Tax appeals to open flood of business: Lawyers, consultants getting ready

May 19, 2008

Tax attorney Sandy Bickle looked forward this summer to taking her first two-week vacation since 1976. But the latest property reassessment and the tax bills to follow are expected to generate a slew of appeals, prompting Bickle to rethink her plans.

"I'll probably take one, but it won't be two weeks," lamented Bickle, who serves in an of-counsel capacity at Ice Miller LLP. "I expect to be very busy."

She's not alone. Tax lawyers, consultants and appraisers all likely will experience a substantial boost in business this summer generated mostly by commercial property owners challenging new market values.

Indiana Gov. Mitch Daniels last year ordered the reassessment, saying he believes Marion County's nine townships historically have done a poor job gauging the market value of commercial and industrial properties, leading their owners to pay unfairly low property taxes.

The Indiana Department of Local Government Finance approved the results of the county reassessment in late March, which are available on the county assessor's Web site. But tax bills acting as the official notice of assessment won't be mailed until at least June 20, Marion County Assessor Greg Bowes said. Property owners then have 45 days to appeal.

So while scores of taxpayers are contemplating an appeal now, the actual number that follows through won't be known until later. Before the governor ordered reassessment last July, the county assessor's office quickly racked up 8,000 appeals, after tax bills spiked 35 percent, Bowes said.

And in 2003, the first year the state began assessing properties using market value rather than assessed value, property owners filed nearly 11,000 appeals. The amount this time should top that, Bowes said.

Ready and waiting

The local law firm of Thrasher Buschmann Griffith & Voelkel PC already has nearly 100 appeals ready for filing once tax bills are received and its clients give final approval.

Still, partner and real estate lawyer Philip Thrasher said most of his work would involve determining whether an appeal is warranted rather than actually filing one.

"Right now, we're pretty busy, but not too busy for new work," he said. "There will be a flurry of phone calls after [the tax bills] come out."

The latest assessment values the county's commercial and industrial properties at $20.4 billion, with $1.4 billion of the properties owned by tax-exempt organizations. The $20.4 billion total represents a 41-percent increase from the $14.4 billion total listed for 2005.

After widespread problems surfaced with assessments released last year, Daniels froze all property tax bills statewide and ordered every Marion County property reassessed.

In his reassessment order, Daniels noted that values for nearly three-fourths of Marion County's commercial and industrial properties did not change during a six-year span.

State legislators ordered a "trending" factor to account for inflation during that time, which added to the higher assessments. On top of that, repealing the inventory tax and reductions in property tax replacement and homestead credits helped cause tax rates to rise.

Jim Beatty, a founding partner of the local Landman & Beatty LLP who has practiced tax law since the mid 1960s, said he's never seen assessments and tax rates increase in the same year. The confusion is creating plenty of work for the firm's tax practice.

"We're already swamped," he said. "It's a very stressful time for those of us in the business, but that's what we do."

How to appeal

Wading through the appeals process can be as simple as calling a firm to represent your case, or going online to handle it alone. Yet, pursuing an appeal all the way to the Indiana Tax Court can be costly and time-consuming.

Taxpayers can challenge the assessed value of their property but not other components of a tax bill, such as the tax rate. But Beatty said the tax bills are critical to an appeal, because a high tax rate typically can decrease the value of the property.

A call to an assessor, who is a township official in most cases, is a good place to begin. Taxpayers also can contact their county auditor if they're unsure where to start, and ask when the deadline is for appeals and request a copy of their property tax card.

If you think an appeal is warranted, obtain a copy of Form 130, "Petition to the Property Tax Assessment Board of Appeals for Review of Assessment." The form applies to all grievances related to the current year's assessment.

After filing the form, you will be granted a conference with the assessor within 30 days. The next step is a hearing before the county's property tax assessment board of appeals.

If a settlement still cannot be reached, the appeal proceeds to the Indiana Board of Tax Review and, if necessary, to the Indiana Tax Court. At that level, it's beneficial to have legal representation, Thrasher said. Only a small percentage of cases make it that far, however.

"By then, you're into multiple years and a lot of time," he said. "Usually, they start making compromise offers. They try to whittle it down to the point where it's not worth taking it all the way up. It becomes a settlement negotiation, almost."

But remember, you run the risk of uncovering errors that cost you more money. Taxpayers often stumble across mistakes that actually raise their assessment and tax bill.

At any rate, that's a gamble scores of taxpayers seem willing to take.

Kevin Chestnut, director of property tax services at the local tax and accounting group of New York-based Thomson Reuters, has been consulting with scads of clients questioning their assessments.

"I've been working [12 hours] the last three weeks straight every day, including weekends," he said. "It's going to stay that way, I think."
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