Tennessee Taxpayers Association

During the past and current Legislative Sessions, the local and State governmental agencies introduced legislation to add a single word to the statutes regarding the filing of  Tangible Personal Property Returns for property taxes.

That one word was “timely”.

The legislation passed (unopposed) and the word “timely” was inserted before the word “filed” in the statutes regarding amended property schedules and automatic application of appraisal ratios. 

If a taxpayer does file the tax schedule after March 1st, the typical procedure is for the county board of equalization to accept the schedule and value the property in the same manner as the timely filed schedules. The taxpayer usually has until June to file these late schedules with the county boards.

Here are the adverse effects to the taxpayers as a result of the legislative change:

1. If a taxpayer files the schedule timely (before March 1st), that taxpayer may correct any errors made by filing an amended schedule before September 1st of the following year. If the schedule is filed after March 1st, the taxpayer may not file an amended schedule at all and no errors may be corrected. If the errors are discovered after the county board deadline in June, there is no way for corrections to be made or for the taxpayer to receive a refund of the erroneous taxes.

 

2. If the Assessor of Property makes an audit of a “timely” filed schedule, the Assessor is limited to only auditing back one year. If the schedule is not filed “timely”, the Assessor may audit and increase assessments as far back as three years. This is a major financial change against the taxpayers.

 

3. Assessments resulting from “timely” filed schedules are eligible for automatic application of the appraisal ratio. The appraisal ratio is a percentage calculated by the State for each county. It is based upon a comparison of real estate sale prices and the Assessor’s appraisals. For example, in Nashville for 2008 the appraisal ratio was .8380. In Shelby County the ratio was .9330. Therefore, the assessment and taxes resulting from a “timely” filed schedule received an automatic reduction of 16.2% in Davidson County and 6.7% in Shelby County. If the schedule is filed even one day late, the taxpayer does not receive these reductions.

 

All these new enactments simply amount to hidden tax increases and a means to gain more tax dollars from audits. The Taxpayers become trapped and cannot escape erroneous assessments and taxes.

Extensions for filing the schedules are not available to the taxpayers in order that they may avoid these harsh hidden tax increases and tremendous loss of rights. This is extremely unfair to the taxpayers. The filing date of March 1st if very early compared to most states and most states do allow extensions to file without penalties. Tennessee is not tax friendly in that regard.

In addition, unbelievably, taxpayers who do not file tangible personal property schedules at all may be better off than those who file after the deadline of March 1st and  filed with the county boards of equalization that meet in June.

This resulted from a separate bill passed this year in which the Legislature approved legislation to permit  taxpayers, who failed to file any schedules at all for up to two years and received forced assessments, to file the very late schedules. If the assessments were excessive, the assessments were adjusted and refunds were issued less a penalty (25% of the reduction in taxes). Refunds, less penalties, are also available to these types of taxpayers if the forced assessments are audited and found excessive.

However, those taxpayers who actually filed schedules, but filed them after March 1st with the county boards of equalization, suffer penalties of 100% because no amended returns may be filed if mistakes were made in the original filing. In addition, if the account is audited and found to be over-assessed, those taxpayers are not eligible for any refunds.

by continuing to file inconsistent hidden tax seeking legislation, the local and State governmental agencies have created a very unfair tangible personal property assessment system in Tennessee.

Tennessee Taxpayers Association will be there in the future to keep such bad legislation from passing and also plans to have bills filed to correct some of these inequities.

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