A tax case in Allegheny County also spurs a judge to limit government's ability to initiate reassessments of individual properties.

Pennsylvania taxpayers recently scored an important victory when the Allegheny County Court of Common Pleas reasserted taxpayers' right to protection against property overassessment, while limiting taxing authorities' ability to proactively raise individual assessments.

Pennsylvania is the only U.S. state (besides California) that does not mandate periodic reassessments. Instead, it employs a county-by-county method: Each county annually submits sales data to the State Tax Equalization Board, which then creates a "common level ratio" between market value and the previous reassessment value.

Intervals between reassessments vary widely, with Butler County conducting its last reassessment in 1969 and others currently in reassessment. This results in a stilted system that assesses many new owners' properties at the sales price (which may or may not reflect market value), and leaves other assessments unaltered, without updates to reflect changes in the economy and submarket.

Pennsylvania's constitution requires uniform taxing schemes and prohibits government from distinguishing between residential and commercial properties when levying property taxes. As such, all taxing authorities dealing with assessments must administer the laws "in a spirit to produce as nearly as may be uniformity of result."

Actions in Allegheny County

Allegheny County, home to Pittsburgh, has faced extensive litigation over the sales data it submitted annually to the state equalization board for calculating the county's common level ratio. This ultimately resulted in its 2022 common level ratio being retroactively reduced after a county judge held that the county had been "cooking the books" by sending skewed data to the state board. Taxpayers received a special lookback period to appeal their 2022 assessments, and thousands had their property taxes reduced after applying the statistically correct ratio.

Pennsylvania is also one of the few jurisdictions that permit taxing bodies to file assessment appeals against specific properties to raise taxpayers' assessments. In Bhardway vs. Allegheny County, a residential property owner's assessment increased after a school district in Allegheny County filed a tax assessment appeal on the taxpayer's property, and the owner appealed to a higher court. The taxpayer then filed a motion to use an alternative ratio, highlighting the county's lack of transparency and history of sending artificially inflated data to the state equalization board. Finally, the taxpayer argued that it would be financially burdensome for taxpayers to disprove the county's ratio.

Specifically, the taxpayers in the Bhardway case sought to prove non-uniformity under the common-law method by introducing evidence of the assessment-to-value ratios of similar properties in the neighborhood, rather than from the entire county. The Pennsylvania Supreme Court had already approved using such evidence to protect taxpayers from high assessment ratios and to promote uniformity. Allowing this evidence also showed that justices recognized that ratios can vary greatly by location within a county.

In May 2024, the trial judge entered an order granting "parties" permission "to utilize the common law method for establishing common level ratios." This ruling would have been an affront to taxpayers by seemingly allowing taxing bodies to establish various common level ratios for different property classes, in contravention of the Pennsylvania Constitution and established jurisprudence.

Fortunately, taxpayers successfully argued that the Pennsylvania Supreme Court's approval of the common level method did not extend to, or approve of, taxing bodies' disparate treatment of residential and commercial property owners. Allowing taxing entities that ability would instead disrupt uniformity, create confusion, and result in more litigation, they argued.

On Sept. 3, 2024, the judge amended his original order in the case and limited taxing bodies' ability to use the common law method. As it stands, taxing authorities can now only use such evidence if it does not sub-classify properties, or to dispute a taxpayers' evidence by using similar properties of the same nature in the neighborhood.

While the judge's ruling protects taxpayers from the long reach of taxing entities, only legislation mandating periodic reassessments statewide will solve the problems that naturally arise from Pennsylvania's outdated base-year system, which does not accurately reflect the ebbs and flows of the real estate market. The state's current system burdens taxpayers with non-uniform and outdated assessments, while taxing authorities struggle to balance their budgets.

Until the state corrects these fundamental flaws to ensure fairness for all, it is essential that taxpayers continue to file tax appeals that assert their protections against overassessment and right to uniformity in taxation as guaranteed by the Pennsylvania Constitution and courts.