FEATURED ARTICLE

Polls continue to show that property taxes, along with federal income taxes, remain the least liked by the American taxpayer. Throughout the country, the hottest money issue at the state and local level is the property tax.

Detractors call for property tax reform. Some even believe the property tax has outlived its usefulness and argue that it should be abolished and replaced by other taxes.

Defenders of the property tax argue that it is a "good tax" that is constantly being reformed to keep it equitable. Many scholars continue to regard the property tax as a good tax because it is dependable, transparent, easy to administer and difficult to avoid. In addition, it is flexible because tax rates can be easily changed. Others argue, that it is less regressive than a sales tax. This position holds that the sales tax is highly regressive and results in the poor paying a larger percentage of their income in total taxed purchases than the wealthy.

Before setting out to deal with the many frustrations of property tax reform we should look to historians for guidance. "Problems will always torment us because all important problems are insoluble: that is why they are important. The good comes from the continuing struggle to try and solve them, not from the vain hope of their solution."

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STATE AT A GLANCE - New Jersey

Dates, guidelines & procedures. What you need to know at a glance.

CASE & POINT

For nearly the past twenty-five years, Pennsylvania taxpayers have been subject to a system of dual assessment ratios.

Under Pennsylvania statute 72 P.S. § 5020-402(a.1), each board of county commissioners shall establish and determine a predetermined ratio of assessed value to actual value. The commissioners shall apply this predetermined ratio to the actual value of all real property in order to formulate the assessment roll for their particular county. This ratio, established at the county level, is the established predetermined ratio, or simply, the EPR.

Conversely, Pennsylvania statute72 P.S. § 4656.16a authorizes the State Tax Equalization Board (STEB) to establish for each county a common level ratio of assessed value to actual value. Unlike the arbitrary nature of the EPR, the STEB ratio is a statistical analysis of real estate sales during the prior calendar year, and is reflective of the true relationship between assessed value and actual value. This ratio, established at the state level, is the common level ratio or simply, the STEB ratio.

Since 1982, the state's statuary system provided that boards of assessment or the courts themselves, when considering an assessment appeal, must first determine the market value of the subject property and then apply the EPR in order to arrive at assessed value. However, if the corresponding STEB ratio varies by more then fifteen percent (15%) from the EPR, the board or court must apply the STEB ratio in order to arrive at assessed value.

In effect, Pennsylvania taxpayers often found themselves victims of a statutorily protected non-uniformity to the extent of 15%. This non-uniformity continued to exist despite Article VIII, Section 1 of the Pennsylvania Constitution, which mandates, "taxes shall be uniform upon the same class of subjects, within the territorial limits of the authority levying the tax."

In Downingtown Area School District v. Chester County Board of Assessment Appeals and Lionville Station S.C. Associates, the Supreme Court of Pennsylvania addressed this very issue of non-uniformity resulting from the dual ratio and base-year assessment system.

By way of background, the appellant school district sought from the trial court and received application of the 100% EPR to the current market value of the subject property. The Commonwealth Court affirmed, concluding that because the STEB ratio of 85.2% varied by less than 15% from the EPR, it was consistent with the statutory scheme to apply the EPR.

The Supreme Court of Pennsylvania granted review. In its holding, the court found that the aforementioned 15% allowance could not be used to effectively circumvent the constitutional requirement of uniformity. As such, the STEB ratio can in fact be applicable in assessment appeals regardless of whether or not it varies by more than 15% from the established predetermined ratio.

Apart from its holding, the Court also suggested that other methods may be used by the taxpayer to demonstrate non-uniformity. Other such methods may include valuing similar type properties and then comparing their assessment ratios to that of the subject property.

Read the case here

TAXING ISSUES

September Tax Appeal Deadlines

CA - September 15th - Alameda, Inyo, Kings, Orange, San Francisco, San Luis Obispo, San Mateo, Santa Clara, Sierra and Sutter Counties. All other counties November 30th.

PA - Most Counties

FL* IL* RI* UT* WI*

* Dates Vary. Check Jurisdiction.

Complete Online Calendar

Minnesota's "60 Day" Rule

When filing property tax appeals in Minnesota, taxpayers need to pay close attention to the "60 day" rule. In Irongate Enterprises, Inc., Relator, vs. Office of Appellate Courts County of St. Louis, Respondent the Minnesota Supreme Court affirmed the lower court's ruling in which an appeal was dismissed for failure to comply with Minn. Stat. §278.05, subd. 6(a), requiring appellants to supply statutorily required information within 60 days after the appeal deadline.

Read the case here

Indiana's Property Tax Upheaval:

Indiana taxpayers are fighting mad over the exorbitant increases in their property tax bills resulting from the state's first update (trending) of the 2002 reassessment. The uproar has initiated the Department of Local Government Finance to conduct reviews of assessments in all the counties in the state. Some have passed review, while others have been ordered to conduct partial or full reassessments.

More information available here

WI Lawmakers Move to Eliminate Waste Treatment Exemption

The WI Senate and Assembly have both voted unanimously to eliminate an exemption that has been granted to the state's manufactures where waste treatment is performed. The exemption, resulting from a 2004 court decision, is estimated to be worth approximately $170 million annually in property tax revenue. The governor is expected to sign the bill into law.

More information available here

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