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Bill would shift tax appeals in property owners' favor

April 20, 2011

A bill expected to be heard Wednesday in the Indiana House would give property owners appealing the assessed value of their homes or buildings more clout in the fight.

Senate Bill 381 would allow those going before a property-tax appeals board to use the median assessed value for properties similar to theirs as evidence their assessments – and therefore their bills – are too high.

The bill also specifies that the onus would be on the assessor to disprove the taxpayer, rather than vice versa.

Those pushing for the bill say it will help ensure taxpayers get a fair shot at making their case without relying on pricey property appraisals. But some county assessors and local-government advocates fear the bill could give taxpayers too much leeway to manipulate the appeals process – and add layers of work for assessors’ to disprove them.

Under the current system, if taxpayers can’t work out their appeals with the assessor’s office, they go to the county’s Property Tax Assessment Board of Appeals for a ruling. According to the Department of Local Government Finance, property owners can use appraisals, sales data for similar properties, purchase offers and listing prices to make their case.

Unless the assessment has increased by more than 5 percent, the burden of proof falls on the taxpayer to disprove the assessment, which is based on home sales in the neighborhood.

The new law states that by presenting comparable properties’ assessed values, the taxpayer “prevails unless the assessor rebuts the taxpayer’s evidence with alternative evidence of comparable properties.”

“Some (assessors) across the state will dismiss a taxpayer out of hand,” said Rep. Bill Friend, R-Macy, the bills’ House sponsor. “We want to make sure taxpayers have full rights to take care of business if they think there’s an incongruity. We’re just trying to make sure they have the tools they need to make their case and be accurate.”

But some say such tools could be too strong.

For instance, if a taxpayer has a home that’s the highest in value in its neighborhood, that homeowner could find a few others that are similar in size and materials but are assessed at lower values. An assessor would have to use the median value of those lower-valued homes unless he or she can find other comparable properties with higher values.

“The taxpayer is going to pick those properties that give him the best advantage, which would probably not be reflective of market value,” said Stacey O’Day, an assessor in Allen County who has raised concerns about the bill. “Whatever the taxpayer brings in as evidence, we’d have to use the median they provide, period.”

The task of disproving taxpayers could become a time-consuming one, some say.

That’s because to determine a home’s assessed value, assessors don’t scrutinize individual properties. They look at the prices of homes that have sold in an area and estimate assessed values of homes in that area based on the sales data.

Counties such as Marion have resources to research properties whose assessments are in dispute and do so as a matter of course when the process reaches the appeals board. But for others, digging up such information would be an extra process they can ill afford.

“They would have to have staff going through sales disclosure forms,” said Andrew Berger, legislative director for the Association of Indiana Counties. “They don’t have staff to process appeals now.”

In fact, Marion County has a sizable backlog – currently about 29,000 appeals – that followed the property-tax fervor of 2007.

Marion County Assessor Joseph O’Connor said he’s not particularly concerned with having the burden of proof to disprove appellants.

But he does worry that those appealing their bills could make a case based on comparable homes’ assessed values, rather than sales data. That, he said, could make it tougher for the county to have homes’ assessments reflect how much they would sell for.

Despite the concerns, the bill is a bit of good news for some homeowners who have been frustrated with the current assessment system.

Russ Morgan, a northeast-side resident, is pushing to appeal both the way his home’s assessed value of just over $400,000 and others in his neighborhood were calculated.

While he doesn’t think the bill solves the systemic problems with the assessment process, he said it’s a step in the right direction.

In the current appeals process, “there’s no question that the onus of proof is on the homeowner,” Morgan said.

“(The bill) helps in the sense that it tells the assessor that the value is based on more than just his word.”

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