Personal Property and Real Estate Property Tax Appeal Process
Throughout the United States, every taxing jurisdiction calls the process of disagreeing with the assessed value of property different as they will either refer to it as a property tax appeal or a property tax protest. These two processes are treated in the same manner but called different names. For example, in Kansas, it is referred to as a property tax appeal, but in Texas, they refer to the process as a property tax protest.
BUSINESS PERSONAL PROPERTY
Determination of Filing an Appeal or Protest
After receiving a notice of value, a taxpayer or their representation will decide if they want to file a property tax protest on their account. This process will be the same for both personal property tax and real estate tax.
For business personal property tax, renditions are required to be filed on an annual basis to the assessing jurisdictions. If these aren’t filed annually, assessors can place arbitrary assessments on the account. In most cases, the acquisition date and cost of the assets are used to place the assets on a set of depreciation tables to account for the loss in value as the assets get older. As assets depreciate differently, these typically include several tables that account for the loss of value at different rates. The calculation of this value plus inventory and/or supplies (if taxable in the particular jurisdiction) is how the appraised values are calculated for personal property taxes.
Property Tax Appeal or Protest Process with the Assessor
Once you or your designated agent have decided to appeal your value, each jurisdiction has a process to follow. Pay attention to deadlines and the procedures for your particular jurisdiction. With your Notice of Value, there is typically an appeal form that needs to be filled out. If there isn’t a form, you can send in a letter, or some will allow you to file the appeal on their website. Some jurisdictions ask that you provide your documentation to support the value you are requesting prior to the hearing. If they have requested the information, perhaps the assessor and/or board is willing to work with you informally to resolve the discrepancy prior to the hearing.
Determination of Who is Correct
Because the State or County Assessor are government employees, it is often assumed that they are following state statutes or guidelines regarding general valuation, and they would like to believe they are correct in their methods. This is not necessarily the case, as PVS has developed multiple revaluation methodologies for assets to reduce our clients’ property taxes. That being said, solid backup data, research and sometimes legal arguments by experts are needed to support and defend value calculations or the board will ultimately side with the assessor.
If the discrepancy is unable to be resolved informally, then you will want to attend the hearing to present your case. Once you have presented your case and the assessor has presented theirs, the board will either issue a ruling at that time or will wait until after everyone has left to determine the outcome. Once the outcome is determined, a notice will be issued to the taxpayer or tax agent regarding the case.
If the board does not side with the taxpayer, there is usually another step which can be taken. This step usually involves going to the State Board of Equalization. At this step, most of the time an attorney must be hired.
Almost all states across the country that impose real property taxes have a legal process in place for taxpayers to keep their real property assessments in line with the market. These assessment appeal processes are almost always annual and typically do not require use of an attorney. It is however recommended that taxpayers utilize industry experts such as property tax consulting firms since property tax consultants have a great deal of expertise and resources at their disposal to combat erroneous property tax assessments.
Determination of Filing an Appeal or Protest
Property tax assessments are often viewed as set-in-stone or predetermined — out of the taxpayer’s control. Assessors in towns and counties across the country are widely presumed to be correct in their valuation of real property and property assessment laws are generally written with the assessor’s presumption of correctness as a starting point. Tax assessments are supposed to reflect the fair market value of one’s property. The market value of your real property is constantly in flux due to sales, changes in rental rates and changes in construction costs. For this reason, your real property assessed value should be monitored regularly. When was the last time you reviewed your property’s tax assessment?
Real Property Tax Appeal or Protest Stages
The real property appeal process varies from state to state, but in most cases, there are three main appeal stages: informal negotiations, board of review and litigation. Just as with business personal property appeals, there are deadlines to be mindful of when filing a protest of your real property assessment.
Many taxpayers can find success at the informal level when being proactive and reaching out to their local assessors. If assessors begin to dig their heels in and decline to alter their assessment within the taxpayer’s requested valuation range, states typically have a process in place to have the appeal reviewed by a third party. This secondary appeal stage consists of either a hearing officer or a board of review composed of multiple members.
Hearing officers and Boards of Review/Equalization do not always look at evidence as impartially as they should, so states have a third level of the appeal process established which generally requires engaging an attorney who specializes in property tax litigation. A cost-benefit analysis should be run when considering the litigation stage of a real property assessment appeal due to the costs involved with this extra stage. Not only are legal fees required but this stage will most likely require a full appraisal report to sway the opinion of the court.
The litigation process for real property tax appeals can sometimes take years or even longer to resolve in certain instances. If the original assessment is far enough out of line however, most will find that seeing the assessment appeal all the way to the end is worth the additional legal fees and appraisal costs.
Whether we are discussing real estate or business personal property, the bottom line is the same: do not assume that the values placed on your property and the corresponding property taxes are accurate. These values are computer calculated with minimal information involved. Reputable property tax firms, like PVS, have been cultivating and implementing valuation methodologies, developing relationships with assessors, and working to reduce our clients’ property tax liability for decades. There is something you can do about your high property taxes, and we can help.