Do Your Property Taxes Reflect True Value?

Do your local property taxes reflect the true value of your property?  In Virginia, property subject to local taxation includes real estate, vehicles, machinery and tools, merchant’s capital, and all other types of tangible personal property.

In these tough economic times, localities are reluctant to let go of any source of revenue.  This often results in the unfair treatment of taxpayers, both business and individual.  The fair market value of your assets may have dropped significantly, yet the locality has made no adjustment to its valuation of your assets or to the amount of tax it assesses.  What can you do?

The first option is to file an application for correction with the commissioner of revenue.  Taxpayers have three years from the last day of the tax year in which the commissioner makes an erroneous assessment, or one year from the date of the erroneous assessment, whichever is later, to file the application.  If the commissioner determines that the assessment was, indeed, erroneous, the locality will exonerate you from having to pay any erroneous tax and will refund any erroneous tax you have already paid, with interest.  If, however, the commissioner determines that your property was assessed at less than fair market value, the commissioner will increase the assessment to the fair market value and will assess you additional tax based on that value.

Another option is to appeal the tax assessment to the commissioner of revenue.  This option is available in the case of local mobile property taxes—taxes on airplanes, boats, campers, recreational vehicles, and trailers—as well as in the case of local business taxes, such as machinery and tools tax, business tangible personal property tax, and merchant’s capital tax.  Taxpayers have only one year from the last day of the tax year in which the tax was assessed, or one year from the date of the assessment, to file such an appeal.  The commissioner of revenue may require you to provide additional information to establish the value of your property.  If the local commissioner of revenue denies your appeal, you can appeal that denial to the state Tax Commissioner in Richmond.

Finally, the taxpayer can bypass the local commissioner of revenue and the state Tax Commissioner and proceed to court.  Taxpayers can file an application for correction directly with the circuit court for the jurisdiction in which the assessment was made within the same timeframe as an application for correction to the commissioner of revenue.  If the commissioner of revenue or the state Tax Commissioner rules against you under either of the two options noted above, you have one year to appeal that ruling to the local circuit court using this same procedure.

The commissioner of revenue’s assessment, however, is presumed by law to be correct, and the taxpayer has the burden of overcoming that presumption.  You can do this by proving that the assessor committed manifest error or disregarded controlling evidence.  As a practical matter, you must be prepared to hire a professional appraiser.  Simply asserting that the value of your property is not as high as the locality says it is will not be sufficient to prove your case either in court or to the commissioner of revenue or the state Tax Commissioner.  You must have an expert witness ready to challenge the locality’s assessor.

Litigation, including the hiring of expert witnesses, can be expensive.  If your locality is over-assessing your property by a significant amount, however, it may well be worthwhile to pursue one of these options.

By Amanda E. Shaw, Law Firm of Glenn Feldmann Darby & Goodlatte

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