DOR Bulletins and VAB Training Materials Deemed Not Binding on VABs


A Florida Administrative Law Judge issued a Summary Final Order in Turner v. Dep’t of Revenue, finding that the Florida Department of Revenue’s advisory bulletins and Value Adjustment Board training materials are not binding on VABs or Special Magistrates, and that Rule 12D-9.020 contravenes Florida law to the extent that it provides that the disclosure of evidence by a VAB petitioner is optional.

Earlier this year, several county Property Appraisers filed a legal challenge to the Florida Department of Revenue’s 2010 Value Adjustment Board training materials and Property Tax Oversight Bulletin 11-01, contending that the materials were improperly-promulgated administrative rules that were contrary to the requirements of the Florida Constitution and statutes.  The Property Appraisers’ primary areas of concern were the DOR’s statements that the Higgs v. Good case did not apply to VABs, its statement that the petitioner has the option of initiating an evidence exchange, and its indication that a “costs of sale” adjustment under Fla. Stat. 193.011(8) should be made to values calculated by the cost and income approach, as well as the sales comparison approach.

On June 22, 2011, the Judge ruled that the bulletins and training materials do not constitute invalid, unpromulgated rules because the “value adjustment boards and their magistrates are not required to apply – and therefore possess the discretion to deviate from – the legal principles enunciated within the materials when conducting VAB hearings.”  In support of their contention that the materials should be treated as administrative rules and thus be subject to the same promulgation procedures, the Property Appraisers had submitted evidence that certain VABs and Special Magistrates had perceived the bulletins and training materials as being mandatory.  However, the Judge found that, regardless of the perception of those individuals, the DOR has no authority to enforce its bulletins or the statements in the training materials and that they were merely non-binding recommendations that the VABS and Special Magistrates were not required to adhere to.

The Judge also ruled that the DOR’s Rule 12D-9.020 was contrary to Fla. Stat. 194.011, Fla. Stat, which requires the VAB petitioners to disclose their evidence at least 15 days before the VAB hearing.  However, the effect of this part of the ruling appears to be nominal, since the Judge also acknowledged that the only penalty for the petitioner’s failure to disclose its evidence is that the Property Appraiser is not required to disclose its evidence to the petitioner.  Thus, the effect on the requirements for exchange of evidence between the parties is essentially nil.  Basically, if the Property Appraiser requests documentation, that documentation must be provided 15 days before the hearing or it may not be admitted into evidence.  But as to evidence not requested by the Property Appraiser, the Petitioner only needs to disclose that evidence if they would like to see the Property Appraiser’s evidence before the hearing.

New Policies & Procedures for 2010 VAB Hearings


Just when I think I know everything there is to know about property tax appeals, they go and change the rules on me again.  VAB season should be interesting this year, given all of the new policies and procedures promulgated by the Florida Department of Revenue and its infamous (and at times puzzling) 2010 Value Adjustment Board Training materials that are required reading for all VAB Special Magistrates in Florida.  Below is a quick summary of some interesting administrative changes that are included in the new Rules and the VAB Training materials.

Good Cause for Late VAB Petitions

The DOR has now included a definition of “good cause.”  According to Rule 12D-9.015(11)(a), “good cause” means the verifiable showing of extraordinary circumstances.  Examples given by the DOR include a personal, family or business crisis, or a physical or mental illness, infirmity or disability that would reasonably affect the petitioner’s ability to timely file, as well as miscommunications with the Board Clerk, Property Appraiser or their staff regarding the filing time.

Agents for Taxpayers

Rule 12D-9.018(3) clarifies that a taxpayer may be represented by anyone, including a family member, and that the agent need not be a licensed individual.  However, a petition filed by an unlicensed agent must be signed by the taxpayer or be accompanied by a written authorization from the taxpayer.

Rescheduling Hearings

Florida Statute 194.032(2) allows a petitioner to reschedule a hearing one time without good cause.  In my experience last year, some Value Adjustment Board Clerks interpreted this section as only allowing the petitioner to request one rescheduling, regardless of whether they had a conflict or other good cause.  Rule 12D-9.019 clarifies that a rescheduling for good cause shall not be treated as the one time rescheduling to which a petitioner has a right upon timely request under Fla. Stat. 194.032(2).  This Rule also clarifies that if a hearing is rescheduled, the deadlines for the exchange of evidence shall be computed from the new hearing date, if time permits.

Effect of Failure to Provide Income Data/Higgs v. Good

Higgs v. Good is, of course, the case that held that where a taxpayer refused to provide his income data to the Property Appraiser when the Property Appraiser was trying to prepare the tax roll, the taxpayer could not later use that data in an administrative or judicial challenge to their property tax assessment (yes, the case did expressly say “administrative or judicial”).  Thus, the DOR has created quite a stir by stating in its 2010 VAB Training materials that “the case of Higgs v. Good does not apply to proceedings of the value adjustment board.”

Note, however, that Fla. Stat.  194.034 still prohibits the VAB from accepting evidence if the Property Appraiser requested it from the petitioner in connection with the VAB proceeding and the petitioner had knowledge of it, but declined to provide it to the Property Appraiser.  If such a request is made by the Property Appraiser (and it always is), Rule 12D-9.020(8) deems the petitioner’s evidence timely if it is submitted at least 15 days before the hearing.  If submitted less than 15 days before the hearing, it is still considered timely if the VAB finds that it was provided a reasonable time before the hearing.

Order of Presentation of Evidence

Rule 12D-9.024(7) clarifies that the Property Appraiser should present their evidence first in a hearing involving a value dispute.  Presumably, the taxpayer would still present their evidence first in exemption and classification hearings.  However, if the parties agree, the Special Magistrates generally prefer for the Property Appraiser to state their reasons for denial of an exemption before the taxpayer presents their case.

Applicability of Rules of Evidence

Rule 12D-9.025(2)(a) provides that VAB proceedings are not to be controlled by strict rules of evidence and procedure.  However, while formal rules of evidence do not apply, fundamental due process shall be observed and shall govern the proceedings.  The VAB Training materials further state that the VABs must not apply strict standards of relevance or materiality in deciding whether to admit evidence into the record, and that any decisions to exclude evidence must not be arbitrary or unreasonable.

In practice, what this likely means is that the VABs should give the parties a bit of leeway when their evidence is challenged on relevance or materiality grounds.  However, parties should still be wary about relying on hearsay to prove their case (such as affidavits or appraisals by persons not present at the hearing).  The Rules specifically allow petitioners to notify the VAB on their petition that they do not intend to appear, but that they would like their evidence considered anyway. In such situations, Rule 9.024(11) states that the VAB must take into consideration the inability of the opposing party to cross-examine the non-appearing party in determining the sufficiency of the evidence.

Applicability of USPAP

Florida Statute 194.301 now requires the Property Appraiser to comply with “professionally accepted appraisal practices.”  Some (including me) had speculated that these “practices” could be construed to include the Uniform Standards of Professional Appraisal Practice [“USPAP”].  Not so, however, as the DOR’s 2010 VAB Training materials have instructed the VABs and Special Magistrates that they are not authorized to determine whether a party is required to comply with USPAP or whether their evidence complies with USPAP.

The Eighth Factor (Costs of Sale)

Another issue that has many people scratching their heads is the DOR’s discussion of “the eighth criterion” in the VAB Training materials.  The materials seem to suggest that where the Property Appraiser has reported to the DOR on Form DR-493 a certain percentage adjustment for the eighth criterion of Fla. Stat. 193.011, but has not made such an adjustment to the petitioned property, the VAB should go ahead and make that adjustment.  Thus, it would seem that the DOR is advising the VABs to ensure that the same adjustment is made to all properties, regardless of the approach used to calculate the assessment and regardless of whether it would result in an assessment at less than fair market value.  I expect that the DOR will be receiving questions from many people about this, and hopefully further clarification will be forthcoming.

Working Waterfront Properties

The VAB Training materials clarify that, despite the legislature’s failure to pass implementing legislation, the constitutional provisions relating to working waterfront properties do apply in 2010, and the DOR anticipates issuing rules later in the summer of 2010.

Electronic Hearings

Finally, the new Rules allow for electronic hearings if the VAB approves of their use and the special magistrate agrees.  Procedures for the use of electronic hearings are set forth in Rule 12D-9.026.

Responding to Requests for Financial Data from the Property Appraiser


If you own commercial property, especially hotels/motels, apartment buildings, self-storage facilities, or other property that is commonly rented, you have probably received a request from the county Property Appraiser for your property’s income and expense data.  This post will explain why the Property Appraiser seeks this data, how it is used, whether you are required to respond, and the consequences for failure to respond.

Why does the Property Appraiser need my financial information?

Commercial property is commonly assessed by what is referred to as the “income approach.”  In a nutshell, the value of the property is determined by capitalizing the property’s net operating income from the prior year.  In order to determine a reasonable amount of revenue and expenses for each commercial property, the Property Appraiser’s office requests that the property owners provide that data, which is then analyzed and used county-wide.

Will my financial information be treated as confidential?

Yes, for the most part.  Fla. Stat. 195.027 authorizes the Property Appraisers to seek taxpayers’ financial records, but states that the financial information is confidential in the hands of the Property Appraiser, except upon court order or order of an administrative body having quasi-judicial powers in ad valorem tax matters.  Thus, in most cases, your information will be kept confidential.

However, if another owner of income-producing property were to take the Property Appraiser to court over their assessment, they could conceivably ask the court to order the Property Appraiser to produce any income data that they used to assess the property, including data received from other taxpayers.  Of course, in my experience, if a judge is going to order the Property Appraiser to produce confidential taxpayer data, they will usually allow the Property Appraiser to redact any identifying information.

Also, if you challenge the Property Appraiser’s assessment of your own property in court or before the Value Adjustment Board, the Property Appraiser will in all likelihood want to use any previously-provided data in their defense.  There has been some disagreement as to whether the Property Appraisers can do so without a court order, but in such a situation the court would in all likelihood allow the Property Appraiser to use your data in court.

What happens if I refuse to respond?

If a taxpayer does not voluntarily provide their financial records to the Property Appraiser, the Property Appraiser has the authority under Fla. Stat. 195.027 and Florida Administrative Code Rule 12D-1.005 to file an action in circuit court requesting a subpoena duces tecum directing the taxpayer to produce the records.  However, this procedure is used very rarely.  Usually, if a taxpayer does not respond, the Property Appraiser will just assess their property using the best available information, such as information provided by owners of similar property in the area or data from national publications.

The most serious consequence of failing to respond is that you essentially forfeit your ability to use that data to challenge your property tax assessment, even if your own income and expenses would result in a lower value.  Years ago, the Supreme Court of Florida in Palm Corporation v. Homer held that a taxpayer who refused to provide their income data to the Property Appraiser could not use it in a later lawsuit to challenge the Property Appraiser’s assessment.

Can I wait until I receive my Trim notice to decide whether to respond?

In Higgs v. Good, the taxpayer did just that and the appellate court held that he could not use his income data in a court action to challenge the Property Appraiser’s assessment.   Basically, the Property Appraiser needs this information in the spring in order to use it in the assessment process, since the tax roll must be completed by July 1st.  The courts have thus found that it is unreasonable to withhold financial data until after the assessments are completed and then submit it only if it suits the taxpayer (i.e. if it would indicate a lower value).

That said, the Florida Department of Revenue has recently raised quite a ruckus by stating in its proposed 2010 VAB Training Materials that, in the Value Adjustment Board process, as long as the taxpayer submits their evidence to the Property Appraiser 15 days before the hearing, it should be considered timely, regardless of when the data was requested.  This proposal has no doubt received a lot of negative commentary from the Property Appraisers, as it appears to ignore the court ruling in Higgs v. Good.  But unless this is changed, it is possible that, beginning in 2010, taxpayers may have the option of withholding their income data until they receive their TRIM notice.  Although they would not be able to use that data in court, the DOR’s materials may allow them to use that data in a VAB hearing.