Articles from 2010
Most communities in Maine will be sending out their tax year 2010 tax bills this summer. The tax year 2010 has an assessing or valuation date of April 1, 2010. The deadline to file an Application for Abatement of Property Taxes with the local assessor is within 185 days after the date the tax was committed to the tax collector (which is usually but not always shortly before the tax bill is mailed). The standard of proof for obtaining an abatement in Maine is an onerous one. The taxpayer must prove that the assessment is “manifestly unjust”. This oppressive standard of proof creates a situation where working with the assessor before the filing of the Application for Abatement will often produce the most favorable results. This may entail providing the assessor with an appraisal or other work product before the filing of the Application for Abatement.
The New Hampshire Department of Revenue Administration recently published its Tax Year 2009 equalization ratios. These ratios are as of April 1, 2009, which is the assessing date pertaining to tax year 2009. Many communities in New Hampshire now have equalization ratios of more than 100%. This means that an assessment may be proper even though the assessment is at more than market value. For example if a property has a market value of $1,000,000 and the median equalization ratio for that community is 120% the proper assessment is $1,200,000. The merit of some cases dissipates in the face of increased equalization ratios. Despite high equalization ratios many cases still have merit. Any Tax Year 2009 Abatement Applications filed with the assessors that have been denied or ignored must be perfected by filing a Petition in the Superior Court or at The Board of Tax and Land Appeals no later than September 1, 2010.
In the recent Massachusetts Appellate Tax Board case of MASS PCSCO v. Commissioner of Revenue et al. the Appellate Tax Board upheld the principle of substance over form in determining that personal property was taxable. In this case a captive leasing company was set up by a parent corporation to lease wireless communications equipment to the parent corporation. The purpose was to avoid local personal property taxes. In Massachusetts stock in trade of a leasing company is exempt from local taxation. The leasing company held no assets other than the communication equipment it leased to its parent corporation and the leasing company conducted no other business activity. The Appellate Tax Board held that the leasing company had no economic substance and was set up solely for the purpose of avoiding personal property taxes. Therefore the leasing company would not be afforded the stock in trade exemption from personal property taxes.
Many communities in Rhode Island are in the process of revaluing for tax year 2010. The tax year 2010 has a valuation date of December 31, 2009. In most cases the tax bills will be sent out during the summer of 2010. Some communities are notifying taxpayers of the proposed tax year 2010 assessments in advance of sending out the tax bills. If that is the case it may be a good opportunity to discuss the assessment with the assessor and correct any errors before the bills are sent out. If the tax year 2010 tax bills are sent out and the taxpayer decides to file an appeal it must be filed with the local assessor within ninety days from the date the first tax payment is due. The assessor then has forty five days to review the appeal, render a decision, and notify the taxpayer of the decision.
In New Hampshire the taxpayer has the option of appealing a decision of the local assessors to the State Board of Tax and Land Appeals (BTLA) or to the Superior Court in the County where the subject property is located. In either case the BTLA and the Superior Courts are afforded a very wide latitude of discretion in determining market value. The BTLA or Superior Court may accept any one of the traditional approaches to value (comparable sales, income, cost) on any type of property. No one approach is favored over the other. In many cases where the subject property is an owner occupied commercial property the BTLA or Superior Court will not accept the comparable sales approach and/or income approach to value. They will often opt to utilize the cost approach to value. This can result in an unrealistically high market value that is extremely difficult to overturn.
In most cases communities in Massachusetts will not send out their actual fiscal year 2011 property tax bills until the end of 2010. The fiscal year 2011 has an assessing or valuation date of January 1, 2010. In most cases it is the condition of the property either physical and/or financial on January 1, 2010 and the twelve months proceeding January 1, 2010 that is most pertinent in valuing property. The assessors are now or have recently sent out requests for information inquiring as the income, expenses, and conditions of certain properties as of January 1, 2010 and Calendar Year 2009. These requests are purportedly to assist the assessors at arriving at a fair market value for the upcoming fiscal year 2011. The failure to answer these requests will probably bar the right of any fiscal year 2011 tax appeals. Please do not ignore these requests.