Do VAB Special Magistrates Have Authority to Remand for a Reassessment?

It’s time for me to get on my soapbox about a big blunder the Florida Department of Revenue made in its new VAB forms and proposed rules.  Okay, so there was probably more than one blunder, but this one sticks in my craw because I filed a public comment and apparently nobody paid any attention.  The blunder I’m referring to is the authority apparently bestowed on the Special Magistrates by the DOR to order Property Appraisers to revise their assessments.  The Florida statutes allow the circuit court or value adjustment board to remand for a reassessment under appropriate circumstances, but the Special Magistrates plainly do not have any statutory authority to issue an order directing the Property Appraiser to change their assessment.

Florida Statute s. 194.301 provides that if the Property Appraiser’s assessment is overturned and the record lacks substantial competent evidence of value, the matter must be remanded to the property appraiser with appropriate directions from the value adjustment board or the court.  While the VAB is authorized by Florida Statute 194.035 to appoint special magistrates for the purpose of taking testimony and making recommendations to the board, the final decision as to whether to overturn the assessment and, if so, whether to set the value or remand to the Property Appraiser for a reassessment, is a decision for the board.  The Board can act on the recommendations of the Special Magistrate without further hearing, but nothing in the Florida statutes suggests that Special Magistrates have any authority to directly order a Property Appraiser to reassess property.

So why then did the Department of Revenue promulgate a form (Form DR-485R) that invites the Special Magistrates to order the property appraisers to reassess property even before the VAB has determined whether the original assessment is valid?  And why do the DOR’s proposed Rules provide procedures for the Special Magistrates to remand an assessment to the Property Appraiser without prior approval of the Value Adjustment Board?  I cannot answer these questions, but I will say that the proposed regulations are clearly beyond the DOR’s rulemaking authority.

Comments on the DOR’s proposed rules can be sent to VAB@dor.state.fl.us or you can call the DOR at (850) 922-7945.

 

Evidence Disclosure Requirements for Florida VAB Hearings

The Florida statutes provide a fairly detailed procedure for the exchange of evidence between the taxpayer and the Property Appraiser.  However, the statutes are a bit vague on the consequences of failing to disclose evidence in a timely manner.  This post will try to address some common questions about Florida’s evidence disclosure requirements for Value Adjustment Board hearings.

Is the Property Appraiser required to share their evidence with the petitioner prior to the VAB hearing?

It depends.  Pursuant to section 194.011(4), Fla. Stat., the Property Appraiser is required to disclose their evidence to the petitioner at least 7 days prior to the hearing only if the petitioner discloses their evidence (witness information and copies of documentary evidence) to the Property Appraiser at least 15 days prior to the VAB hearing and the petitioner sends the Property Appraiser a written request for disclosure of the Property Appraiser’s evidence.  If the petitioner fails to disclose their evidence in a timely manner, or if the petitioner discloses their evidence but neglects to send the Property Appraiser a written request for disclosure of evidence, the Property Appraiser is under no duty to share their evidence with the petitioner.  That said, the Property Appraiser’s records are, for the most part, still subject to the disclosure requirements of the Public Records Act, and thus a petitioner may still be able to make a request for specific documents.

If the Property Appraiser does disclose their evidence in a timely manner, will it be excluded from evidence?

No.  If the petitioner complies with the requirements of section 194.011(4), Fla. Stat. and the Property Appraiser fails to disclose their evidence at least 7 days prior to the hearing, the hearing will be re-scheduled, but there is no indication in the statute that the Property Appraiser’s evidence would be inadmissible.

Is the petitioner required to disclose their evidence to the Property Appraiser prior to the VAB hearing?

No.  If the petitioner wants to see the Property Appraiser’s evidence prior to the hearing, the petitioner must disclose their evidence at least 15 days prior to the hearing.  However, according to the training materials provided by the Florida Department of Revenue to the VABs and Special Magistrates, the petitioner’s initiation of an evidence exchange with the Property Appraiser is strictly optional.  If the petitioner chooses not to disclose their evidence, the evidence is not necessarily inadmissible.  The only consequence provided in the statute is that the  petitioner does not have a right to see the Property Appraiser’s evidence in advance.

What if the Property Appraiser sends the petitioner a request for documents?  Must the petitioner respond?

Yes.  Pursuant to section 194.034(1)(d), Fla. Stat. and the Higgs v. Good case, if the Property Appraiser makes a written request for information and the taxpayer fails to respond, the taxpayer will be prohibited from using that information at the VAB hearing or in court.  Thus, while the taxpayer is  not required to initiate an evidence exchange, failing to respond to a written request from the Property Appraiser could affect their right to introduce the requested information at a later hearing.

What transmission methods can be used for exchanging evidence?

Rule 12D-10.0044 of the Florida Administrative Code provides that the exchange of evidence can be accomplished by mail, fax, e-mail, hand delivery or any other method agreed upon by the parties.  See Rule 12D-10.0044 for more information on delivery methods.

VAB Evidence Part 2: Use of Sales That Close After the January 1st Assessment Date

One of the more confusing issues that seems to arise during Value Adjustment Board hearings is the question of whether and to what extent the Property Appraiser and the taxpayer can use sales that close after the January 1st assessment date to support their respective opinions of value.  The short answer is that there is no legal prohibition against using post-assessment date sales as evidence.  Ultimately, the issue is the just value of the property as of January 1st, and any evidence that tends to indicate the value of the property on that date may be admissible.

The confusion about this issue arose, in part, because of Florida Department of Revenue Bulletin PTA 06-08, wherein the Department of Revenue advised Florida county property appraisers that the use of sales that occur after January 1st to prepare their tax rolls would be inconsistent with the requirements of Florida law.  This bulletin raised some eyebrows among the appraisal community, as many appraisers and attorneys felt that, particularly when the market was in a state of transition on January 1st, post-assessment date sales could be indicative of a market trend that affected the value of the property on January 1st.  The bulletin also appeared to conflict with the case of Bystrom v. Equitable Life Assurance Society, wherein the appellate court held that evidence (in that case, income data) that comes to light after the assessment date may be relevant to the value as of January 1st.

Thereafter, the Department of Revenue issued Bulletin PTO 08-02, which replaced Bulletin PTA 06-08.  In this new bulletin, the Department reviewed the case law in more detail and came to the conclusion that post-assessment date sales may be considered if they are probative of the just value on the assessment date.  Specifically, the Department advised county property appraisers that post-assessment date sales may only be considered in preparing the tax roll when the following four conditions are met:

1.  When post-assessment date sales are probative of just value for the subject property as of January 1st;

2.  When post-assessment date sales are not used as a substitute for pre-assessment date sales;

3.  When post-assessment date sales are considered only in conjunction with pre-assessment date sales;  and

4.  When the consideration of post-assessment date sales is otherwise consistent with law.

In short, the Department indicated that, in preparing their tax rolls, county property appraisers may consider post-assessment date sales, as long as they are considered in conjunction with pre-assessment date sales and the sales are indicative of the January 1st value.

Of course, as a practical matter, because the property appraisers must submit their tax rolls by July 1st, they are simply unable to use sales that occur late in the year.  Thus, sales that occur later in the year will likely not be admissible to prove that the Property Appraiser failed to properly consider those sales, since it would have been impossible to consider a sale that had not yet occurred.  And even when there is a sale of the actual property in question, the court in Haines v. Holley held that a sale that occurs in June should not necessarily be relied on to assess the property as of January 1st.  However, based on the current state of the law and the Department’s most recent bulletin, it appears that both the Property Appraiser and the taxpayer could conceivably use post-assessment date sales to defend their respective opinions of value, as long as they can tie the sales to the January 1st assessment date.

VAB Evidence Part 1: Assessments of Similar Properties

Florida Statute s. 194.034(5) provides that “for the purpose of review of a petition, the [VAB] may consider assessments among comparable properties within homogeneous areas or neighborhoods.”  Conversely, the Florida Supreme  Court has long held that a court may not reduce a taxpayer’s asssessment below its fair market value based on a mere showing that parcels of other taxpayers are assessed at a lesser amount.  This creates a bit of a conundrum for the taxpayer, property appraiser and the VAB in trying to determine whether and to what extent evidence of the Property Appraiser’s assessment of other properties is relevant and admissible.

In Deltona v. Bailey, the Florida Supreme Court relied on the constitutional requirement that all property be assessed at its just value in holding that taxpayers’ assessments may not be reduced below just value just because other taxpayers may be assessed at a lower amount.  The exception to this rule is when the taxpayer can plead and prove that it is being “singled out” and specifically discriminated against vis-a-vis the other taxpayers generally in the county.  Based on the Deltona case, some VABs have refused to consider evidence of the assessment of comparable properties, despite the existence of Florida Statute s. 194.034(5).  It is possible that they are correct in doing so, as any reduction based solely on the assessment of other comparable properties would likely be unconstitutional, absent evidence that the assessment of the subject property exceeded its just value. 

However, another view is that the statute allows VAB petitioners to submit evidence of assessments of comparable properties in order to help prove that the Property Appraiser’s assessment was “arbitrarily based on appraisal practices which are different from the appraisal practices generally applied by the property appraiser to comparable property within the same class and within the same county,” per Florida Statute 194.301.  Prior to 2009, if a taxpayer could meet this burden, their burden of proving that the assessment exceeded just value would be reduced from “clear and convincing evidence” to a “preponderance of the evidence.”  Beginning in 2009, if the taxpayer meets this burden, the Property Appraiser’s assessment is overturned and the VAB must either set the value or remand to the Property Appraiser for a reassessment.

Viewed this way, evidence of the assessment of comparable properties could have limited relevance if it tended to support the taxpayer’s contention that the Property Appraiser used different appraisal practices for their property that were not  used for other similar properties.  However, based on Deltona v. Bailey, the VAB would still not have the authority to reduce a taxpayer’s assessment based solely on other assessments.  To reduce the taxpayer’s value, the VAB would need to see evidence that the assessment exceeded just value.

Also, it is important to note that Fla. Stat. 194.034(5) only applies to VAB proceedings, not to actions in circuit court.  Thus, taxpayers who take their case to court should not plan to rely on this statute.

DOR: New Statute Places Initial Burden of Proof on Property Appraiser

Subsequent to my earlier blog post on The New Reduced Burden of Proof in Florida Property Tax Appeals, the Florida Department of Revenue has revised its VAB training materials and issued its DOR VAB Training Revision – September 18 2009, which reflects a significant change in how it is interpreting the new burden of proof  statute.

Page 8 of the new training materials indicates that the Property Appraiser has the initial burden of coming forward with evidence that the assessment complied with section 193.011, Fla. Stat. and professionally accepted appraisal practices.   They also indicate that if the Property Appraiser does not prove by a preponderance of the evidence that the assessment met those requirements, the assessment will be overturned and the VAB must either set the value or remand to the Property  Appraiser for a reassessment.

This represents a dramatic change from the training materials released on September 1, 2009, which continued to place the burden of proof on the taxpayer, consistent with the statutory language that states that the party bringing the action has the burden of proof.  I will be reviewing the  revised training materials in more depth and will let you know if there are any additional significant changes.

Filing a Late VAB Petition in Florida

In Florida, petitions to the county value adjustment board must be filed no later than 25 days after the Property Appraiser mails the Notice of Proposed Property Taxes (or TRIM notice, as it is often called).  If a taxpayer misses that deadline, their VAB petition will only be considered  if they can demonstrate that the late filing was due to “good cause.”

The Florida courts have not had much opportunity to consider what constitutes good cause for filing a late VAB petition.  However, in one case, the appellate court held that the fact that a non-profit corporation had difficulty assembling its directors to approve the filing of the VAB petition was not such an extraordinary circumstance that would justify filing a VAB petition after the statutory deadline.

In its training for the 2009 VAB Special Magistrates, the Florida Department of Revenue explains the meaning of “good cause” as follows:

“Good cause” means the showing of extraordinary circumstances.  While this is not a compete list, some examples of circumstances that may affect the taxpayer’s ability to file on time are:  (a) personal, family, or business crisis or emergency or emergency at a critical time or for an extended period of time;  and (b) physical or mental illness, infirmity, or disability.

When a taxpayer files an untimely VAB petition, they must attach an explanation of their reasons for filing the petition late.  Those reasons are then considered by the VAB or its designee.  In some counties, the question will be referred to a Special Magistrate for a hearing.  If the Special Magistrate finds good cause, then a later hearing will be scheduled on petition itself.  Other counties allow the attorney for the VAB to make the good cause determinations.

The Department of Revenue’s training materials also provide that the VAB should consider whether the delay will affect the performance of its function in the property tax process.  Thus, a petition received a few days after the deadline is probably much more likely to be considered than a petition received months into the VAB hearing process.

Requesting an Informal Conference with Your County Property Appraiser

Florida law allows taxpayers to request an informal conference with their county property appraiser to discuss the assessed value of their property.  At first blush, it would seem that resolving a dispute informally, without the time, expense and stress of a VAB hearing or court proceeding would be a no-brainer.  Yet, in my experience, there are a number of reasons why taxpayers choose to go straight to VAB without meeting with the Property Appraiser first.

One common reason is the short time available for filing a VAB petition.  Often, by the time a taxpayer receives their TRIM notice, digests it and does a little research about their assessment, the deadline to file a petition is right around the corner.  So they file a petition and then think that the decision is up to the VAB.  What many people don’t realize is that, even after you file a VAB petition and, for that matter, even up to the VAB hearing itself, you can still communicate directly with the Property Appraiser’s office in an effort to reach an agreement. 

Another reason for failing to communicate with the Property Appraiser is the belief that the Property Appaiser’s office is not interested in resolving disputes.  That is generally not the case.  The staff in most Property Appraisers’ offices are not eager for a showdown at VAB.  While they are naturally going to want to defend their work, if you have a credible argument, they would much rather discuss your assessment now rather than later before the Special Magistrate.

A third reason is the taxpayer’s fear of “showing their hand.”  Many tax professionals caution their clients against meeting with the property appraiser because they are concerned that the property appraiser’s office will take advantage of the opportunity to discover the taxpayer’s case so they can be better prepared to defend their assessment at the VAB hearing.  While that is always a risk, by taking some steps, the taxpayer can improve their chances of having a productive meeting with the Property Appraiser’s office.  Here are some do’s and don’ts for meeting with the Property Appraiser’s staff:

Do . . .

  • Request a copy of your property record card and any sales comparison or other worksheets that the Property Appraiser has prepared.  Preferably, you would want to review these documents prior to the meeting, so that you can be prepared to discuss them and ask questions.
  • Make sure that you still file a VAB petition, if the deadline for filing is prior to your informal conference.  If you reach an agreement, you can always withdraw your petition.
  • Be courteous and respectful to the staff.  Remember, they are just doing their jobs;  they don’t get a bonus if the county collects more taxes.  And it can’t hurt to establish a positive rapport in the event you have issues in future years.

Don’t . . .

  • Spend your money on an appraisal from someone that the local Property Appraiser’s office views as a “hack” or a “hired gun.”  The Property Appraiser’s staff know which appraisers have integrity, and which do not.  And for that matter, so do the Special Magistrates and the judges.  As much as it may be tempting to hire the person who will give you the lowest value, just remember that credibility is everything.
  • Rely solely on assessments of other properties.  The Property Appraiser’s office wants to see sales that support your claim, not hear “my neighbor’s assessment is lower.”
  • Argue for a reduction based on your good qualities as a human being.  Property taxes aren’t based on personal merit, so your community service, charitable activities, military service, and strong work ethic aren’t going to get you anywhere.  Focus on the real issue – the value of your property.
  • Talk in terms of the amount of taxes you think you should be paying.  Remember, the property appraiser is only concerned with the value of your property, not the amount of taxes that you ultimately pay.  They are not going to be prepared to negotiate the amount of taxes that are due – only the assessed value.

Above all, remember that you are dealing with a government office that does not have a vested interest in producing a high tax roll.  The Property Appraiser sets the value;  the County Commission, School Board and  other taxing authorities set the millage rate that determines the amount of taxes you owe.  The Property Appraiser’s office is interested in determining the value of your property under the constraints of Florida law and the limited information that comes before them.  Provide them with quality information and conduct yourself with a professional attitude, and you are much more likely to be successful.

Deadline Approaching to Submit Evidence of Chinese Drywall

The Lee County Property Appraiser has announced that the deadline to submit evidence that your home is affected by toxic Chinese drywall is September 18, 2009.  Click here for more information.  Upon submitting such evidence, you may be able to obtain a reduction of 50% off the just value of your home, according to a memo released last week.

I will be looking into other counties’ policies and hopefully posting some more information on this issue, so stay tuned.  If you have information about the requirements of any other counties that are making adjustments for Chinese drywall-related issues, please feel free to post a comment.

How to File a Late Homestead Exemption Application

So you missed the March 1st deadline for filing your application for a homestead exemption.  What now?  Are you completely out of luck?

Maybe not.  Florida law allows the Property Appraiser or the Value Adjustment Board to grant late-filed homestead exemption applications if the untimely filing was due to particular extenuating circumstances.  If you believe that your reasons for filing late meet this standard, you must do two things:

1.  File the late homestead exemption application with the Property Appraiser;  and

2.  File a petition with your county’s Value Adjustment Board no later than 25 days after the mailing of the TRIM notice by the Property Appraiser (which usually occurs in late August).

It is very important that you take both of the above steps, as the VAB cannot consider your petition unless you have filed an exemption application, however untimely, with the Property Appraiser.  The VAB will then notify you of the time scheduled for your hearing before the VAB or a Special Magistrate, where you will testify as to your reasons for filing late.  If the VAB determines that your untimely filing was due to particular extenuating circumstances and you were otherwise entitled to the exemption, your homestead exemption will be granted.

Revised VAB Training Materials Available

The Florida Department of Revenue has released the 2009 VAB  revised on-line training materials, which reflect the recent statutory changes to Florida’s ad valorem tax laws.  The on-line training is mandatory for all persons serving as Special Magistrates in 2009.  For smaller counties that do not use Special Magistrates, the training is mandatory for the VAB members.  The materials are also available to taxpayers, attorneys and other interested persons.