The Tennessee Assessment Appeals Commission meets throughout the State to hear property tax appeals from local property taxpayers.  This Commission is specifically charged by law to  “hear and act upon all complaints and appeals regarding the assessment, classification and value of property for purposes of taxation . . .

Having first been through the lower appeals process consisting of the Assessor, the county board of equalization, and the State Board’s Hearing Officer, the taxpayer’s last hope may be with this Commission.  

Its powerful decisions overrule all the lower officials and board decisions. 

The Commission’s decisions, therefore, set precedent for future assessment, tax, and appeal procedures that must be followed by all the assessors, lower officers, boards of equalization, and of course, the taxpayers of Tennessee. 

While The State Board has the power to review and reverse the Appeals Commission’s decisions, the State Board rarely reviews any.

It is absolutely essential then that the Appeals Commission be composed of independent members who have no inherent bias for or against any of the parties involved in a property tax appeal.

The Appeals Commission is typically composed of six primary members and a panel of nine alternate members.  Various members and alternates hear appeals depending upon whether the appeals are located in west, middle, or east Tennessee.  The alternate members often hear cases when the Commission meets in their division of the State.

Our serious concern with the present member composition is that among the fifteen total members and alternates, six of them are Assessors of Property. Two Assessors are among the six regular members and four Assessors are included among the alternates.

We do not see how it is possible that Assessors may sit on the Appeals Commission without the appearance of inherent bias in favor of the Assessors’ side of the dispute. After all, the Appeals Commission is deciding disputes between the taxpayers and the Assessors. 

The Assessors are the parties opposing the taxpayers.

For example, some time ago members of the county boards of equalization included various local tax officials.  TTA was able to cure that inequity by presenting a bill to the Legislature to forbid such members.  The Legislature agreed and passed the bill into law.

The Attorney General, however, has issued his Opinion that it is not a conflict of interest for an Assessor to sit and decide assessment appeals on this high Commission.   Of course, it is only an Opinion, but one that will permit this practice to continue and the practice may even get worse.  Soon, more Assessors may sit on the Commission.

The Attorney General did leave doubt in his Opinion by the following statements:

As your request suggests, a local assessor should not hear property tax appeals from his own jurisdiction.  A local assessor also may be disqualified from hearing a particular matter if it will set a precedent for a particular case pending in his jurisdiction.

Our point is that common sense tells us every case this high Commission hears will set precedents for an Assessor member’s county.  Every case is precedent setting for all Assessors, taxpayers, State Division of Assesments, and  county boards of equalization.  There is no escape from these precedents for these lower assessment officials.

Therefore, there is absolutely no way we can be convinced that an Assessor of Property may hear and decide, without the appearance of inherent and inescapable bias, a property tax appeal as a member of the Appeals Commission. 

Our objections are summarized below:

• Even though Assessor members may recuse themselves should any appeal involve a property located in their counties, the appearance of bias is still unavoidable.  An Assessor’s mere presence as  a Commission member places unfair pressure upon the other members when it is time to vote for or against the Assessor member’s case before the Commission.  

• What responsible judges or members of a jury would not offer to recuse themselves if they knew one of the parties to a case they had to decide?   This would have to be necessary in just about every case with Assessors.   All appeals that comes before the Appeals Commission involves Assessors from other counties who the Assessor members probably know, belong to the same organizations, attend conferences with, and have common interests, even play golf together.  

• Again, of great importance is that on any appeal which the Assessor members vote, those votes will affect the member Assessors and their counties.   This is without doubt a fact because as pointed out earlier, Appeal Commission decisions are used a precedents and guidance by all Assessors (including Commission member Assessors), lower boards, State Hearing Officers, and taxpayers.  This fact is inescapable.

All these concerns present a horribly unfair bias against the property taxpayers of Tennessee.

Packing the Appeals Commissions with Assessors, who make the assessments and are always the opposing parties, is an unavoidable conflict of interest. 

We feel the members of the State Board of Equalization should refuse to appoint assessors to this Commission.  

©  copyright – Tennessee Taxpayers Association – November 7,  2009

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 It is our experience that fairness is not to be expected by Tennessee’s taxpayers. The only way to obtain such an unreasonable goal is to fight for it.            Jerry R. Caruthers, President

Not too long ago TTA finally convinced the Tennessee Legislature to permit tangible personal property taxpayers to file amended personal property assessment returns.   This right allowed the taxpayers to correct their errors, or request the Assessor to correct his or her errors, made in the original return. 

However, the State and local assessment officials strongly resisted, all the way to the bill’s final passage, to the taxpayers having this right.  On the other hand, with regard to just about any type tax return we can think of at any other governmental level, the taxpayers have long had the right, for a reasonable period of time (sometimes up to 3 years),  to file corrected or amended returns.  

Prior to passage of Amended Personal Property Return law the taxpayer’s only recourse was to catch errors early and file an appeal with local county board of equalization in June.   This allows the taxpayer about 3 months to file such an appeal.  

After the county board appeal rights have expired, if the taxpayer made a mistake in reporting the correct amounts of property, or if an unfavorable mathematical error was made by the taxpayer or the assessor, there was no way such errors could be corrected.  The taxpayer was just plain stuck with the erroneous taxes with no way to receive a refund of the overpaid amounts.

On top of all these injustices, a State administrative judge recently decided that only the original taxpayer or filer of the original return could file an amended return and, therefore, correct any errors made in the original return by the seller.

This meant that if a property was sold and the purchaser subsequently discovered errors in the return filed by the Seller, the State said no way can the purchaser file an amended return.   A purchaser, even though required to pay all or a portion of the the taxes, had no such rights as the original owners.

Justice Finally

After long appeals, the Tennessee Assessment Appeals Commission reversed the judge’s position and held that purchasers are successors in interest to the original owners and have the same rights to amend the original returns; a common sense ruling.  (Commission’s
Decision)

Thanks to this ruling, one more issue of fairness is again resolved in favor of the taxpayers, but not without fighting for it.

© copyright – Tennessee Taxpayers Association – September 30, 2009

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Taxpayers in Memphis & Shelby County Pay Extra $61 million in Taxes to Allow for Appeals.
 

Our original article dated July 2, 2009, Truth in Taxation in Tennessee: It Needs to be Enforced, contained information about the allowance for decreases in assessments and taxes that local governments are permitted to charge taxpayers in the tax rates for estimated tax losses due to taxpayer appeals.

Local governments are required to reduce the tax rate in a reappraisal year to compensate for the value increases the Assessor gives them in increased property values for assessments.  However, there is one loophole.  The governments may add to the reduced tax rate an allowance for estimated tax reductions resulting from appeals of the assessments and taxes.

It was reported in the July article that Shelby County had estimated that over $40 million (actually now over $42.8 million) in County taxes would be lost through appeals.  We pointed out that we thought the estimate was excessive and just another way for a hidden tax rate increase.   

We now have learned that the City of Memphis has provided in its tax rate an extra $18.5 million ($.16 of its tax rate) to allow for anticipated tax losses due to taxpayer protests and appeals.

This means that taken together over $61 million in extra taxes are being collected from Memphis and Shelby taxpayers to allow for tax appeals reduction estimates. 

We do not yet have the Knoxville and Knox County allowance for tax appeal losses, but we do have that information for Nashville and Davidson county. 

Davidson county (USD) has estimated $1.3 million dollars in anticipated tax losses to appeal and Nashville (GSD) has an allowance of slightly over $11.2 million. 

Together, Nashville and Davidson County have estimated tax appeal losses of over $12.5 million and are charging their taxpayers that much more in taxes for 2009 to allow for those expected losses. 

In order to compare these allowances to Memphis and Shelby County, the assessment bases have to be compared. 

Guess what?  The assessment base in Davidson County is almost the same as the Shelby County assessment base.  Davidson County’s total property assessment is approximately $19.6 billion and Shelby County total property assessment is approximately $19.5 billion. 

Why then have Memphis and Shelby County increased their taxpayers’ taxes by over $61 million to allow for expected tax appeal losses while Nashville and Davidson have increased taxes on their taxpayers by only $12.5 million to allow for appeal losses?

Some of the difference is explained in that Nashville and Davidson County’s total tax rate is only $4.13 while the total tax rate for Memphis and Shelby County is $7.2157 or almost 75% more.  

This should not, however,  make Memphis and Shelby County taxpayers feel much better because it shows them that due to the higher tax rate they have to pay 75% more taxes on their homes and other property than Nashville and Davidson County taxpayers. 

If the Nashville and Davidson County appeals allowance is increased by 75% that would be an adjusted equivalent appeals loss allowance of approximately $21.9 million for Memphis and Shelby County, still way short of the extra $61 million charged their taxpayers for anticipated tax losses to appeals.

The message from this information appears to be that Memphis and Shelby County taxpayers may be well overtaxed for the appeals allowance. 

We won’t know for sure until next year and the big question then is, will the governments give any excess back to the taxpayers? 

We think not.

copyright – Tennessee Taxpayers Asssociation – August 6, 2009

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It appears that for at least the last four years, perhaps more, Shelby County taxed properties located outside of Memphis based on tax rates higher than the tax rates applied on properties located inside Memphis.

For example, in 2008 for homeowners who were located inside Memphis, the County tax rate applied to their assessments was $4.04 per $100 assessment.   Homeowners located outside of Memphis, received a tax rate of  $4.09 per $100 assessment, $.05 per $100 more than City homeowners.   The higher tax rate was, of course, also applied to commercial and industrial properties. 

For 2009, Shelby County has done it again.  For properties inside Memphis City limits the tax rate is $4.02 and for properties located outside the City limits, the tax rate is $4.06, or, $.04 less if located inside Memphis.

Why did Shelby County charge the County taxpayers located outside of Memphis more?

It is generally explained that the higher rate was necessary to retire a bond issue for schools.

We’re not sure that it is fair that County residents must pay on a higher tax rate, but these days in government “fair” doesn’t get much consideration. 

But, there is a larger question looming on this less than “uniform” County tax rate. 

Did Shelby County violate the Tennessee Constitution and State statutes in setting separate tax rates for properties based upon whether they were  located inside or outside Memphis city limits?

According to our legal advisors, the Tennessee Constitution requires uniformity in taxation.  They advise that Article II, Section 28(c), specifically states that with regard to tax rates:

Each respective taxing authority shall apply the same tax rate to all property within its jurisdiction.

This is clear language that raises the question whether the County could have been wrong in applying two different tax rates to its taxpayers based upon location. 

Shelby County is a single taxing authority, yet its tax rate varies within certain districts.   In other words, the same tax rate has not been uniformly applied to all property within the County jurisdiction.

We understand that a suit may be filed to seek County tax refunds and reduced tax bills for properties located outside the City of Memphis. 

Regardless of need for extra revenue, we all should abide by the Constitution and the State Statutes.

copyright – Tennessee Taxpayers Association – August 2, 2009

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Re: SB 2196 / HB 2175 – A Bill to Recognize Foreclosure Effects upon Assessment Values

Tennessee Taxpayers Association prepared and presented this bill to the Legislature in order to permit Tennessee assessors to recognize that values in neighborhoods decrease from the effect of foreclosures.   The Shelby County Assessor of Property, Cheyenne Johnson, supported the concept of this bill before it was filed.  We do not believe that opponents in the Legislature would have initially accepted it without her assistance.

Prior to the passage of this new law, statutes, rules, and precedents prevented sales made at foreclosure from being used to establish values for other properties. 

This new law will make it possible for the assessors and the boards of equalization to treat taxpayers fairly in appraising their homes at what they are really worth; not some fictitious price higher than the true market value. Without this new law, it would have been very difficult (perhaps impossible) for Tennessee’s taxpayers to receive true justice reflected by real market values.  

Senator Jim Kyle (D) of Shelby County and Speaker Lois DeBerry (D) of Shelby County were the legislative sponsors of the bill and we are very grateful for their hard work to effect its passage. Many taxpayers will also be grateful to these sponsors once they protest their assessment values that have been affected by numerous foreclosures.

The bill started as a general bill with local application to only Shelby County because Shelby County had been hit particularly hard by many foreclosures.  Taxes are also much higher in Shelby County than in the other 94 counties. 

However, lawmakers from other counties recognized the value that this bill would have when their counties are reappraised for assessments and taxes. Therefore, an amendment was added  to make the bill have state-wide application. 

This bill should help many struggling taxpayers to possibly avoid foreclosure.  

Thanks again to the legislative sponsors, the Shelby County Assessor, and the Tennessee General Assembly for this new law.

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Taxpayers Pay Extra Taxes for Appeals Loss Allowance – But Unused Portion is Never Returned

After a county has completed a reappraisal, each local taxing jurisdiction is required to reduce its tax rate in order to generate the same revenue that was produced the prior year.  By keeping the same tax rate, local governments are kept from enjoying a windfall increase in revenues from the increased values .  

Prior to this requirement, local governments could leave the tax rate the same as the year before and claim they did not raise taxes, yet in fact they actually did through the valuation increases.

This reduced rate in Tennessee is called the “Certified Tax Rate”.  In most states it is referred to as the “Truth in Taxation” law.  

If the local governments need additional revenues, they must first lower the rate to the certified amount and then increase the rate.  This lets taxpayers know if a tax rate is increased.  

The system worked fine in Tennessee until the State permitted the local governments to add an estimate of refunded tax dollars to the reduced certified rate. The estimate is what the local government may have to pay to the taxpayers if  the appeals are successful.  

For example, in Shelby County this year the County reduced the tax rate from $4.04 to $3.81 due to the increases in assessments from the reappraisal.  The County then added back an estimated amount of $.21 to anticipate losses due to successful appeals. At this time, we have been unable to obtain the allowance for Nashville and the tax rate has not been set for Knoxville .   We will follow up on these.

This tax rate allowance was based upon estimated assessment losses of over $1.06 billion that will be reduced by appeals.   This amounts to over $40,000,000 in tax dollars estimated to be lost in appeals to the County Board of Equalization.  

That is believed to be well overestimated.   According to the Memphis Daily News, some members on the Commission expressed that everyone knew what was really going on.

The amount which is excessive and not reduced by the appeals should be returned to the taxpayers the following year. 

Our Association was present in the Legislature when the law was proposed to permit the local governments to add the expected tax loss from appeals to the certified rate. 

We recognized that this would be just another way of increasing the tax rate without the local government taking responsibility for the increase.  This was  because there was no provision requiring the local government to return the overestimated losses to the taxpayers.   

Therefore, this Association successfully added the following amendment to the statute permitting this loss estimate:

The state board of equalization shall order recapture of an excessive adjustment in the following year if the certified tax rate is found to have been overstated due to overestimation of the appeals adjustment, and in these cases the jurisdiction may exceed the recapture rate only after public hearing.  TCA § 67-5-1701(a)(5)

This amendment was meant to keep the estimates from getting out of hand. 

We could see that if there was no provision for return or accounting the next year, then there was great incentive to overestimate tax losses and increase local revenues without a visible tax rate increase.

It is the responsibility of the State Board of Equalization to order that the excessive adjustment be recaptured.  If the jurisdiction is going to exceed the recapture as ordered, there must be a public hearing on the matter so the public will know they are not going to receive a return of the overestimated tax losses and that the tax rate is actually being increased, all a part of “Truth in Taxation” as it should be.

This Association will be expecting enforcement of this law in Tennessee cites and counties at the proper time.

 copyright – Tennessee Taxpayers Association – July 2, 2009

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Could you get your assessment and taxes reduced if your neighbors’ assessments and taxes are lower?

Ask any taxing authority if you, as an owner and taxpayer, may compare your property’s assessment (per sq. ft. or other basis) to your neighbors’ or business competitors’ assessments in order to receive a similar assessment. The answer would probably be this process is not allowed. These authorities assert that this procedure is an improper basis for protest and appeal.

Sound unfair? It is! After all, we always thought we were supposed to be equal in the taxation of our property. To compare to similar properties and equalize assessments and taxes is a basis that taxpayers can understand and feel is fair.

Nevertheless, in the present system, you cannot use such as a basis for equalization.

Some years ago you could compare assessments to achieve fairness in taxation, and it worked well. In recent times, the State Board of Equalization has held, and enforced in the various counties, that equalization is achieved through application of an “overall sales ratio”.

Unfortunately, Tennessee is not alone in this application. Numerous states do the same, i.e. Florida. On the other hand, others, such as Texas specifically permit practical comparisons of assessments as a basis for appeal.

Now what does overall sales ratio mean and how does it work?

The Division of Property Assessments, under the guidance of the State Board of Equalization, performs sales ratio studies for each of our 95 counties. Simply put, this process is nothing more than comparing the assessor’s appraisals of properties which have sold to the sales prices and developing a percentage. For example, if the assessor’s appraisal is $95,000 and the property sold for $100,000, the sales or appraisal ratio for that property is 95%.

They also mix commercial, industrial, and residential sales all together and calculate an overall ratio. The State performs this function every two (2) years.

Once the ratio for a county is published, the taxpayer is technically stuck with only one way to a reduction; which is, prove that the assessor’s appraisal is above market value. Then, the taxpayer is entitled to the State’s form of equalization consisting of multiplying the proven market value times the overall sales ratio for the taxpayer’s county.

It is easy to see that if the ratio is 100%, and many are, then the taxpayer gets nothing in the way of equalization, only the market value. If the ratio is 95%, then the taxpayer gets a 5% reduction from the market value, but only after having first proved the market value of the property.

What a bad deal for the taxpayer! If the taxpayer cannot prove the taxpayer’s property is appraised at more than market value, even though his neighbors or competitors enjoy lesser assessments and taxes, the taxpayer loses. Practical fairness is no longer a factor.

What is wrong with using only an overall sales ratio method of equalization? Let us review a few things:

1. The overall part is clearly erroneous. We have classification in our State. Commercial and Industrial properties are assessed at 40% of value, Residential and Farms at 25% of value. There should be separate ratios applied from separate sales studies. There are clearly many more sales of residential properties than commercial and industrial properties. To mix all the sales of all the classes of properties together will produce an erroneous distorted result. That result is usually a higher ratio which favors the local governments over the taxpayers.

 

2. The studies are performed only every two (2) years. Several years ago the procedure was changed from every year presumably because as real estate values increase (at least on a historical basis recent economic downturn not considered) each year, the ratio would go down each year and would favor the taxpayer.

 

3. The assessors have the right to challenge and eliminate sales from the studies. Each county taxing jurisdiction desires a high ratio, so the pressure is there to eliminate those sales which would lower the ratio. Otherwise, the county could lose revenue through having a lower appraisal ratio applied to values. Please keep in mind that the appraisa ratio is automatically applied to all tangible personal property assesments. Therefore, there is even more pressure on the ratio.

 

4. The method for selecting sales to include in the study may be flawed because a review of the State’s sales ratios for 2008 indicate that most fall within 90% to 100%. This is a clear disadvantage to a taxpayer who feels that the taxpayer has been discriminated against in the appraised value.

 

5. Use of only the sales ratio method of equalization has relieved the assessors from the burden of explaining why a taxpayer’s neighbors may be assessed on a lower basis.

 

6. By eliminating practical comparison equalization, therefore the assessors do not have to justify to anyone any unequal appraisals. This has opened the door for possible political favoritism for some taxpayers over others. Before the market value and appraisal ratio system, the taxpayers were the best watchdogs of the property tax system by exposing any unequal appraisals or assessments to the boards of equalization.

 

Our firm has developed a proprietary method for introducing as much direct comparable evidence as we can to help equalize our clients’ taxes. We recommend the taxpayer present as much information as any body hearing the tax case will allow. Even though this evidence may not be considered, it could persuade the hearing body to consider more closely your other arguments to value.

In fact, our Counsel advises us there may be a legal basis for overturning overall ratio only equalization.

First, they advise that the State statutes provide that boards are unlike courts and are not restricted to strict rules of evidence. Further, they point out that the Tennessee Constitution requires equality and uniformity of assessment ratios within each class or subclass of property.

Practical equalization is what taxpayers understand and is the only way the general public will be able to use our system effectively. Practical equalization will also ensure that all taxpayers are treated as equally as possible. If not, at least it can be pointed out to the boards of equalization in a form everybody can understand.

copyright – Tennessee Taxpayers Association – July 1, 2009

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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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Senator Ken Yager Votes Against Taxpayer Rights

Senator Yager

I recently read an article by Truman Bean in a popular blog called Tennessee News Platoon.   The article was entitled Senator Ken Yager seeking friendly right-minded bloggers.   

 According to the Blog, Senator Yager, Republican, Dist. 12,  had attended a  meeting of a group of conservatives known as TN ConserVOLiance and spoke about conservative principles.

We can’t say much about Senator Yager’s conservative principles.  They may have shined for this group of conservatives, but when it comes to voting in the Legislature they didn’t shine through in a recent vote before the Senate State and Local Government Committee, on which he serves as one of nine members.

Senate Bill 2110 came before that Committee on May 5, 2009, and received only five yes votes, passing by just one vote.  Senator Yager’s “yes” vote made the difference.

Now, was SB 2110 a conservative bill? 

Absolutely not!

That anti-taxpayer bill was solely designed to delete rights Tennessee taxpayers have had for many years.  The bill sought to delete the taxpayers’ right to contest void or illegal assessments which were wrongfully or illegally made.  

In spite of Senator Yager’s vote, TTA was able to stop the bill on the House side.  If it had passed, the bill would have deleted the taxpayer’s right to contest an illegally made assessment that should actually be voided.

The case that brought this legislative matter up and caused the bill to even to be filed was simply a duplicate assessment and tax bills.  The Comptroller’s Office, which assesses public carrier properties, had rightfully assessed this property and erroneously so had the local assessor.The assessor made an audit on the taxpayer and discovered that the assessments she had made were made illegally.

The taxpayer was paying taxes twice on the same property.  This was all discovered in 2006.  The Assessor deleted the assessments as far back as she legally could which left one more year. The taxpayer appealed to the Tennessee Assessment Appeals Commission who agreed and voided the assessment as illegally made.  The technical basis for appeal was called “collateral attack”.

The Executive Secretary to the State Board of Equalization (not any of the parties did so) asked the full members of the State Board to review the case and then the Executive Secretary also unilaterally filed legislation to void the right to appeal illegal assessments to the State Board. 

The State Board did not ask that this legislation be filed and once it found out (after it had already passed a subcommittee), it took no position.  So, it certainly can’t be said that the State Board was in favor of passing this bill and deleting its right to consider illegal assessments.

The Executive Secretary’s argument was that these type cases should go to court, not to the State Board. 

First, It is very difficult for a taxpayer to get into court in this State. Taxes must to be paid under protest and then after that date there is then only a 6-month window to file in the court. If the property lies inside a city or town, there is only a 30 day window to file suit for those taxes once the taxes have been paid under protest. 

Next, who ever pays their taxes under protest?

This particular taxpayer didn’t even know he or she was being illegally assessed. By the time that taxpayer found out the taxes were illegal, the taxpayer would have no place to go if there was no State Board of Equalization to accept an appeal.   All taxpayers would be left with no way to correct these illegal errors.

The Attorney General even confirmed the right of the taxpayers in Opinion 92-62 to file an appeal based upon collateral attack of an illegal assessment and plainly stated the State Board ”should” accept these appeals.  Why?  Because it was the right thing to do and the State Board has responsibility for all assessments in the State.

To do away with the right to go to the State Board of Equalization would deny the purpose for which administrative agencies like the State Board of Equalization were even created; that is, to keep the taxpayers from being forced to go to court at all.

Senator Yager apparently voted politics on this bill instead of fairness and consideration of the taxpayers.  All the information (including the AG Opinion) was presented to him that was presented to the House Committee. 

We are certain that no taxpayers asked him to vote for that bill and we also know that numerous taxpayers asked him not to vote for the bill.  The only two people we know who wanted the bill passed, was the Executive Secretary of the State Board of Equalization and the bill’s sponsor, Senator Overbey.

Senator Yager ignored the taxpayers in this important issue.  

What will he do in future taxpayer rights issues?

Jerry R. Caruthers,
President

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The question now is, can you protest the value and assessment of your home by yourself without professional help? Can you reduce your property taxes?

Sure you can. It may be difficult, but taxes saved can be worth it. Reappraisals are made on four (4) year cycles which means that unless you do some new construction to your home during this period, the assessment will probably not increase again for four (4) more years. Therefore, you can multiply the first year’s tax savings times four (4).

Tennessee taxpayers are very fortunate because we have a very liberal protest and appeal process. Numerous steps are afforded us to appeal excessive values and assessments. If the taxpayer has gone through all the available administrative levels of appeals and has not achieved satisfactory results, the taxpayer probably didn’t really have a case for reduction.

If your home is located in Shelby, Davidson, or Knox County, our firm has prepared additional websites which will provide you with detailed information on the property tax system, the Assessors’ offices, how to get to their websites, and information on the equalization boards in those counties. At these sites you will also find information on The State Board of Equalization members and that Board’s appeal system.

As you go through the steps of protesting your assessment, you will find some of this information very helpful, You may get there by the using the following links: www.memphispropertytax.com, www.nashvillepropertytax.com, www.knoxvillepropertytax.com.

Step Number 1.     Review Notice and Gather Information

First, read the notice closely. Do not miss any filing dates or fail to follow instructions.

Obtain a copy of the Assessor’s sketch and interior records of your home. Check this information. The Assessor has to maintain such records on all properties and it is impossible to do so for so many properties without making some errors. Therefore, you may discover an error has been made which caused your value to be higher than the proper amount. Point this out to the Assessor and it will be corrected. Sometimes it is as simple as that.

Other times, new measurements must be taken and the property has to be inspected by the Assessor. Just make sure you’re right and the Assessor’s information is wrong before you ask for a correction of any errors. Taxpayers have had their assessments increased because the Assessor found additional property or corrected errors made in the taxpayer’s favor.

Also, check the grade the Assessor has classed your home. By grade, I mean the assessors have established quality levels of construction by using a number system. This is sometimes an almost effortless way for a tax reduction. After explaining to the Assessor why your home should not be graded as high, a change just might be agreeable. If the Assessor doesn’t agree, you can make the grade disagreement part of your arguments in later appeals.

Request the comparable sales the Assessor used to value your home. You are entitled to these comparable sales. Review and use them to your advantage. Some or all of these comparable sales may not be truly comparable to your home and adjustments may be necessary. In addition, gather information on your neighbors’ values and assessments. Check sq. ft. values and find out about interior information such as modernizations, fireplaces, bathrooms, etc.

You will need this information. The assessment and sq. ft. information are available on the Assessor’s website.

Step Number 2.      Request a Review by the Assessor

The Assessor will allow you to request an informal review of the appraisal. This may solve the entire problem without taking further action. Do not forget to mention deferred maintenance in your property. You know best what needs to be fixed in your home; i.e. outdated kitchens, bathrooms, cracks in foundation, rotten wood, leaky roof, drainage problems and any others you can list. Document these items with photographs. If possible get estimates to repair them.

Also, the comparable sales that the Assessor has relied upon may all have been modernized and all repairs made before the sales. Find out these facts! They are important to your case. If so, make the Assessor aware of the differences. The comparable sales should be adjusted downward to reflect the obsolescence and the physical condition of your home.

Thank the Assessor for discussing the assessment and inquire when you may receive notice of the review decision. Please note that in some counties, you may file online for a review by the Assessor.

Step Number 3.      Appeal to County Board of Equalization

If the Assessor has notified you of the review and the results are not satisfactory, you have the right to appeal to the County Board of Equalization. In most counties in Tennessee, these appeals must be filed before the end of June. However, these dates do differ, so to be safe, watch for advertisements and inquire of the filing deadline. Do not miss the deadline.When you file the appeal, you should answer all questions thoroughly. Also, obtain a date stamped receipted copy of the appeal. Be sure to include enough information in the initial appeal so that the reviewers can get some idea of the problem and your basis for appeal. Find out about any rules of the Board. They have rules which change from year to year, so obtain a copy from the Board.

Your first hearing could possibly be before an appointed Hearing Officer acting alone (Homes with high values are usually heard only by the full Board members). Hearing Officers are local citizens, some with real estate backgrounds, who are appointed by the County Board of Equalization to hear appeals for the Board.

Be at the hearing on time and be prepared to present in a composed manner why you feel the Assessor’s value is excessive. The Assessor may or may not be there. Their presence is not required before Hearing Officers. To be well prepared, you must do some research. You already have the Assessor’s comparable sales and you should obtain some more sales which would help your case. You can purchase these sales, your Realtor may help you, or you can easily search them out on the Assessor’s website. The latest sale and the square feet of each home are contained in the Assessor’s site.

In some neighborhoods there are many foreclosure or bank sales available. Present these sales. These sales may represent the market in your neighborhood. For your sales comparisons, you should prepare a table containing the address, parcel number, age, construction type, square feet, special important features, and the sales price per sq. ft. If the Assessor’s value is less than the sale price per square feet, list a column with this number.

These comparable sales should be dated prior to January 1, 2009, because January 1 is the assessment date. The Assessor may object to introduction or consideration of any sale past this date. If you do locate some later dated sales which you feel are a more realistic representation of the market, try to present them. While generally not to be considered by the Boards, and they will probably tell you this, these sales could have an effect on their decision anyway. Just don’t overdo it or insist that they be considered. Do tell the Hearing Officer you are only doing this because these sales are more indicative of the true market. You could also hire an appraiser to prepare an appraisal of your home. This could be helpful at this level but always consider the costs and you can’t be sure that the appraiser’s report will even come close to your value estimate.

Since you are the taxpayer, it may be difficult to keep from displaying emotion. This is okay, however, do not get too excited or raise your voice or be argumentative. Tell the Hearing Officer why you feel the way you do and answer all questions in a straightforward honest manner. Do not tell the Hearing Officer that your taxes are too high or that you cannot afford to pay the tax increase. Taxes are always too high. Everybody knows this and that fact cannot be used as a basis for reduction in the value of your property. The Hearing Officer cannot consider these issues and it will not help you. So, please do not bring these items up for discussion.

If you have found inequities (your neighbors’ assessments are lower than yours) in your neighborhood, go ahead and present them, but they should be significant differences. The Hearing Officers have been instructed to not consider inequities in assessments. By this I mean, the State does not consider inequities as a basis for appeal of an assessment. For the County to ignore inequities and inconsistencies in assessments, in my opinion, is wrong. However, that’s the way it is for right now.

As I mentioned, if you have some really noticeable inequities you might go ahead and present them. It could influence the Hearing Officer to consider more closely some of your other arguments. Our firm has a proprietary method for introducing comparable assessments as evidence and oftentimes they are considered. However, please don’t make that your whole case and be careful not to get your neighbors’ assessments increased.

Thank the Hearing Officer and make sure he has your correct mailing address for notification. You do not want to miss this notice. Once you receive notice, you may accept the Hearing Officer’s recommendation or you may appeal further to the full County Board of Equalization. The appeal period is usually short (sometimes ten days or less), so don’t procrastinate if you wish to file an appeal. Also keep in mind that if you do receive a favorable recommendation, the Assessor may appeal and force a hearing before the full Board members.

Step Number 4.      Appeal to Full County Board Members

In this step you will be appearing before the full Board membership. In Shelby County the Board may have as many as nine (9) members, but presently only has seven (7) members. In Davidson and Knox Counties, each Board has five (5) members.Have your comparable sales ready in a neat legible format for hand out (one for each member and one for the Assessor) and have numerous photographs of your home and the comparables, preferably large photographs.

Be very familiar with the comparables and the differences in your home, Also, be familiar with the Assessor’s comparables and be ready to explain why they should not be considered or adjusted for certain differences. If the Assessor uses additional comparable sales that he or she did not provide to you when you requested them, request the Board to rule in your favor because of this unfair tactic. The Board probably will not grant your request but may be influenced to consider more favorably your other arguments.

After you have presented your arguments and information, the Assessor will do the same. Make notes for questions during the Assessor’s presentation and then you will have another opportunity to explain what’s wrong with the Assessor’s presentation and reinforce your arguments. You might wish to hire an appraiser for this level of appeal if the costs justify the results and the appraisal is favorable. Just keep in mind appraisals are not always accepted by the Board because they are just opinions. It’s the same with the Assessor. Their value is just an opinion and many times they argue against the values contained in professional appraisal reports, and win. Therefore, ask the Assessor well before the hearing that if you had a professional appraisal made would the Assessor accept the appraisal.

Once again, if you are aware of some true inequities in assessments in your neighborhood, go ahead and point these out to the Board. The Board will probably tell you they cannot consider these inequities, but it could persuade them to consider your other arguments. Just don’t overdo it, because, in some cases this could cause some damage. If you point out too many inequities and low assessments and it appears to the Board that all your neighbors are under appraised, the Board may order the Assessor to increase all the neighbors. This will make you very unpopular.

This Board will not allow you very long for your presentation so don’t get distracted or argue with any Board member or the Assessor. Be polite, calm and professional. This Board will also usually let you know at the hearing of their decision. Do not take a negative decision personally because even though you may not think so at the time, they truly try to do a good job and are calling it the way they see it based upon what was presented.

Although the hearing is informally conducted, you must really be prepared for this level because you will be asked numerous questions by different Board members. These Board members have heard all the reasons why assessments should be reduced, so you can’t surprise them and you certainly can’t fool them. They will not be impressed by lack of preparation. It will help if you practice your presentation and anticipate questions. Be realistic as possible and eliminate parts that just complain of high taxes and assessments. Don’t take up much time in your presentation.

Step Number 5.      Appeal to the State Board of Equalization

If you are still unhappy with the results so far, you may appeal to the State Board of Equalization. You will have forty-five (45) days from the date of the notice from the County Board of Equalization to file an appeal with the State Board of Equalization. Complete the appeal form as completely as possible. Answer all questions. You may file this appeal online on the State Board’s website. If you mail, do it Certified with Receipt. Just don’t be late. There is a fee for filing a State Board appeal and a hearing charge if one is conducted.

Study the State Board’s rules for contested cases. You can find these at Contested Case Procedures and more published by the Secretary of State at Uniform Rules of Procedures for Hearing Contested Cases Before State Administrative Agencies .

It is uncertain as to how long it will be before you will be notified for a hearing because this depends on the number of appeals filed with the State Board. Just let it take its course and wait. It doesn’t help your interest to push the State Board for a hearing. When you are notified, you will be given a date, time, and place to appear before an Administrative Judge or Hearing Officer who hears appeals for the State Board.

Do not let the title of Administrative Judge or Hearing Officer intimidate you. He or she is simply appointed by the State Board to hear the case. The hearings are held informally. In fact, an informal hearing is a legal requirement enacted by the Legislature at the request of our firm. Relax! You are not in court.

If you have picked up new information by all means present it at the hearing if it is helpful. You will also have an opportunity to settle with the Assessor at the hearing. This happens often if you have a reasonable case. Again, be calm and polite, but determined. Ask the Administrative Judge or Hearing Officer to rule in your favor if the Assessor uses comparable sales that he or she did not provide you when you requested them.

You may present inequities in your neighbors’ assessments, but that will receive very little consideration at this level. Try to impress that the value of your property is less than the Assessor’s estimate and why. If you have had an appraisal prepared, your appraiser should be present at this level to testify. Most costs of an appraisal and testimony outweigh the possible results, so calculate these factors carefully.

The administrative judge will notify you later of the decision. You will have thirty (30) days to appeal his or her decision from the date of the decision. Again, send it Certified Mail and don’t be late.

Step Number 6.      Appeal to the Assessment Appeals Commission

If you are still not satisfied with the results, you may file a further appeal to the Assessment Appeals Commission, which also hears appeals for the State Board. This Commission consists of up to (6) members (although three members are all that are needed for a quorum).

While this Commission may appear more formal, it really is not. Again, the statute passed at our request and effort requires the hearings at this level to also be informal. You may introduce new evidence if you wish or you may stick with what you used before and point out what the administrative judge failed to consider or give enough weight. Be sure to have good backup for these arguments.

If you had an appraisal made, your appraiser should be present to testify.

The Commission will usually inform you of their decision after the hearing.

Step Number 7.      Appeal to Full State Board Members or Lawsuit

You will have other steps after the Commission hearing, but few taxpayers take them. The first is to request a review by the full State Board of Equalization members. They rarely grant this request.

The other option is to go to Chancery Court. If you truly wish to go to court, hire a qualified appraiser because the court will usually not be persuaded by your own evidence. It is extremely rare that value cases go to court in Tennessee.

As I have mentioned earlier, there are so many administrative levels available to a taxpayer that if a taxpayer has lost at all the hearings along the way, there probably was no real case.

There you have it. While possibly a long and tedious process, it can be rewarding and some people may enjoy the experience. Good luck in your venture and don’t give up. If you need assistance, do not hesitate to obtain professional help.

Reprinted with permission of Caruthers & Associates, Inc. -

Copyright – Caruthers & Associates, Inc. – May 24, 2009

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The Executive Secretary of the State Board of Equalization had filed a bill in the Legislature, which if passed, would have changed the entire hearing and appeal process before the State Board. This bill was filed without the knowledge of the State Board but once they were advised of the bill, the State Board took no position.   So, it cannot be said that the Board was in favor of its passage.

At the present time, the hearings are not on the record; meaning, that if a taxpayer wants to appeal further, that taxpayer is not bound by the record made at the previous hearing. This procedure is called de novo and it goes all the way to the first level of the court system, Chancery Court.

A change to recorded hearings would have limited the judges to considering any appeal to only what appears in the record from the previous hearing. No new evidence could be presented.

Judicial review would increase costs of the hearings because court reporters would be necessary and also attorneys to ensure that the record was made adequate for the courts to review. To be without an attorney in an appeal limited to the record would prejudice the taxpayer because the record may be made inadequately.

The do novo procedure was part of the legislation package authorizing taxpayers and assessors to choose non-attorney representatives in State Board hearings. The de novo amendment was offered by Senator Haynes who made the statement of intent on the Senate Floor that de novo would be required in order to prevent prejudice to the taxpayers and allow them to continue to freely choose their own representatives.

In addition, TTA had sponsored and passed legislation requiring the State Board to conduct all hearings on an informal basis. Judicial review would have formalized the appeal process to the detriment of the taxpayers.

The Senate State & Local Government Committee heard the arguments from both sides on May 5th and solidly rejected judicial review. The proponents only received one or two voice votes for their amendment which made the bill. They were offered the opportunity to come back with a better bill, but did not return.

This was a good victory for the taxpayers. Judicial Review would have harmed many taxpayers in their attempts to protest their taxes.

If you wish to view the legislative process on this bill on video, here is a link:

http://wapp.capitol.tn.gov/apps/BillInfo/Default.aspx?BillNumber=SB2111

Click on video clips then click on SB2111 for May 5th. After the video screen appears, scroll down to SB2111 and click.

Thanks to all for their help in defeating this bill.

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Congratulations on a House victory.  On May 20th, before the House State & Local Government Committee, the sponsor and promoters of the above bill have admitted defeat in the House for this year.  Of course, they may bring it back next year, but that’s another battle.

If passed, the bill would have deleted the taxpayer’s right to contest an illegally made assessment that should have been voided.  For example, the case that brought this matter up and caused the bill to even be filed was simply a duplicate assessment. 

The Comptroller’s Office, which assesses public carrier properties, had assessed this property and erroneously so had the local assessor.  The assessor made an audit on the taxpayer’s assessments and discovered that the assessments she had made were made illegally. The taxpayer was paying twice.  This was all discovered in “2006″ and was appealed then. 

The Assessor deleted the assessments as far back as legally allowed leaving only one more year.  The taxpayer appealed to the Assessment Appeals Commission who agreed and voided the assessment as illegally made.  The technical basis for the Decision was called “collateral attack”.

The Executive Secretary to the State Board of Equalization, Kelsie Jones, asked the full State Board to review the case.  Neither of the parties appealed nor did they ask the State Board to review the case.  Then, unknown to the State Board, the Executive Secretary unilaterally filed legislation to void the right to appeal such illegal assessments to the State Board.  His argument before the Committees was that legal issues should go to the courts, not to the State Board.

It is very difficult for a taxpayer to get into court in this State. First, taxes must  be paid under protest. After the payment date, there is only a 30-day window to file suit for City taxes and only a 6-month window to file in the courts for county taxes. Therefore, unless the taxpayer sued both the city and the county within 30-days, the taxpayer would be forced to file two separate lawsuits. These are  preposterous impositions upon the taxpayers. 

Who pays their taxes under protest?  This taxpayer didn’t even know he or she was being illegally assessed!  That taxpayer would have no place to go if there was not a State Board of Equalization to accept an appeal. 

The Attorney General even confirmed the right to file an appeal based upon “collateral attack” of an illegal assessment in Opinion 92-62 and plainly stated the State Board ”should” accept these appeals.  Why?  Because it was the right thing to do and the State Board has responsibility for all assessments in the State. 

To do away with the right to go to the State Board of Equalization would deny the purpose for which these administrative agencies were created; that is, to keep the taxpayers from being forced to go to court at all. 

There have been many bills passed in previous years that delete taxpayers’ rights to protest assessments and taxes.  We must take a stand and this bill is one of those stands.  

The Legislators do not intentionally take away our rights.  They pass these bills because they only hear from one side, the government or government officer’s side.  When they hear from the taxpayers’ side and how these bills adversely affect their rights, they vote differently.  They do not wish to vote against the taxpayers.

Thanks to all of you who helped by contacting the Legislators and letting them know that this was a bad bill for the taxpayers of the State.

We now hear that the sponsor is planning on bringing the bill back this year on the Senate side to place them in a strategic position for passing the bill in the House next year. 

We will be sending out information on this issue very soon.  The bill is before the Senate Finance Ways & Means Committee, Tuesday, June 2nd at 1:30PM. 

The sponsor may drop the bill if he receives tremendous opposition from emails and calls.  So let them hear from you.

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Senator Jim Kyle and Speaker Lois DeBerry have sponsored this bill, endorsed by the Tennessee Taxpayers Association, to allow the taxing authorities to recognize foreclosure sales in making appraisals and assessments for property tax purposes.

At the present time, certain rules, practices, statutes, and precedents make it difficult for the assessors and the boards of equalization to recognize foreclosure sales as comparable sales in appraising other properties.

Obviously, when foreclosure sales become numerous, they have an effect upon the values in a neighborhood and this should be recognized.

However, foreclosure sales have never reached an epidemic level before where they even had to be recognized. Since there was a limited number, they were always ignored.

This new law, however, would make it possible for the assessor and the boards of equalization to treat taxpayers fairly in appraising their homes at what they are really worth; not some fictitious price higher than the true market value.  Without this new law, it will be very difficult (perhaps impossible) for taxpayers to receive true justice reflected by a real market values. 

The bill is a general bill with local application to only Shelby County.  Shelby has been particularly hit hard by foreclosures and taxes are much higher in Shelby County.   For example, in 2008, taxes on a home in Memphis were 65% higher than a comparable home in Nashville.  Therefore, any overvaluation in Memphis results in respectively a greater burden to the homeowner.

In addition, we anticipate that appeals will go on until this time next year before  a homeowner may even be heard before the boards.  By that time, it will have been necessary to file another appeal for 2010.

Perhaps, the bill may be expanded next year to include other counties, but, this is an emergency year in Shelby County.  Of course, other counties could amend into the bill if they desire. We are sure that the sponsors would not object. In Shelby County, and perhaps some other counties, the 2009 reappraisal has caused increases in the appraisals and assessments of these affected homes.

The bill has sailed through the Committees because of its good intentions and what it will accomplish for the taxpayers of Shelby County.

Please talk your representative and Senator.  Ask him or her to vote for the bill.  It is coming up for vote in the Senate and House soon.

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        State Can Now Intervene in Local Taxpayer’s Appeal

The State Division of Property Assessments, aligned with the Tennessee Association of Assessing Officers, has just passed a bill to allow the State Division to intervene in local assessment appeals. 

This means that if the State becomes interested in a local assessment appeal issue, it has the unconditional right to intervene and become a party in a taxpayer’s appeal with all the rights and powers of the assessor of property. 

What’s wrong with this? 

Well, for one thing the State does not collect or receive any of the property tax.   The tax is strictly local. 

And another, this non-elected State representative can approve or disapprove any settlement the Assessor, an elected official, wishes to make with the taxpayers. 

And still another thing wrong?.  The Division is a State agency opposing a taxpayer in a hearing to be decided by the State (State Board of Equalization).  Both agencies come under the State Comptroller’s Office.  We feel this close relationship to be a bit of a biased situation against the taxpayer. 

And yet another thing wrong, this brings all the power of the State and their powerful resources (combined with those of the Assessor)  to bear against the taxpayer.  Not a fair fight.

The Division already makes all the assessments for 90 out of 95 counties in our State.  This makes them a powerful organization wielding enormous influence over local taxation.  In some areas, they even print the tax bills.

Now in the five (5) largest counties in the State (Shelby, Davidson, Rutherford, Knox, and Hamilton),  in which the Division doesn’t make the appraisals or assessments, the Division can intervene and be a party there as well.  

So watch out taxpayers.  Don’t expect to deal with the person you voted for as Assessor of Property.  

We now have a State Assessor’s Office where no-one is elected by Tennessee citizens.

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Yes!!  We do have another tax freeze procedure available to our senior citizens. 

Several years ago the Tennessee Constitution was changed to enable the Legislature to enact  legislation which would allow local governments to adopt a tax freeze for senior citizens over the age of 65.

Senator Mark Norris, Republican, Shelby County, did a marvelous job is getting this major legislation passed.  He deserves tremendous credit for this work and this organization will see that the gets a lot of it. 

The catch is that the Legislature put on an income limitation to Senator  Norris’ enactment is very prohibitive.  So, not enough deserving senior citizens are going to receive benefit from this freeze. 

For example, in Shelby County the annual income limitation is $33,340 per annum, and that includes income from just about all sources.  In Davidson County the annual income limitation is $36,200 and in Knox County the limit is $34,070.

That’s sad, because it knocks out so many deserving seniors who have struggled to support our local governments through property taxes all their lives. 

What may be even sadder is that as of March of this year, only twenty (20) counties and twenty (20) cites have even approved this tax freeze.

Golly Gee!  It’s only a tax freeze.  It’s not going to break the governments and there won’t even be any immediate effect.  The taxes are frozen at the level that existed at the time the taxpayer was approved for the freeze.  The taxpayer receives no immediate tax reduction.  

Taxes stay at the same level as assessments and tax rates increase.  Considering that values of homes have fallen in recent times, the tax freeze is of dubious value or benefit.  Many taxpayers will receive reductions in taxes because of the decreases in property values. 

Contrasted to other states, which provide its citizens with Homestead Exemptions, the tax freeze in Tennessee is not enough.  It is especially not a enough with the low income limit in place.  

In Homestead states, taxpayers get immediate reductions in taxes and value or credits which equates to real immediate tax dollar savings.

Tennessee does not offer its citizens a Homestead Exemption.  Mississippi offers a homestead exemption to all citizens regardless of age and regardless of income.

In Mississippi, each citizen who applies receives a tax credit of up to $300 in actual taxes off their tax bill.   If the homeowner is over 65, the senior gets an additional exemption up to $75,000 in appraised value. 

A Homestead exemption is much better, but the Tennessee Constitution will not allow it.

However, Tennessee does have another tax freeze to offer its citizens as an alternative to the one being used by the few counties that implement it. 

At the time the alternative tax freeze was enacted, our Constitution did not even allow a regular tax freeze.  The freeze had to be designed along the lines of the freezes offered businesses to locate in a certain city or county. 

Under this method, title of the property is actually transferred to the local government, usually for $1.00, and is leased back by the taxpayer at rent equal to the amount of taxes at the time of the freeze.  The taxpayer pays the lease amount each year instead of taxes because the property is exempt (owned by city or county).

In that way the taxes are really frozen.  The taxpayer has the right to repurchase the property for usually $1.00 at any time or at the end of the lease. 

Sure it’s a gimmick, but it works for the large commercial properties, why wouldn’t it work for the homeowners?

It sure would work!

A homeowner transfers title to the government for a $1.00 and taxes are frozen until the homeowner dies, sells the property, or just wants to stop the freeze.  In any of those events, title is returned to the homeowner.

At any time the homeowner may repurchase the property for $1.00 and the tax freeze is over.

Simple?  Yes it is!

However, because of the anticipated costs, the cities and counties have ignored this little known law.  They have tried to discourage it by making the procedures appear so ominous as to scare away the taxpayer homeowners.

The procedure is not ominous because it is done all the time.  It is a standard way of freezing taxes on commercial and industrial properties and has has worked very well for a long time for those properties. 

I would do it on my house in a heartbeat.  No fear.  It works and works well, safely.  If you don’t pay the rent, guess what?  You lose the property. 

Well!  Guess what?  If you don’t pay your property taxes you also lose your property.  No difference whatsoever.

To qualify, the taxpayer must be at least 70 years old and have paid taxes on a residence in Tennessee for at least 20 years.  This is open to all taxpayers of all income ranges.  

Hence the lack of interest by the cities and counties.   We really need to take some action that will give some real benefit to the seniors.   Either raise the income limitations to realistic levels on Senator Norris’ bill, or use this alternative tax freeze method.

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Thank you for your interest in the legislative process.

SB 0873 – HB 0889:The bill provides that any business taxpayer who fails to file a personal property schedule and has received a forced assessment may have an additional remedy to seek relief from the forced assessment. At the present time, the only remedy is to appeal to the county board of equalization and if the filing date for that board is missed by the taxpayer, there are no further remedies. This proposed law would in effect allow the taxpayer until March 1 of the second year following the year of assessment to apply for a correction. However, nothing is free, and the penalty for receiving any relief is 25% of the relief granted. If it is determined the taxpayer was out of business and did not own or lease personal property held for business, the assessor may correct any forced assessment made against such taxpayer. This bill gives more correction rights to a taxpayer who did not file at all for two years than to a taxpayer who filed one day late. It is very unfairly written.(Senate: Ketron; House: Hackworth)

SB 1570 – HB 1535: If passed, this bill will permit the State Division of Property Assessment to intervene in contested cases between taxpayers and the assessors before the State Board of Equalization. The real effect of the bill is to permit the State to represent the county assessors against the taxpayers. The bill also lists others who are authorized to represent the assessors of property in certain types of contested cases. (Senate: Ketron; House: McCormick)

SB 2110 – HB 2074: This bill extends the time allotted to assessors for correcting errors from March 1 to September 1 of the second year following the tax year in question. They may also now correct errors made in calculating personal property returns in addition the existing power to correct acreage size, square feet, and other type clerical errors. The bill does not permit the assessor to correct errors made by the taxpayer in the taxpayer’s personal property return. The taxpayers must correct these errors under the amended schedule law which allows a full year less than the assessor has to correct errors made by the assessor This is another unfair attempt to change the law so that taxpayers have more difficulty in recovering erroneously paid taxes. The bill also eliminates the taxpayers’ right to file with the State Board on assessments which the taxpayers feel that are unconstitutional or should be voided by a collateral attack. (Senate: Overbey; House: Fitzhugh)

SB 2196 – HB 2175: This bill will force the assessor to correct errors made by taxpayers in filing tangible personal property returns. At the present time the assessor does not have to correct any such errors made by the taxpayer under the correction of errors statute. In order to have an error corrected the taxpayer must file an amended personal property schedule which has a much shorter time period for filing than correction by error by the assessor. Bill applies only to Shelby County. Our firm also drafted this bill. (Senate: Kyle; House : DeBerry L.)

SB 0750 – HB 0559: Taxpayers may approve tax rate increases by referendum if the voters have determined by a previous referendum that all tax rate increases must be approved by the voters. Referendum to approve tax rates may be placed on the ballot by petition signed by 10% of registered voters. (S: Johnson J.; H: Kelsey)

SB 0279 – HB 0382: The bill provides that properties qualified as low rental apartments by the IRS code, shall be valued on a basis less than other apartment properties. Provides that the value shall equal the gross rental times a multiplier of 6. (Senate: Haynes J.; House: Sargent)

SB 2111 – HB 2075: This bill would remove the taxpayers’ long standing right to introduce new evidence into the courts. At present, a case may go to court on a de novo basis once the hearing with the State Board of Equalization is over. The new law would delete the de novo provisions of the law and limit the courts to the power to only review the case from the record made at the state board hearing. If passed, this bill will certainly enhance the power of the State Board’s decisions. This is a limitation of what the courts can do with a State Board decision and we feel is harmful to the taxpayers. The bill also appears to ultimately require that only lawyers represent taxpayers before the State Board of Equalization.(Senate: Overbey; House: Fitzhugh)

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