Appealing property tax assessments requires attention to the details
January in Michigan gives us a few things to look forward to: Newsmakers of the Year, more snow, holiday bills — and property tax assessments.
Whether you own residential or commercial property, or both, you will be receiving a notice of assessment that assigns a value to your property for tax purposes. Should you disagree with that assessment, you have the right to appeal the assessor’s valuation of your property to the Michigan tax tribunal.
The tax tribunal is an administrative court in Michigan that hears and adjudicates property tax valuation disputes. Although the tax tribunal generally is less formal than, say, a federal court proceeding, the leadership at the tribunal has made an effort in recent years to tighten up tax tribunal procedures to make the process more rules-based, streamlined and professional.
Property owners who are serious about appealing their property tax assessments need to understand and be mindful of the process and need to make a compelling case in the tribunal — or else face the risk of wasting time and money during a failed appeal.
Pay attention to deadlines
A business that wants to contest the property tax assessment on commercial or industrial property must file a tax appeal by May 31 — no ifs, ands or excuses. You better not be late or get careless with strict procedural requirements, such as filing deadlines. A late petition will not be accepted because the tribunal simply lacks jurisdiction over untimely petitions.
Other traps for the unwary can be found in the tribunal’s rules. Several years ago, the tribunal changed its service of process requirements to require a petitioner to formally serve the petition on the assessor after filing the petition and after the tribunal assigned a docket number to the case. Many petitioners were unaware of the change and followed the old rules by simply mailing a copy of the petition to the assessor at the time they filed it. They found themselves in default as a result.
The tribunal establishes deadlines for the parties to exchange and file their property valuations, to complete discovery and to take other required actions. These deadlines typically will not be extended unless good cause can be shown. So, for example, if taxpayers blow the deadline to identify witnesses, they could find themselves in a situation where the tribunal refuses to allow their appraiser to testify at the formal hearing.
These are just several examples of how failing to understand the tribunal’s rules can land a taxpayer in “procedural stickiness.”
Appraisals, effective advocacy
While it is critical for a petitioner to know about and follow the required procedures, substance is where your case ultimately is won or lost. The key to success in any tribunal valuation case is the appraisal. It’s critical to have a good appraiser with tribunal experience who understands how to draft a professional, reliable and well-supported appraisal.
Most importantly, the appraiser must be prepared and sufficiently skilled to defend their appraisal on cross examination. A good appraiser will understand what the tribunal judges view as important, what’s persuasive — and what isn’t.
Because a property owner always bears the ultimate burden of persuading the tribunal that a reduction is warranted, the case often will boil down to whether the owner has presented credible and well-supported appraisal evidence. A credible appraisal also will enable a property owner to have more effective settlement negotiations with the taxing authority, as assessors are hesitant to agree to any reduction unless they see a reason to do so.
Of course, the other key to ensure success is finding the right attorney to represent you. Taxpayers may choose to represent themselves in front of the tribunal in order to save money. But that can actually wind up costing more if a company relies on a layperson who doesn’t understand tribunal rules and procedures, who misses deadlines or who fails to present a compelling case as to why the assessment is too high.
While the tribunal is a less formal procedure than court, it would be a mistake to assume that it is informal. Missing deadlines, failing to file documents in the proper format or in a timely manner, or having a poor appraisal can and often does result in dismissal or loss at the tax tribunal. Although an adverse tribunal decision can be appealed to the Michigan Court of Appeals, it often is an uphill battle because of the limited scope of review and involves additional time and expense.
Businesses that are serious about appealing their property tax assessment should do so in a serious way.
Thomas M. Amon is a litigator at Warner Norcross & Judd LLP who concentrates his practice in commercial and real estate litigation. He can be reached at email@example.com.