Time to Appeal Tennessee Property Tax Assessments

Now is the time to request an appointment to appeal real or personal property assessments if you disagree with your local property assessor’s appraised value or classification of your property.

Deadline to Appeal

County boards of equalization will begin hearing regular property tax appeals on June 1.  They have the authority to increase, decrease or leave unchanged the appraised value of the property or change the classification of the property.  You must make an appointment to appear before the county board by contacting your local property assessor’s office.  The deadline for review varies by county.  If you fail to appear before the county board, the property tax assessment is deemed conclusive and you lose any further rights of appeal, except in very limited circumstances.  Tenn. Code Ann. § 67-5-1401.  You should contact the local assessor’s office to request your appointment to appeal your property tax assessment by June 1.

Steps to Appeal

There are multiple levels of appeals that taxpayers must follow in order to preserve their rights and the appeal path can become a trap for the unwary if deadlines are missed.

1.   Informal Review – The first level of review, which is informal but should not be overlooked, is to talk with the local property assessor’s office.  This is an easy and inexpensive means to review your assessment and determine if there has been a mistake or if the property assessor is willing to make an adjustment based on information you can provide about the use or value of the property.  To request an informal review, call your local property assessor’s office.

2.   County Boards of Equalization – If you are not satisfied with the informal review or if you decide to skip that step, you must request review by the county board of equalization to preserve your appeal rights.  Tenn. Code Ann. § 67-5-1401.  County boards begin their sessions each year on June 1 and you should contact your local property assessor’s office to request an appointment.  You must appear “in person” before the county board of equalization prior to its final adjournment.  You may appear before the board or hearing officer by yourself or you may be represented by a qualified property tax representative or an attorney.  Again, if you fail to appear, the assessment will be deemed conclusive against you.  Tenn. Code Ann. § 67-5-1401. 

3.   State Board of Equalization – If you are not satisfied with the decision by the county board of equalization, your next step in the appeal process is to the State Board of Equalization.  Tenn. Code Ann. § 67‑5‑1412.  There are several levels of appeal within the State Board and the process becomes more formal.  Appeals to the State Board must be submitted in writing, sworn to, and filed with the Executive Secretary of the State Board.  The State Board has forms available for your use or you may also file your appeal online at www.tn.gov/comptroller/sb/.  There is a filing fee required for all appeals and the amounts are noted on the State Board’s website.

Taxpayers have until August 1 or 45 days after the date the notice of the decision of the county board of equalization was sent to file a further appeal with the State Board, whichever date is later.  Tenn. Code Ann. § 67-5-1412(e). 

Other Points to Remember 

You should also make note of the following important points:

1.  Appeals for Successive Years – Unless there is a change in your property assessment from last year, you will not receive a separate notice of assessment each year.  Nevertheless, if you have appealed an earlier year, your appeal is limited to that tax year and does not preserve your appeal rights for the successive years in which the assessment remains unchanged.  You must appeal the assessment for each tax year even if the assessment remains the same and you do not receive a new notice. 

2.   Payment of Undisputed Taxes – While on appeal, a taxpayer still must pay the undisputed portion of the property tax assessment in order to pursue the appeal and avoid the assessment of penalties after the taxes become delinquent on March 1.  The unpaid portion will accrue interest if you are ultimately required to pay the assessment.

3.   Mark Your Calendars – Remember that even if you do not receive any of the notices that are required to be sent to you, you are not relieved, usually, of your obligation to meet all filing deadlines.  If a deadline is approaching and you have not received a notice, call the local assessor or State Board office.  Do not let any of the deadlines pass.

IMPORTANT DEADLINES FOR TENNESSEE PROPERTY TAX APPEALS
January 1	Assessments of all real property and personal property are made annually as of January 1
May 20	Deadline for property assessor to make assessment
June 1	County Boards of Equalization begin their annual sessions.  Taxpayers should call to schedule an appointment to appeal before June 1
August 1	Deadline to file appeal to State Board of Equalization, or 45 days after notice of the action of the County Board is sent, whichever is later
October 1	Date on which property tax payments first become due (not delinquent until March 1 of the following year)
February 28	Last date to pay prior year’s property taxes before they become delinquent and subject to penalty and interest
March 1	Unpaid taxes for prior year become delinquent

Tennessee Department of Revenue Rescinds Notice Regarding Compressor Fuel For Pipelines

The Tennessee Department of Revenue has rescinded Notice 12-19, which indicated that the Department was going to impose sales tax on compressor fuel that propels natural gas through pipelines in the state. Notice 13-03 issued on April 18, 2013 indicated that the State has reconsidered its position that tax should collect sales tax on compressor fuel "consumed" in the state. No details are provided regarding the Department's decision; however, Tennessee Supreme Court precedent plainly holds that such fuel is not taxable.

As part of the Notice, the Department has requested that interested parties submit comments and that meetings will be held with those interested parties to determine the future applicability of the sales tax to these transactions. Accordingly, interested parties should reach out to the Depatment to provide comments and participate in the discussion process.

Tennesse Tax Tribunal Bill Deferred to 2014

      Legislation (HB961/SB734) to establish an independent tax tribunal to resolve disputes between Tennessee taxpayers and the Tennessee Department of Revenue has been deferred to the 2014 legislative session by the House Government Operations Committee.

      The legislation, sponsored by Sen. Bo Watson and Rep. Jon Lundberg, was based in large part on the ABA Modal Tax Tribunal Act and would have established an independent tax resolution system similar to tax tribunals recently approved in Georgia, Illinois, and Maine. Alabama looks poised to enact a tax tribunal in its current legislative session.

       Under current law, tax disputes involving the Tennessee Department of Revenue, including assessments based on audits, can be reviewed by the Informal Hearing Office of the Department if the taxpayer appeals the assessment.

       Taxpayers that disagree with the Informal Hearing Office may proceed to Chancery Court, and taxpayers seeking a refund must similarly pursue denied refund claims in Chancery Court. 

       As originally introduced, the Tax Tribunal Act would have replaced the Chancery Court proceeding with a full-time Tax Tribunal, and appeals would have proceeded from the Tax Tribunal directly to Tennessee’s appellate courts.  The bill likely will be amended to offer the taxpayer the option to appear before the Tax Tribunal while preserving the avenue to file suit in Chancery Court.

       The Tax Tribunal is being championed by the National Federation of Independent Business. “The goal is to offer Tennessee taxpayers, small and large, an independent, less costly forum for appeals,” said Jim Brown, Tennessee State Director of the NFIB, noting as many as 35 states have similar appeals functions. “It’s important to our members and supporters to know they have received a fair, impartial hearing.”

        “We will continue to work closely with the taxpaying community and other interested parties to incorporate suggested improvements and address remaining concerns before presenting a revised proposal to the legislature in 2014.”

         No fiscal note was issued on the legislation.

Tennessee ALJ Grants Motion to Reconsider Non-Standard Valuation of Property

      A Tennessee Administrative Law Judge held on April 4, 2013 that Georgia Pacific's ("GaPac")

nonstandard valuation should be considered on appeal. In re Georgia Pacific Corrugated II, LLC (Shelby County, Apr. 4, 2013). In so ruling ALJ Brook Thompson, recognized that Tenn. Code Ann. 67-5-903(e) did not become effective until after GaPac filed its original 2011 property tax schedule. Thus, the amended law, which prevents taxpayers from filing amended schedules that introduce non-standard valuations for the first time as part of the amended return, was not applicable to GaPac for the 2011 year. Accordingly, GaPac should be allowed to present its nonstandard valuation as part of the administrative appeal.

     In this case, GaPac filed its original return in March 2011. In April 2011, the Tennessee General Assembly amended the Tennessee property tax law, stating that nonstandard valuations may not be raised for the first time as part of an amended return. Subsequent to this change in the law, GaPac amended its original March 2011 filing, asking for a nonstandard valuation. On appeal, the ALJ concluded that the amended law applied and prohibited the nonstandard valuation, dismissing the case.

     On a motion to reconsider, Judge Thompson reversed the order dismissing the case, concluding that Tenn. Code Ann. 67-5-903(e) (as amended) did not become effective until after the original schedule was filed. "In a case with similar facts, ALJ Loesch ruled that the timing of the amendment to the statute did not preclude the subsequent claim of non-standard valuation." See Armstrong Hardwood Flooring Company (Davidson County, Sept. 27, 2011).

     Practice Point: While this ruling could have limited significance for most taxpayers, based on the delay in hearings in Tennessee on property tax matters, taxpayers who failed to present a nonstandard valuation for the 2011 tax year, may still be able to support a nonstandard valuation even though a non-standard valuation was not filed with the original filing. Thank you Armstrong Hardwood and Georgia Pacific!