annexing town only, not landowners [like Taxpayer] of the annexation area.” (citing Deaton, 582 N.E.2d at 885). Taxpayer further failed to make other necessary allegations (i.e. its land was not contiguous to the Town’s boundaries or that the Town failed to implement a fiscal plan). (citation omitted).

As Intervenor, Town was permitted to raise new arguments post-judgment.  Taxpayer, on rehearing, argued that the Tax Court was not permitted to consider the Towns’ new arguments.  But Trial Rule 24(C) “expressly recognizes a party’s right to intervene post-judgment for purposes of seeking relief from the judgment or filing an appeal of that judgment.” (citing Panos v. Perchez, 546 N.E.2d 1253, 1255 (Ind. Ct. App. 1989)).  Furthermore, an intervenor “may litigate other issues or claims that were not already determined by the court.” Id.  Accordingly, the Town’s petition and new arguments were permissible. 

The certified record included showed that the Town had adopted three ordinances regarding storm water management.  One ordinance allowed for the development of storm water drainage facilities and systems. Had the Town created a plan for its storm water project, adopted the plan by resolution, and held a public hearing after the adoption, Taxpayer could have then filed a written remonstrance.  If that failed, Taxpayer could have then filed an appeal with the local court. The record did not establish that Taxpayer “used the specified statutory process to pursue their storm water claim in the prescribed period and appropriate forum.”  The Court held that Taxpayer’s storm water claim was untimely, explaining the “object of the declaratory judgment statute is to afford a new form of relief, not a new choice of tribunals.” (citing Quiring v. GEICO Gen. Ins. Co., 953 N.E.2d 119, 126 (Ind. Ct. App. 2011) (citation omitted)). 

The Court vacated the part of its December 2018 decision that remanded Taxpayer’s annexation and storm water claims to the IBTR. That decision was otherwise affirmed. The Court entered final judgment in favor of the Assessor and Town.

NOTE:  In 2019, the Indiana General Assembly responded to this decision by passing legislation stating that storm water charges are fees and disallowing challenges to user fees from the property tax appeals process. Local courts now have jurisdiction over these claims.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Ruling from the Indiana Board of Tax Review discuss its Jurisdiction and the Burden of Proof on Appeal

Jurisdiction.  The Indiana Board of Tax Review is charged with reviewing and ruling on appeals of property tax assessments, exemptions, and limited other matters. Following are recent rulings where the IBTR concluded that it lacked jurisdiction to consider the claims raised or to order the remedy requested. 

1. IBTR did not have authority to calculate refunds or compel Assessor to act on refunds.  Hoovler v. Clinton County Assessor, Pet. No. 12-012-15-1-1-00890-16 (10/9/18) (2015 tax year).  Taxpayer requested that IBTR: (i) calculate refunds she was owed; (ii) order the Assessor to provide those refunds; and (iii) order an investigation of the Assessor’s office.  “The Board is a creation of the Indiana Legislature, and it only has those powers conferred by statute.”  Taxpayer cited no authority requiring these actions and noted that Ind. Code § 6-1.1-26-2.1 “explains the requirements for obtaining a refund.”
2. IBTR refused to issue time for Assessor to implement assessment changes.  Hoovler v. Clinton County Assessor, Pet. No. 12-012-16-1-5-00749-17 (10/9/18) (2016 tax year). Assessor conceded a lower value, and Taxpayer asked IBTR to issue a timeline for Assessor to apply that change. Taxpayer further requested the IBTR require Assessor to provide proof to Taxpayer and IBTR of the change.  Taxpayer failed to cite authority permitting the request. Again noting it is a “creature of statute with powers limited by statute,” IBTR denied the request.
   
   
3. IBTR could not address Taxpayer’s claims that tax bills, including delinquencies and penalties, were improper.  Hiatt v. Delaware County Assessor, Pet. Nos. 18-007-12-3-5-00897-17 et seq. (11/26/18) (2012 – 2015 tax years).  Taxpayers contested the taxes applied to their assessments. “The Board, however, lacks jurisdiction to address appeals where taxpayers contest only their tax bill and not their property’s assessment.”  Similarly, “the Board lacks the authority granted in the enabling statute to review either penalties or delinquencies.”
   
   
4. IBTR lacks authority to change a statute. Dover Hills v. Hendricks County Assessor, Pet. No. 32-016-16-2-8-01340-16 (12/19/18) (2016 tax year). Taxpayer requested IBTR to order a “jury trial” to nullify the 2015 early childhood property tax exemption law.  The Board declined this request, explaining “The statutes governing the Board’s operations do not contemplate jury trials.”
   
   
5. IBTR cannot order attorneys’ fees or appoint a different assessor.  Draheim v. Marion County Assessor, Pet. Nos. 49-101-12-3-4-01535-17 et seq. (1/14/19) (2012 – 2017 tax years).  Taxpayer’s “motion for attorney’s fees and her request for the Board to appoint a different assessor are both denied.  The Board is a creature of statute and cannot act beyond its statutory authority.  No statute gives the Board the power to supplant an elected assessor.”
   
   
6. PTABOA’s Form 115 issued after Taxpayer’s appeal deemed “nullity”.  TLC Properties, Inc. v. Lake County Assessor, Pet. Nos. 45-018-15-1-5-01442-16 et seq. (2/4/19) (2015 and 2016 tax years).  Taxpayer appealed directly to the IBTR as permitted by Ind. Code § 6-1.115-1.2(k).  IBTR treated the Form 115 notice for the 2015 assessment issued after that appeal as a “nullity.” 

Burden of Proof.  Depending on the facts of the property and the assessment, Taxpayer or Assessor may have the burden of proof for Indiana property tax appeals 

Following are summaries of various rulings of the Indiana Board of Tax Review involving the burden of proof in property tax appeals.  The summary addresses two statutes —ind. code§§ 6-1.1-15-17.1 and -17.2, which dictate which party (the Taxpayer or the Assessor) has the burden of proof. Generally, the Assessor has the burden of proof when he or she changes the classification of land under Section 17.1. In addition, the Assessor typically has the burden of proof if the property’s assessment has increased by more than 5% over the last assessment date but the subject property’s physical status or use has not materially changed year-over-year.  If the Taxpayer successfully appealed the assessment for the immediately prior year, any increase in value (not just 5%+) shifts the burden of proof to the Assessor.

1. New construction. Kappa Investments, LLC v. Shelby County Assessor, Pet. Nos. 73-002-11-1-4-82434-15 et seq. (10/2/2018) (2011, 2012, 2013 tax years). Assessor asserted that the burden of proof should not shift under Ind. Code § 6-1.1-15-17.2 because improvements were constructed at the subject property between the March 1, 2010 and 2011 assessment dates. Taxpayer conceded it had the burden of proof, so the IBTR concluded the burden of proof remained with Taxpayer.
   
   
2. IBTR reverses ALJ’s determination due to prior year’s successful appeal. Hoovler v. Clinton County Assessor, Pet. No. 12-012-15-1-1-00890-16 (10/9/18) (2015 tax year). The Administrative Law Judge initially ruled that Taxpayer had the burden of proof. In 2017, the IBTR issued a final determination lowering the subject property’s 2014 assessment. “Because this was a successful appeal, any increase in assessment causes the burden to shift.” The 2015 assessment increased $1,100 above the finally determined 2014 assessment. IBTR concluded that Assessor, in fact, had the burden of proof.
   
   
3. Failing to show change of use for land, Assessor had burden of proof on appeal. Russell Family Partnership v. Bartholomew County Assessor, Pet. Nos. 03-011-15-1-5-00305-15 et seq. (10/16/18) (2015, 2016, 2017 tax years). Assessor conceded that the assessment increased by more than 5% from the March 1, 2014 to 2015 assessments. But Assessor claimed the change was due to the reclassification of the properties’ land classification from agricultural to excessive residential. The burden-shifting provision does not apply if the new assessment is based on a use that was not considered in the prior year’s assessment. Ind. Code § 6-1.1-15-17.2(c)(3). But the Assessor failed to show that there was change of the properties’ actual use.
   
   
4. Assessor had burden to show change of land classification was correct. In addition, Assessor under Ind. Code § 6-1.1-15-17.1(2) had the burden to show the change in land classification was correct. Thus, Assessor had the burden of proof for the March 1, 2015 assessment. Assigning the burden for the 2016 and 2017 years depends on the IBTR’s ruling for 2015 assessment.
   
   
5. Burden-shifting statute applies to contested assessments – not homestead deduction challenges. Sickmeier v. Hamilton County Assessor, Pet. Nos. 29-007-14-1-5-00410-18 et seq. (12/10/18) (2014, 2015, 2016 tax years). Taxpayer requested application of the homestead deduction and mortgage deduction. “Because the Petitioner did not challenge the current assessments of the subject property, the burden shifting provisions of Ind. Code § 6-1.1-15-17.2 do not apply.”
   
   
6. Burden-shifting statute does not apply to uniformity claims. 546 Investments, LLC v. Bartholomew County Assessor, Pet. Nos. 03-005-16-1-5-01514-17 et seq. (12/27/17) (2016 and 2017 tax years). Taxpayer “raises a claim based on a lack of uniformity and equity in assessments. The burden-shifting rule under Ind. Code § 6-1.1-15-17.2 does not apply to such claims.” (citing Thorsness v. Porter County Assessor, 3 N.E.3d 49, 52 (Ind. Tax Ct. 2014)).
   
   
7. Assessor failed to meet his burden, but IBTR applied value conceded by Taxpayer. Bishop v. Bartholomew County Assessor, Pet. Nos. 03-005-15-1-5-00342-15 et seq. (1/7/19) (2015, 2016, 2017 tax years). Assessor had, and failed to meet, his burden of proof for the March 1, 2015 assessment date. Therefore, the 2015 assessment under the burden-shifting statute would be reduced to its 2014 assessment of $340,500. However, Taxpayer requested a 2015 assessment of $350,500. The Board accepted and applied this concession.
   
   
8. Burden of proof switched during hearing based on prior successful appeal. Geroulis v. Porter County Assessor, Pet. No. 64-09-19-379-008.000-019 (9/6/18) (2016 tax year). ALJ made a preliminary determination that Taxpayers had the burden of proof. But during the hearing ALJ realized that Taxpayers had successfully appealed their 2015 assessment and therefore told the parties that Assessor had the burden of proof.
   
   
9. Assessor re-classified land from agricultural to residential, causing a substantial increase year-over-year; assessor had burden of proof under two statutes. Susan Mudge-Trustee/Trust v. Bartholomew County Assessor, Pet. No. 03-001-17-1-5-01515-17 (3/11/19) (2017 tax year). The assessment of Taxpayer’s land increased from $8000 to $101,100, after Assessor changed the land’s classification. Therefore, Assessor had the burden of proof under both Ind. Code §§ 6-1.1-15-17.1 (changed land classification) and -17.2 (5+% increase).

Voluntary withdrawals of IBTR appeals. 

Whether a party, typically the Taxpayer, can voluntarily withdraw an appeal from the Indiana Board of Tax Review recently has been discussed in several cases. The rulings tend to focus on whether the responding party, typically the Assessor, is potentially prejudiced by the requested withdrawal. Following are summaries of some of these cases.

1. Withdrawals permitted – no substantial expense incurred by Assessor.  Cornerstone Holdings LLC v. Bartholomew County Assessor, Pet. Nos. 03-005-12-1-3-20426-15 et seq. (10/22/18) (2012 and 2015 tax years).  Taxpayer requested withdrawals of its appeals 34 days before the scheduled hearing, after Assessor engaged an appraiser.  Assessor objected, claiming it had expended too many resources.  IBTR analyzed the issue under Indiana Trial Rule 41(A), citing 52 IAC 2-1.2-1 and noting that the trial rules may be applied to the extent they do not conflict with the Board’s procedural rules or applicable statutes.  The standard is “substantial expense” – not simply an “expense.” Taxpayer had denied the appraiser access to the parcel, and the appraisal was “put on hold.”  Assessor had not incurred the “substantial expense of a completed appraisal.” (citing Joyce Sportswear Co. v. State Bd. of Tax Comm’rs, 684 N.E.2d 1189, 1193 (Ind. Tax Ct. 1997). The withdrawals were granted.
   
   
2. Withdrawals prohibited – Late withdrawal would “squander” resources; Assessor demonstrated substantial expense ($900 appraisal) and legal prejudice.  TLC Properties, Inc. v. Lake County Assessor, Pet. Nos. 45-018-15-1-5-01442-16 et seq. (2/4/19) (2015 and 2016 tax years). In this appeal of land supporting a billboard sign, Taxpayer sought to withdraw its appeals eight days before the hearing.  IBTR observed that to allow the withdrawals “at such an advanced stage would mean the Board and the parties squandered substantial time and effort.” IBTR found that Assessor’s $900 appraisal was a “strong showing of substantial expense.”  In addition, Assessor would be legally prejudiced by not being able to seek an increase of assessment.  “Because the assessor demonstrated both substantial expense and legal prejudice, and because it preserves the Board’s and parties’ limited resources,” IBTR denied Taxpayer’s request for voluntary dismissals. 
   
   
3. Withdrawals prohibited – substantial expense incurred by Assessor. Russell Properties, LLC v. Bartholomew County Assessor, Pet. No. 03-005-15-1-3-00097-16 (11/8/18) (2015 tax year). The IBTR discussed its 2014 ruling in Props v. Hamilton County Assessor, where it found that “a taxpayer’s last-minute request to withdrawal should be granted over the assessor’s objection because the assessor did not seek to raise the assessment [thus, no legal prejudice to the assessor] and did not present evidence of substantial expense.”  In this appeal, Assessor was seeking to raise the assessment and demonstrated a substantial expense had been incurred.  The Assessor’s objection to the withdrawal was sustained.Voluntary dismissal reversed; trending stipulation maintained. CVS Corporation #2519-01 v. Lake County Assessor, Pet. Nos. 45-036-07-1-4-99024-15 et seq. (1/4/19) (2007 - 2014 tax years).  Taxpayer’s request for voluntary dismissals was granted.  Assessor objected, and IBTR reinstated the Form 131 petitions.  IBTR also rejected Taxpayer’s request to set aside the trending stipulation to which the parties had agreed.

Default judgments / Judgment on the Evidence.

1. IBTR prefers to resolve cases on the merits.  Draheim v. Marion County Assessor, Pet. Nos. 49-101-12-3-4-01535-17 et seq. (1/14/19) (2012 – 2017 tax years).  Assessor filed a motion to dismiss, claiming use of Form 133s [which form has now been eliminated and incorporated into the Form 130] was improper.  IBTR overruled the motion, reasoning: “In Indiana, there is a longstanding preference for resolving the case on the merits.” (citing Keener v. Kendallville, 191 N.E.2d 6, 7 (Ind. 1963)).
2. Default judgment denied. CVS Corporation #0434-01 v. Lake County Assessor, Pet. Nos. 45-045-12-1-4-00001 et seq. (1/4/19) (2012 - 2016 tax years). Assessor alleged that an anonymous email to the press contained allegations of misconduct against him. The email, the Assessor contended, included information about the case not available to the public.  Assessor argued this was abusive conduct and justified default judgment under 52 IAC 2-10-2.  Taxpayer denied knowledge of the email.  Noting the email was not placed into evidence and that the record contained no proof that Taxpayer engaged in abusive conduct, IBTR described the situation as “troubling” but denied the request.
   
   
3. Motion for Judgment on the Evidence rejected.  Draheim v. Marion County Assessor, Pet. Nos. 49-101-12-3-4-01535-17 et seq. (1/14/19) (2012 – 2017 tax years).  Assessor moved for judgment on the evidence, citing Trial Rule 50, before commencing his case-in-chief.  Noting that its rules allow it discretion to apply the trial rules, IBTR explained that a “litigant is always free to rest on the burden of proof without offering additional evidence.”  Here, Assessor chose to proceed with his valuation case. Assessor’s appraiser concluded to a value of the subject property that was $100,000 lower than the January 1, 2016 assessment (the only date for which Taxpayer filed a Form 130 appeal petition).  The Board denied the motion, reasoning that to ignore “such evidence would be unfair and against the interest of justice.” 

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Indiana Board of Tax Review Denies Real Property Tax Exemptions for Early Childhood Educational Facilities for Lack of Proper Certifications

Name: Rainbow Rascals Warsaw, LLC v. Kosciusko County Assessor

Date Issued: April 10, 2019

Property Type: Childcare Facility

Assessment Year(s): 2015-2018

Point of Interest: Tangible property owned, occupied, or used by a for-profit provider of early childhood education services to children ages 4-5 years old may qualify for an educational exemption only if the requirements set forth in Ind. Code § 6-1.1-10-16(p) and Ind. Code § 6-1.1-10-46 are met.

Synopsis: Rainbow Rascals Warsaw, LLC (“Rainbow”) timely filed Form 136 exemption applications on two of its early childhood educational facilities in Warsaw for the 2015 to 2018 assessment dates. The Kosciusko Property Tax Assessment Board of Appeals (the “PTABOA”) denied each of the applications. Rainbow contested the denials, filing Form 132 appeal petitions with the Indiana Board of Tax Review for all four assessment dates.

Motion to dismiss not addressed. Rainbow had 45 days to appeal the PTABOA’s exemption denials. The Assessor asked the Indiana Board to dismiss the 2015 to 2017 appeals, because Rainbow had filed those petitions more than 45 days past the date listed on the PTABOA’s Form 120 notices denying the exemptions. Rainbow claimed it never received the PTABOA’s notices. The Indiana Board observed that Rainbow did “little to show” that it had not received, but then discarded, the notices. However, because the Indiana Board ultimately determined Rainbow failed to make its case on the merits, it declined to address the motion to dismiss.

Lacking required program ratings, Taxpayer failed to show it qualified for exemption. Indiana Code § 6-1.1-10-46 (“Section 46”) provides the requirements that a for-profit early childhood educational provider must meet to be eligible for a property tax exemption. Section 46 provides in part:

(a) Tangible property owned, occupied, or used by a for-profit provider of early childhood education services to children who are at least four (4) but less than six (6) years of age is exempt from property taxation under section 16 of this chapter only if all the following requirements are satisfied:
(1) The primary purpose of the provider is educational.
(2) The provider is the property owner and the provider also predominantly occupies and uses the tangible property for providing early childhood education services to children who are at least four (4) but less than six (6) years of age.
(3) The provider meets the standards of quality recognized by a Level 3 or Level 4 Paths to QUALITY program rating under IC 12-17.2-2-14.2 or has a comparable rating from a nationally recognized accrediting body.

(emphasis added). Additionally, the exemption percentage is calculated based on the percentage of children (out of the total enrollment of children) that are ages 4-5.

The Indiana Board pointed to the requirement set forth by Ind. Code § 6-1.1-10-46(a)(3) requiring that the provider meet the standards of quality recognized by a Level 3 or Level 4 Path to QUALITY program rating under Ind. Code § 12-17.2-2-14.2 or has a comparable rating from a nationally recognized accrediting body. One of Rainbow’s facilities did not receive its Level 3 certification until October 2018 – well after the assessment dates at issue — and the other facility had only a Level 1 certification. Moreover, even had the certifications been in place, Rainbow failed to provide necessary information to prove what an appropriate exemption percentage would have been. Having failed to show that the childcare facilities were properly certified on the assessment dates, the two facilities did not qualify for an educational exemption for any of the assessment dates at issue.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

UPDATED March 2019

The Time to Negotiate Iowa Property Tax Assessments is Now

On April 1, 2019, assessors around the state of Iowa will release their property tax assessment values.  This starts the clock for negotiations.

Pursuant to Iowa Code § 441.30, from April 2 until April 25, aggrieved taxpayers may contact local assessors and make an informal request that the assessment be changed.  This can result in a written agreement with the assessor to correct or modify the assessment, or an agreement by the assessor to file a recommendation with the local board of review that the assessment be changed.  Assessors around Iowa take this period seriously.  The time to consider negotiations is now.

Here is a brief overview of the Iowa appeal deadlines:

• January 1 – Assessment date (Iowa Code § 441.46)
• April 1 – Assessor’s release assessment values (Iowa Code § 441.23)
• April 2-25 – Time to negotiate with assessors (Iowa Code § 441.30)
• April 30 – Iowa Board of Review protests due (Iowa Code § 441.37)
• Later date of May 31 or 20 days after board of review opinion – Deadline to file appeal with PAAB or district court (Iowa Code §§ 441.37A, 441.37B, 441.38)

This email address is being protected from spambots. You need JavaScript enabled to view it. and Elizabeth Carter
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Updated June 2014

New Changes To Kansas Property Tax Appeal Procedures

Commercial taxpayers alarmed by recent Kansas Court of Tax Appeals ("COTA") decisions initiated a call for reform of the system. The initial group of taxpayers contacted legislators directly. Soon they were joined by many groups including the Kansas State Chamber of Commerce and the Kansas Association of Realtors. The recommendations received wide-spread support and House Substitute for Senate Bill 231 was signed by Governor Brownback.

Some provisions in the new law include:

• Changes the name of the state agency from the Court of Tax Appeals back to the Board of Tax Appeals ("BOTA") to eliminate any confusion that COTA is a real court instead of a state agency.
• Provides for optional de novo review. This change would ensure a taxpayer could have court of competent jurisdiction hear the taxpayer's evidenc e and decide the case. A party could also appeal directly to the Court of Appeals on the record if they choose.
• Requires one member of BOTA to be a licensed general real property appraiser. That person will join the other two positions be filled with an attorney and a CPA. This change will occur upon the next vacancy.Directs BOTA to issue a Summary Order within 14 days of the hearing. If either party wants to appeal they have 14 days to request BOTA prepare a Final Order. BOTA will have 90 days to prepare that Order. If neither party wants to appeal, the matter will be over without BOTA issuing a Final Order. If the Order is not done within the 90 day time period, BOTA must refund to the taxpayer any filing fees paid.
• If a case is not decided in the year it was filed and a protective appeal must be filed for a subsequent year(s), the taxpayer will not be charged a filing fee.
• Open up the Small Claims Division to more appeals by raising the valuation ceiling from $2 million to $3 million.
• And required BOTA to change their policy and now require a simultaneous exchange of evidence in cases.

Few expect BOTA to embrace the change as they have already issued Directives and Memoranda with new procedures that appear to be the first salvos to circumvent the law. Watch here for updates!

For a full copy of the bill go to www.kslegislature.org.

Property Tax Law Group, LLC
Linda Terrill, Attorney
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

Deed Price Doesn't Necessarily Equal Value

As anyone who has purchased property in Kentucky knows, the consideration paid for the property and listed in the deed will almost certainly become the amount of the new property assessment.  The Kentucky Claims Commission recently affirmed that “consideration” and “fair cash value” are not interchangeable.  In Agree Hazard KY LLC v. Perry County PVA, Order No. K-25925 (May 22, 2019), the KCC adopted the portion of the hearing officer’s recommended order holding that, while the sale price for a property is “clearly evidence” of fair cash value, it is not necessarily determinative of valuation for property tax purposes.  If the property owner can present evidence showing that the deed price should be disregarded, the KCC will reject an assessment based on the deed consideration.

While the KCC adopted the hearing officer’s recommended order with respect to the deed price, it rejected the hearing officer’s finding that the property in question should be valued using market sales and rents, and instead found that the leased fee should be valued using the actual contract rent.

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Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

Updated september 2018

Proving Economic Obsolescence is All In the Timing

TBM-WC Sabine, LLC (“TBM”) owns natural gas pipeline and surface equipment in Sabine Parish, Louisiana. In support of its claim of economic obsolescence, TBM provided information with its annual property tax rendition demonstrating the condition of the pipeline and establishing that the surface facilities were idle during the tax year in question. TBM also provided an unaudited, consolidated financial statement that did not specifically attribute income and expenses to TBM.  Finally, TBM provided a short statement regarding the utilization percentage of its pipeline.   Based on this information, the assessor recognized considerable obsolescence in the surface equipment, but only about 12% in the pipeline.  TBM appealed the pipeline valuation to the Louisiana Tax Commission (“LTC”).

At the hearing before the LTC, TBM introduced additional evidence of obsolescence that had not been provided to the assessor, which apparently had been available to TBM. The LTC ruled in TBM’s favor, but did not issue factual findings or any conclusion that the assessor had abused her discretion in denying additional obsolescence.  The assessor appealed to district court in Sabine Parish, which promptly reinstated the assessor’s determination.  TBM appealed to Louisiana’s Third Circuit Court of Appeal.

The Court of Appeal affirmed on all counts. First, the Court reiterated that the LTC was only to review property tax assessments, not make them.  It then held that it was incumbent on TBM to provide all data and information regarding obsolescence to the assessor.  Providing information, even compelling information, to the LTC on appeal was insufficient.  Importantly, the Court never questioned whether the information was too little, just that it was too late.

Next, the Court stated that, in reviewing the LTC’s decision, it must determine whether the LTC manifestly erred when it held that the assessor abused her discretion in rejecting TBM’s evidence of economic obsolescence. It concluded that the LTC had indeed erred.  The Court noted that the assessor's determinations were based on data provided by TBM, and that TBM had no complaint with assessor's exercise of discretion in accepting the depreciated value of surface equipment, but only complained about her exercise of discretion when she denied the requested obsolescence on the pipeline.  Essentially, the Court found that, because TBM agreed that the assessor’s valuation was correct as to surface equipment, it could not challenge her valuation of other property. 

Notably, the LTC revised its regulations this summer, at least partly in response to this case. The regulations now require any information to be introduced before the LTC must first have been provided to the assessor.  The LTC recognized that it may be impractical for taxpayers to provide full-blown appraisals, but any documentation that would be used by an appraiser in conducting an appraisal, such as audited financial statements, purchase/sale agreements, substantiated utilization reports, etc., should be provided to the assessor. 

TBM-WC Sabine, LLC v. Sabine Parish Board of Review, 2017-1189 (La. App. 3rd Cir. 7/18/18), ___ So.3d ___. 

Angela W. Adolph, Partner
Kean Miller LLP
American Property Tax Counsel (APTC)

Updated December 2014

Ignoring The Assessor's Inquiries Can Be Fatal To Your Appeal

In Maine the assessor may require the taxpayer to answer in writing all proper inquires as to the nature, situation, and value of the taxpayer's property liable to be taxed. This request can include income, expenses, manufacturing or generational efficiencies, manufactured or generated sale price trends, or other related information. A taxpayer has thirty days to respond to the inquiring. Upon written request a taxpayer has an automatic thirty day extension to respond to the inquiring. The failure to supply the information will bar the taxpayer the right of appeal. Please be aware that some assessors use this provision of the law to inundate the taxpayer with inquires. The property of some of these inquires is questionable and some inquires appear to be patently improper. These inquires can be a cynical attempt to have the taxpayer's appeal dismissed for failing to comply with an inquiry.

David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)

UPDATED September 2018

Assessment Appeal Quirks and Deadlines

Maryland continues to see various counties and incorporated cities attempt new avenues to raise tax revenue through issuing or challenging assessments.

County and City Finance Departments have begun to challenge assessments for properties that trade at values higher than their subsequent reassessments. Montgomery County and Baltimore City have exercised this right continuously throughout the most recent reassessment. Taxpayers should be aware that Maryland Law allows counties and cities to challenge tax assessments. Always be on the lookout for a notice of such an appeal once the property you recently purchased is reassessed.

Montgomery County has begun to issue new construction assessments for tenant build-outs that cost $100,000 or more. Taxpayers should be monitoring for quarterly assessments once a new lease is signed and the tenants complete their build-out.

Out of Cycle Cases for properties not reassesed as of January 1, 2019 are due December 31, 2018. Taxpayers should begin to evaluate the performance of their properties for potential assessment appeals for properties that have experienced a significant negative change in performance in 2018.

Emily Betsill, Esquire
Wilkes Artis, Chartered
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

In Massachusetts Be Prepared for Expensive Access to Justice

The deadline for filing most petitions to the Massachusetts Appellate Tax Board is approaching. The filing fees required to enter your petition are the highest in the nation. The filing fees generally started at $100 for property assessed at up to $1,000,000. For assessed values over $1,000,000 the filing fee is .10 cents per thousand in addition to the $100. This incremental increase in filing fees increases to a maximum of $5,000. A $5,000 filing fee would apply to $50,000,000 assessment, a $4,000 filing fee would apply to a $40,000,000 and so on. These filng fees apply to every fiscal year assessment is appealed, e.g. if there are two years pending at the Appellate Tax Board two separate filing fees must be paid. The filing fees are a significant expense. If you are not aware, these filing fees can be an unpleasant surprise.

David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

New Michigan Industrial Tax Abatement Decision

Michigan’s Public Act 198 of 1974 (“PA 198”) provides a discretionary property tax abatement program for industrial facilities.   The program can be used for new construction or rehabilitation projects. Generally, under the program, new construction receives an approximately 50% reduction in the tax rate, and a rehabilitated property’s tax base is frozen at the pre-rehabilitated value. PA 198 abatements must be approved by both the local unit of government and the State Tax Commission (STC) and may have a term up to 12 years after the completion of construction.

In Delta Business Center, LLC v Delta Charter Township, a June 20, 2019 published decision of the Michigan Court of Appeals (Docket No. 343386), the Court clarified that if a property is leased, in order to be eligible to receive the abatement, the lessee of the property must be liable for the taxes and must furnish proof of that liability.

In this case, the owner-landlord applied for the abatement.   The Township approved the abatement, but the STC denied it stating that even though the property’s lessees would be using the property for industrial purposes, the applicant owner did not engage in any eligible industrial activities.   The Court of Appeals found that, contrary to the STC’s finding, the statute does not require an applicant to be engaged in an eligible industrial activity, however, it affirmed the denial of the abatement because no proof was submitted that the lessees were liable for the taxes.

Mark Hilpert
Honigman
American Property Tax Counsel (APTC)

Updated December 2017

Minnesota Property Tax Update

Many Minnesota property taxpayers with pending appeals before the Minnesota Tax Court have seen their petitions resolved recently. The court expedited the trial calendar by compressing scheduling orders, eliminating a large backlog of filed, unresolved appeals.  It is expected that the pay 2017 appeals, filed last spring, will soon receive scheduling orders from the court.

Minnesota assessing jurisdictions are busy posting values for the 2018 pay 2019 assessment. Assessors are evaluating the active sale transaction market for both commercial and multifamily properties, and deciding what sectors will see increases.   Overall value increases in most jurisdictions over the last few years have led to significant drops in the effective tax rates, which have helped temper the tax impact from valuation increases.  Apartment owners in particular are bracing for increases, as the sale market for this property type has continued be very active, and jurisdictions continue to follow that activity up.

As always, commercial and apartment property owners are advised to have their assessments reviewed annually by a professional, to ensure that their properties stay competitive and are not overassessed. In Minnesota, the deadline for filing a petition to challenge the pay 2018 taxes is April 30th, 2018.

Mark Maher.
Smith, Gendler, Shiell, Sheff, Ford & Maher
 American Property Tax Counsel (APTC)

Updated June 2016

Personal Property Statute

On August 28, 2015 the Missouri Legislature enacted Section 137.122.1 which requires county assessors to apply the “standardized schedule of depreciation” to determine assessed value of personal property which will be “presumed to be correct.”

Owners may challenge the assessment by presenting substantial and persuasive evidence of value.

It appears many county assessors are resisting using the depreciation concept in setting assessed value. Only time will tell how this plays out.

Jerome Wallach
The Wallach Law Firm
American Property Tax Counsel (APTC)

Updated MARCH 2019

Valuation Testimony before the Boards of Equalization

Property tax is based on the principle that equality is achieved by applying a uniform tax rate to the taxable value of each parcel. As a result, the higher the taxable value the greater the tax. Consequently, in most appeals to the boards of equalization the dispute is over the value of the property. The testimony regarding value is critical and, in preparing for the appeal, thought must be given to who will provide that testimony.

In Nevada the appraisal of real property is regulated by the Division of Real Estate pursuant to NRS Chapter 645C. Pursuant to this chapter an “analysis, opinion or conclusion… relating to the nature, quality, value or use of… real estate for or with the expectation of receiving compensation” constitutes an appraisal. NRS 645C.260. And, only appraisers who hold the appropriate certificate, license or permit issued by the Division may testify regarding an appraisal. Id. One who testifies without the appropriate authorization from the Division is potentially guilty of a misdemeanor (NRS 645C.260) and subject to a fine of not less than $5,000 (NRS 645C.215).

In addition to appraisers, property owners have traditionally been allowed to testify about the value of their own property. Nevada follows the general rule that the owner of a property is presumed to have special knowledge of the property and, therefore, may testify to its value without qualifying as an expert witness.  City of Elko v. Zillich, 683 P.2d 5, 8 (Nev. 1984). This principle also allows officers of corporate entities to testify regarding the value of property held by the corporate entity. Dep’t of Highways v. Wells Cargo, Inc., 82 Nev. 82, 411 P.2d 120 (1966). In either instance the limitations of NRS Chapter 645C should not apply because the property owner is not offering the valuation analysis “for or with the expectation of receiving compensation.”

An appraiser and the owner of the property can testify before the boards of equalization regarding value, but it is also important to understand who cannot testify regarding value. An appeal to a county board can be filed by an authorized representative of the property owner (NRS 361.362), but that representative or agent cannot testify regarding the value of the property. There is no exception to Chapter 645C for an agent or representative of the property owner. The boards of equalization admonish agents who start to testify regarding value and regularly notify the Division of Real Estate regarding conduct they perceive as appraising property without the appropriate authorization. See NAC 361.729.

In short, the best practice is to retain a qualified appraiser. However, retaining an appraiser is not always cost effective or practical due to the short time frame allowed for administrative appeals. In these instances the owner of the property should be prepared to testify.   And, since a corporation can only speak through its employees and officers, the appropriate corporate representative, one with actual personal knowledge about the property, should be prepared to testify.

Paul D. Bancroft
McDonald Carano
American Property Tax Counsel (APTC)

Updated March 2019

New Hampshire Inventory Blanks are Due April 15

In New Hampshire every taxpayer must file an Inventory Blank with the local assessors by April 15 in order to preserve their right of a future property tax appeal. The requirement of filing an Inventory Blank can be waived by a city or town. Many cities and towns, by way of local election have waived the requirement of filing Inventory Blanks. In cities and towns that require the Inventory Blank on or before March 25 of each year the Inventory Blank form is sent to each taxpayer. The Inventory Blank requires that the taxpayer provide under oath a description of the real estate taxable, other information needed by the assessing officials to assess the property at its true value, and a census of all persons occupying the premises among other things. If you receive an Inventory Blank from the assessors do not ignore it otherwise you will be at the doom of the assessors.

David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)

Updated MARCH 2019

New Jersey Tax Court Analyzes Freeze Act Invocation and Waiver

A recent New Jersey Tax Court opinion analyzed whether a tax payer waived N.J.S.A. § 54:51A-8 (“Freeze Act”) protections pursuant to a settlement agreement that expressly invoked Freeze Act application only for the freeze year immediately following the appealed tax year. In 160 Chubb Properties, LLC v. Township of Lyndhurst, the Tax Court held that the taxpayer did not waive Freeze Act application to the second freeze year because Freeze Act protections must be deliberately and intentionally waived. Although the settlement agreement invoked Freeze Act protections for the first freeze year, the agreement did not expressly mention the waiver of application to the second freeze year. Importantly, the Freeze Act is self-executing, thus, invocation is not necessary for its application. Without any indication that the taxpayer requested or agreed to waive Freeze Act protection rights, application to both freeze years was enforceable. 160 Chubb Properties, LLC v. Township of Lyndhurst, 30 N.J. Tax 613, 624-25 (N.J. Tax Ct. 2018).

Gregory S. Schaffer, Esq.
Garippa, Lotz & Giannuario P.C.
American Property Tax Counsel (APTC)

Updated September 2018

Expanding the Workforce in Construction: Inclusive Initiatives for Women and Minorities Proves Critical for Ever‐Evolving NYC Construction Industry

New York City represents the best of real estate development on a global spectrum. From the record-breaking economic sales, to record-breaking building heights, the complexity and success of this industry rests on the shoulders of its committed, dynamic, knowledgeable, and diverse workforce.

This workforce is made up of many roles – developers, architects, legal counsel, and construction personnel. Take a stroll through any New York City street and you will undoubtedly witness a construction site underway. The hammering, demolition, concrete mixing, safety signaling, and drilling make up the musical medleys that fill the every-day tunes this magical City is best known for.

For that reason, it’s imperative that the construction workforce advance and grow. One initiative that has gained momentum and added a dynamic impact to the construction world is the growing rate of women-owned construction firms and women construction workers on-site. The construction world has been predominately male-oriented, but the inclusion of women in the workforce has only strengthened the industry and given it a greater edge.

Marcus & Pollack LLP, a leading real estate tax firm in New York City, has recognized this trend. Recently, Marcus & Pollack created a new department specifically tailored to assist women and minority owned business in the bidding and contract award process on major construction projects throughout New York City.  Marcus & Pollack LLP works hand-in-hand with leading developers to include women owned business on their job-sites at every level – from general contractors and construction managers to all lower-tiered trades.

Marcus & Pollack LLP can be the catalyst in bringing significant numbers of women and minority owned businesses and construction labor into the bidding and contract award process. Marcus& Pollack LLP’s involvement and representation of many of the owners and developers involved in new construction projects enables the initiative to be established and pursued at the very early stages of planning and project development.

As advisors in property tax aspects and tax incentive programs, Marcus & Pollack LLP advocates the inclusion of minority and women owned firms on construction sites by counseling clients to include at least three minority and/or women owned companies in every request for proposal or construction labor throughout the project. The initiative has been widely accepted and implemented.   

Further, women and minority owned firms and construction workers are also given access to Marcus & Pollack’s database of on-going, active construction sites looking to hire. By matching these minority and women owned firms or construction labor to projects currently underway throughout New York City, the overall construction schedule is helped to steadily progress because construction needs are being met by an able, capable, and dynamic workforce.

For more information, please contact Joel Marcus or Kristine Loffredo at This email address is being protected from spambots. You need JavaScript enabled to view it. or (212) 490-2900.

Joel R. Marcus
Marcus & Pollack LLP
American Property Tax Counsel (APTC)

Updated December 2002

Hijacking the Assessment Review Process 

New York consistently ranks as one of the highest taxed states in the nation, and local property taxes are 79 percent higher than the national average. Boards of Assessment Review face high rates of complaints and increased pressure by the local governing body to control refund liability.

The evidentiary demands of many Boards have escalated sharply and many initiatives have been criticized as mere attempts by the local governing body to deliberately discourage taxpayers from exercising their right to seek a fair assessment, in conflict with the spirit of New York's Real Property Tax Law.

Perhaps the most flagrant attempt to hijack the review process as a tool to curtail the property owner's right to a fair assessment is found in a recently proposed local law by the new Nassau County Executive. The controversial proposed law requires only commercial property owners who file appeals of their property's assessments to submit a certified appraisal as a condition precedent to reducing an assessment. In the alternative, owners may submit a "bona fide" counteroffer - defined as no less then 85 percent of the County's assessment, or withdraw the appeal altogether. Owners who fail to exercise one of the above options forfeit their right to judicial review and are subject to a $5,000 fine.

Nassau County spends approximately $150 million annually to pay down a $1.1 billion debt from past tax refunds even as taxpayers file more than 100,000 protests annually. More than 80 percent of the annual refund liability goes to commercial property owners. The proposed law by the new County Executive seeks to punish commercial property owners for exercising their constitutional right to a fair assessment and equitable tax burden.

The controversial law must be codified by the Nassau County Legislature as well as the New York State Legislature, which must issue a "home rule" message to authorize the change. However, State Senator Craig Johnson (D-Port Washington) has rejected the County Executive's request to introduce the state legislation, citing concerns that the legislation would be unfair to commercial property owners and was unconstitutional on its face. Of the many concerns with the proposed law, it was rejected by Sen. Johnson because it is punitive and bullies commercial property owners to settle within a 15 percent margin that deprives the owner of the right to a fair assessment and an opportunity to be heard.

Michael Martone
Koeppel Martone & Leistman, L.L.P.
American Property Tax Counsel (APTC)

Updated September 2015

North Carolina

The North Carolina General Assembly has enacted legislation which exempts from property tax the increase in the value of real property held for sale by a builder. Effective for tax years beginning January 1, 2016, and applicable to improvements made after July 1, 2015, improvements to single family or duplex residential real property held for sale by builders and commercial real property held for sale by builders are excluded from taxation as long as the property is held for sale. Applications for exclusion must be filed annually.

Charles B. Neely, Jr.
Nancy S. Rendleman
Williams Mullen
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

Use of purchase of entity interests to set real property value

While a recent arm’s length sale of the unencumbered fee simple interest is the best evidence of real property value for tax purposes in Ohio, the sale of interests in the ownership entity have not been adopted as readily as indicators of value. Eg. Salem Medical Arts & Dev. Corp. v. Columbiana Cty. Bd. of Revision[1]; Gahanna-Jefferson Pub. Schs. Bd. of Edn. v. Franklin Cty. Bd. of Revision[2] (company’s stock price did not equal real property value because of the ownership of other assets and of the going concern; no evidence in record of transfer of real estate for consideration, the sale of partnership interests in dissolution of one entity or from subsidiary to parent ownership entity was personal not real property).

More recently, tribunals and courts have adopted the sale of ownership interests as reflective of value of the real estate more eagerly[3].  Recent examples are the Ohio Board of Tax Appeals (BTA) decisions in Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision[4] (“Palmer House”) and Orange City Schools Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision (“Corporate Circles”)[5].

In Palmer House, the buyer purchased the membership interests of the LLC that owned a 264 unit apartment building.  The buyer entity was created solely for the purpose of owning the subject property.  Evidence in the record included a settlement statement, recorded mortgage, financing appraisal, and purchase agreement.  The BTA concluded based on these factors that the transaction was, fundamentally, the transfer of real property. This case has been appealed and is pending at the Ohio Supreme Court.

The facts are similar in the Corporate Circles decision.  The record included the closing statement, purchase agreement, and financing appraisal.  The taxpayer argued that the transfer was the sale of member interests in the ownership LLC and therefore, was the exchange of personal, not real property.  The BTA determined this transfer did represent real property value. The only purpose of the ownership entity was to own the subject real property, and the entity had no other assets or other going concern business value.  It also had no other liabilities other than the note and mortgage connected to the ownership of the real estate.  The Eighth District Court of Appeals affirmed the BTA’s decision agreeing that the documents and testimony demonstrated that the sale was of real property and not a truly a membership transfer.  This case is also pending at the Ohio Supreme Court with proceedings stayed until the Court rules in Palmer House. 

Potential legislation

About a year ago, there was a potential change to the current property transfer tax law circulating among county auditors.  The legislation has not been formally introduced, but the Ohio Legislative Service Commission analysis can be found here.  In short, the law would remove the current exemption to paying the property transfer tax when the transfer of ownership is effectuated through the transfer of the interest in the ownership entity (eg, LLC, partnership, corporation) instead of a direct conveyance of title.

[1] 82 Ohio St.3d 193, 1998-Ohio-248.

[2] 89 Ohio St.3d 450, 2000-Ohio-216.

[3] Parkland Assoc. v. Mayfield Hts School Dist. Bd. of Edn. (June 25,2014), BTA No. 2011-3893, 4060 (function of owner partnership was solely to own subject property with no other going concern value).

[4] (July 25, 2018), BTA No. 2016-2365.

[5] (April 23, 2018), BTA No. 2017-127.

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Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED March 2018

Avoid Deadline Disaster

Under the Oklahoma Ad Valorem Tax Code a taxpayer has thirty (30) calendar days from the date of mailing of a notice of increase in value to file an informal appeal with the county assessor.  If no notice of increase in value has been issued, a taxpayer can still file an informal appeal by the first Monday in May.  The taxpayer has ten (10) working days from the date of the assessor’s informal hearing decision to file a formal appeal with the county board of equalization.  A taxpayer has ten (10) calendar days from the board’s final adjournment date to continue the appeal by filing a petition in district court. By statute, boards are to adjourn by May 31st, but they have the authority to extend their sessions so it is critical to confirm each board’s final adjournment date.  The lack of consistency in the computation of filing deadlines under Oklahoma law can create confusion, but it is essential that deadlines be met because failure to comply will bar an appeal.

William K. Elias
Elias, Books, Brown & Nelson, P.C.
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

Government Restrictions on Property Impact Real Market Value

Often overlooked by the assessor is the impact of conditions of approval for a development that impact the use of the property. A developer that is required to set aside a portion of its property for non-development uses is not utilizing the property to the highest and best use of the current zoning, and should not be paying full taxes or in some instances any taxes on that property. An example is a developer required to put aside several parcels of property for park use as a condition of a multi-family planned development. These parcels cannot be used for commercial use because of the government restriction on the property's use and the value to the owner is zero. Similarly, a city or county that places a conservation easement over a portion of property is placing a government restriction on that property that must be taken into account when considering the real market value of the property. The impacts of these restrictions need to be pointed out to the assessor who may not be aware of the government restriction and instead place a real market value per square foot over the property without any adjustments.

Cynthia M. Fraser
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Garvey Schubert Barer,P.C.
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

PENNSYLVANIA SUPREME COURT ISSUES ANOTHER DECISION IN A SERIES OF UNIFORMITY RULINGS PROTECTING TAXPAYERS

In an April 2019 decision, the Pennsylvania Supreme Court issued yet another ruling in a series of decisions over the last decade consistently upholding the constitutional requirement of uniformity in taxation in favor of taxpayers.  In Sands Bethwork Gaming, LLC v. Pennsylvania Department of Revenue, 216 MM 2017 (Pa. Apr. 26, 2019), the Supreme Court ruled that a statute that taxed gaming revenue at different thresholds and then re-distributed the proceeds violated the Uniformity Clause.

The Pennsylvania Constitution provides “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax. . . .”  In Sands, all seven Justices agreed in the result, declaring the statutory section to be unconstitutional; five Justices made up the majority and two Justices concurred.  The concurrence, authored by Justice Wecht (who was the author of the Court’s 2016 Mount Airy decision) is particularly strong.  Justice Wecht begins with a refresher that Pennsylvania’s Uniformity Clause was adopted in the late 1800’s in a “populist backlash against the preferential tax treatment that the legislature often had extended to favored industries and individuals.”  He noted that as a result of those preferential laws “[t]he burden of maintaining the state had been, in repeated instances, lifted from the shoulders of favored classes, and thrown upon the remainder of the community.”  The  Uniformity Clause was the specific remedy fashioned by the delegates to the constitutional convention to prevent “certain groups from having to shoulder the benefits of progress from which all would benefit.”

Unfortunately, in Pennsylvania, most local school districts, some local assessors and some trial courts seem to have lost sight of the requirement of constitutional uniformity in taxation.  Pennsylvania’s Supreme Court, refreshingly, has not.

The Sands decision follows the Court’s recent decisions in:

• 2017, Nextel v. Commonwealth, 171 A.3d 682 (Pa. 2017)(declaring that a corporate income tax statute that required corporations that met an income threshold to pay an income tax, whereas corporations that did not meet the threshold wholly escaped taxation, violates the Uniformity Clause);
• 2017, Valley Forge Towers v. Upper Merion School District, 124 A.3d 962 (Pa. 2017)(declaring that a school district policy targeting only commercial property owners for increase assessment appeals violates the Uniformity Clause);
• 2016, Mount Airy #1 v. Pennsylvania Department of Revenue, 154 A.3d 268 (Pa. 2016)(declaring that a gaming statute setting a graduated-rate income tax violates the Uniformity Clause)
• 2012, Tech One v. Allegheny County, 53 A.3d 685 (Pa. 2012) (acknowledging the “logic and force” of the trial court’s finding that treating some real estate as exempt from taxation solely because it is owned as a leasehold interest rather than in fee simple would violate the Uniformity Clause, but deferring a ruling on those grounds because it had already ruled that real estate cannot be classified differently for purposes of taxation based on the manner in which it is owned)
• 2009, Clifton v. Allegheny County (Pa. 600 Pa. 662 (Pa. 2009)(ruling that “base year” system of assessment was unconstitutional as applied in Allegheny County because it did not consider real estate valuation changes; and ordering county to re-assess);
• 2006, Downingtown Area School District v. Chester County Board of Assessment, 913 A.2d 194 (Pa. 2006)(ruling that a taxpayer may bring evidence of assessment-to-value ratio of similar shopping centers in challenging uniformity of taxpayer’s assessment);

We have called the Uniformity Clause the “fourth approach to value”.  The Uniformity Clause is the underpinning of all taxation and should inform the strategy of every assessment appeal.

To discuss the specifics of your property, please contact Siegel Jennings at:

Sharon F. DiPaolo, Esquire
Siegel Jennings, Co., L.P.A.
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American Property Tax Counsel (APTC)

Updated december 2018

File an Account to Protect your Right of Appeal

Now is the time for Rhode Island taxpayers to preserve their right of appeal for Tax Year 2019 by filing an Account with the local assessor. In most jurisdictions the Tax Year 2019 tax bill will be sent out during the summer of 2019. The Tax Year 2019 tax bill has an assessing date of December 31, 2018. In most cases the filing of a Valid Account by January 31, 2019 is a prerequisite to a valid appeal. The Account must describe the property, both personal and real, claim a value of the property, and be signed under oath and notarized. Occasionally the assessors do not send out Account Forms. It is incumbent upon the taxpayer to seek out a form and properly complete and file it. It is possible for a taxpayer to construct his own Account form, but it must include all the required information and be signed under oath, notarized and filed timely.

David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)

Updated June 2011

South Carolina Enacts New Point of Sale Law

On June 14, 2011, Governor Nikki Haley signed a new law significantly amending South Carolina's controversial "point of sale" law requiring tax reassessment of properties whenever a sale has occurred. The prior law adopted in 2006, commonly known as "Act 388," placed a fifteen (15%) percent cap on reassessed values as part of the five (5) year countywide reassessment programs but sought to make up for the loss of revenue by requiring that properties be reassessed whenever there is a change of ownership.

Many in the commercial real estate market had expressed that Act 388 placed buyers of commercial properties at a significant competitive disadvantage with competitive properties whose property taxes had not increased. The new law, which does not apply to owner occupied residential properties, creates an exemption equal to twenty-five (25%) percent of any increase in valuation resulting from a change in ownership. The exemption does not permit a reduction in market value below the prior assessed value.

The new legislation leaves several important legal arguments unresolved, most notably the date of valuation for property owners whose properties have decreased in value during the middle of the countywide reassessment cycle. Although the current law calculates property taxes based on the state of the property as of December 31st of the prior year, the South Carolina Attorney General's Office issued an advisory opinion in June 2010 stating that the valuation for any mid-cycle appeal was to refer back to date of the last countywide reassessment. Many South Carolina counties are not adhering to this advisory opinion. The new legislation does not address this issue.

Morris A. Ellison
William T. Dawson
Womble Carlyle
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 JUNE 2019

The 86th Texas Legislature Has Adjourned Providing Long-Awaited Property Tax and School Finance Reform

In the words of Governor Greg Abbott, “This was an extremely successful session.”  The Texas Legislature’s primary focus, as widely reported in the press, was on property tax and school finance. These same issues were debated in the 2017 legislative session, but were left unresolved, much to the frustration of school districts and taxpayers. Lawmakers had a clear mandate this session – deliver reform. They succeeded by passing SB 2 and HB 3.

HB 3 (Huberty) addresses school finance. The new law provides $4.5 billion in additional state funding, $2 billion in additional teacher pay, and $5 billion in property tax relief.  This tax relief reduces school district tax rates by 7 cents in 2019 and 13 cents in 2020, which essentially limits the increase in local school district revenue to 2.5% per year.

SB 2 (Bettencourt) is the omnibus property tax bill designed to provide reform at several levels of our ad valorem tax system. As dollars go, the new law limits revenue increases for cities and counties to 3.5% per year. Any increase above that must be approved by voters. Other provisions apply for small taxing units.

SB 2 also:

• Increases transparency for taxpayers by requiring taxing units and appraisal districts to create and maintain websites concerning tax information
• Creates a Comptroller Property Tax Administration Advisory Board
• Requires appraisal districts to appraise property in compliance with appraisal manuals to be issued by the Texas Comptroller; manuals must comply with generally accepted appraisal techniques
• Provides for special Appraisal Review Board panels, comprised of highly qualified individuals, to hear protests concerning properties with appraised values over $50 million located in counties with populations over 1 million
• Codifies that the following publications are considered generally accepted appraisal methods and techniques as a matter of law: The Appraisal of Real Estate, The Dictionary of Real Estate Appraisal, USPAP, and publications including information related to mass appraisal
• Eliminates taxing unit power to challenge the level of appraisal of a category of property
• Prohibits Appraisal Review Boards from increasing appraised values above the values certified by appraisal districts

There were other important property tax bills. For instance:

HB 380 (Geren) allows a taxpayer to correct procedural flaws in a protest or lawsuit.

HB 1743 (King) reduces the rollback on ag use from 5 to 3 years and the interest rate from 7 to 5 percent.

HB 3143 (Murphy) extends the tax abatement program featured in Chapter 312 of the Texas Tax Code to September 1, 2029.

The session was successful not only for passing helpful legislation, but also for quashing dangerous proposals. Two are most notable: a bill seeking to eliminate the equal and uniform remedy did not receive a public hearing and a sales disclosure bill was not reported from committee. Passage of these bills would have caused serious turmoil for taxpayers, as key protections for confidentiality and against unfair taxation would vanish. 

Many thanks to our hardworking legislative affairs team who fought tirelessly this session on behalf of taxpayers. Jim Popp along with Vilma Luna and Clint Smith of Hillco Partners are to be commended for their watchful eyes, keen observations, and effective legislative strategies. Additionally, special thanks goes to Daniel Gonzalez and the Texas Association of Realtors for their continued support and ongoing efforts to defend our property tax system. Experience has shown me that, in representing taxpayers from start to finish, the start is always at the Texas Capitol.

For a more detailed analysis of legislation please click here: https://www.property-tax.com/wp-content/uploads/2019/05/1.-2019-Summary-Passed-Legislation.pdf

 Danny Smith
 Popp Hutcheson
American Property Tax Counsel (APTC)

Updated June 2018

Tax Commission Holds that Debt Rate Must Match Capital Structure

The concluding step in deriving a weighted average cost of capital cost is to determine the proper capital structure.  In Appeal No. 15-958 (May 2018), the Tax Commission stated that the capital structure is related to a company’s credit rating and held that “[c]ombining a debt rate from “A” rated companies with a capital structure from mostly “B” rated guidelines companies . . . [was] a mismatch.”  The Commission corrected this error by utilizing an “A” credit rating and a capital structure of “A” rated debt.  Thus, it is important to understand the relationship between a company’s debt rating and its capital structure when determining a weighted average cost of capital.

David J. Crapo, John T. Deeds
Crapo Deeds PLLC
American Property Tax Counsel (APTC)

UPDATED March 2019

2019 Appeal Deadlines Approaching

The 2019 assessments have been released in all Northern Virginia jurisdictions, and now is the time for property owners to focus on potential appeals.  In Arlington County, the assessed values of commercial office properties are up 4.3%.  In the City of Alexandria, commercial assessments are up approximately 2.70%.  Fairfax County has increased non-residential assessments by 5.19%, and Loudoun County commercial assessments are up 7.66%.  Arlington County has proposed an increase in the real estate tax rate for the current tax year, while Fairfax County and the City of Alexandria are expected to remain flat.  Those rates will be reviewed and potentially adopted over the next several weeks.

Because market conditions have not drastically changed, the changes in assessed value may not adequately reflect the current value of a particular property.  Assessment appeal deadlines are coming up in Arlington County (April 15), and in Fairfax County, Alexandria and Loudoun County (June 3).  To discuss the merits of an appeal of your assessment, please contact us at the numbers listed below.

Mark Rogers
202-457-7804

Ilene Boorman
202-457-7806

Wilkes Artis, Chtd.
American Property Tax Counsel (APTC)

Updated JUNE 2019

Washington Legislature Raises New Revenue

The 2019 Washington Legislature raised substantial new revenue for the next biennium. Two notable changes: school levy limits were relaxed and the real estate excise tax was practically doubled.

The real estate excise tax applies to sales of Washington real estate and sales of a controlling interest in an entity that own Washington real estate. The tax is 1.78 percent of the sale price in most parts of the state. A new graduated rate structure goes into effect on January 1, 2020, with rates starting at 1.6 percent and quickly rising to 3.5 percent. Several other changes were made, as well.

School finance litigation resulted in the 2017 Legislature limiting local school levies in exchange for increased funding from the state. This session the Seattle school district and others persuaded the Legislature to relax those limits. The effect will vary from district to district, making property tax projections more complicated and uncertain for taxes payable in 2020.
 
Norm Bruns and Michelle DeLappe
Garvey Schubert Barer, P.C.
American Property Tax Counsel (APTC)

Updated JUNE 2019

Tax Rate Rollercoaster Lands

The DC Tax Rate Rollercoaster has finally landed. Following a year of uncertainty, increases, and decreases in the commercial property tax rate the D.C. Council has finally provided clarity regarding the rate. In June 2019 the Council passed the Fiscal Year 2020 Budget Support Act. This Act officially increased the top commercial tax rate back to 1.89% from the 1.85% rate the Council set just six months prior. The Council also approved an increase in transfer and recordation taxes (payable upon, e.g., the sale of a property) from 2.90% to 5.00% for commercial properties. These taxes are set to sunset in 2023.

Scott B. Cryder, Esq.
Wilkes Artis, Chartered
American Property Tax Counsel (APTC)

Updated March 2018

Wisconsin Court Of Appeals Holds That Agricultural Land Classification Does Not Require That Crops Be Grown For A Business Purpose

In a decision issued on March 7, 2018, State of Wisconsin ex rel. The Peter Ogden Family Trust v. Board of Review, the Wisconsin Court of Appeals rejected the assessor’s position that crops must be grown for a business purpose for land to qualify for agricultural classification, which requires assessment at significantly below market value.

Beginning in 2012, the land at issue was classified as agricultural and agricultural forest based upon pine trees, apple trees, and hay the landowners planted on the property. In 2016, the assessor concluded that the property failed to meet the agricultural and agricultural forest classifications and reclassified the property as residential.  This resulted in an increase in the assessed property value from $17,100 as agricultural land to $886,000 as residential land.

The landowners objected to the 2016 assessment, and the board of review upheld the residential classification. The landowners filed an action for certiorari review, arguing that the change was erroneous because it was based upon the mistaken belief that for land to qualify as agricultural land, crops grown on the property must be grown for a business purpose. The circuit court upheld the assessment, and the landowners appealed.

The Court of Appeals examined Wisconsin statutes defining “agricultural land” and “agricultural use,” as well as the relevant Department of Revenue rule, and concluded that the plain language of the statutes and rule refers to “growing” the relevant crops, not marketing, selling, or profiting from them. The Court found that the board of review’s position that the land could not be “devoted primarily to agricultural use” without “minimal sales,” “valid economic activity,” and crops being “marketed for sale” was unsupported and contrary to law. The Court further rejected the board’s argument that the assessor did not impose a “business standard” when evaluating the use of the property, concluding that a review of the transcript of the board hearing demonstrated that the assessor and the board clearly—and erroneously—equated “agricultural use” with growing crops for a business purpose.

The Court thus held that to qualify for agricultural classification, it is sufficient that the land be devoted primarily to growing qualifying crops, whether or not those crops are grown for a business purpose.

Marie Bahoora
Michael Best & Friedrich LLP
American Property Tax Counsel (APTC)