What Happens At The Actual Hearing?
At the hearing, the taxpayer’s attorney will make an opening statement summarizing the facts and what the taxpayer intends to prove. Next, the expert witness testifies. The expert witness is a real estate appraiser who will give their opinion about the property’s fair market value. The attorney may also offer testimony from fact witnesses or employees of the facility who can speak to the physical characteristics of the property, how the building functions, and what problems may exist. The Attorney can call other types of expert witnesses such as a commercial/industrial real estate broker to offer testimony. The broker can testify whether there is a market for the type of property under appeal. Assessors often rely on a cost approach to value, which typically results in a higher value because the Assessor does not attribute enough depreciation to it. As practitioners, we feel that the best evidence of depreciation and obsolescence is found in marketplace transactions. A broker can support the data relied upon by the appraiser by testifying that the property is not specialized and that there is a market for it.
After this part of the case is complete, the assessing jurisdiction would call its valuation witness, an Assessor or an appraiser whom they hired independently to appraise the property. We then cross-examine their witness about how they determined value. At that point, we will already be aware of their proofs since we will have done a thorough review of the evidence, which was exchanged before the hearing. Our objective is to impeach the credibility of the Assessor’s witnesses and to demonstrate that their work product is unreliable.
Do I Have To Pay My Property Tax If I File An Appeal?
Before incurring tax appeal filing fees, it’s necessary to keep property tax payments current. Otherwise, the appeal could be dismissed for nonpayment, or even late payment. Some states require that property taxes be paid timely and in full in order to maintain an appeal. In those states, if even a penny of interest is incurred, the appeal cannot proceed.
What Issues Are Common During the Appeal Process?
An unrepresented taxpayer may encounter many issues, which can be avoided by retaining an experienced tax attorney. Another pitfall is noncompliance with Income and Expense requests. Failure to comply could result in an appeal being dismissed or penalty assessment being imposed.
In New Jersey, this is called a Chapter 91 request. A Chapter 91 request is a request for Income and Expense information that is sent by the Assessor. Not every municipality will send a Chapter 91 request, but an increasing number of municipalities have been sending these requests. A taxpayer owning, or in some cases occupying, income producing property is required to respond within 45 days of the request. Income producing is defined as any property wherein there is income attributable to the real estate. Examples of income producing properties are: office buildings, retail strip centers, apartment complexes and warehouse space. If you receive a Chapter 91 request and own or occupy an income producing property, you must respond to the request. Failure to do so may bar a subsequence property tax appeal.
In Connecticut, a penalty assessment will be imposed on an assessed value if there is no response to an income and expense demand by June 1st of each year (not every town sends out demands, but some do). For example, if the assessed value is $10 million, then the penalty assessment would be 10 percent or $1 million. This amount would be multiplied by the tax rate. In Connecticut, millage rates can be 2.5 percent, so a $1 million penalty assessment multiplied by a tax rate of 2.5 percent would be $25,000 in additional penalty tax due.
At Stavitsky & Associates LLC, we ensure that our clients are aware of these requests and take steps to prevent our clients from incurring such penalties.
How Long Does A Property Tax Appeal Take?
A property tax appeal could take several months, a year or even longer to resolve. Much depends on the Court’s docket, willingness of the Assessor to negotiate, the specific property and the market.
What Factors Do You Consider When Determining Whether Or Not To Advise Clients To File For Tax Appeals?
When considering whether or not to advise a client to file a tax appeal, we look at the physical characteristics of the building through a personal inspection of the building’s interior and exterior. We also consider the property itself and determine what it is assessed for and how it compares in the market. This applies to any property type – warehouses, shopping centers, hotels, office buildings and apartment buildings. Many commercial or industrial properties are leased, income-producing buildings. For hotels, it is revenue from its operations that is relevant to assessment valuation. We analyze the property’s financials and income after deduction of relevant expenses. If, after a thorough evaluation of all factors, we determine that it is over-assessed, then an appeal is recommended.
For more information on Process Of A Tax Appeal Hearing, a complimentary consultation is your next best step. Get the information and legal answers you are seeking by calling (973) 227-1912 today.
