Part 1 of this article discussed the recent Montana Supreme Court case of K & J Investments, LLC v. Flathead Cty. Bd. of Cty. Commissioners.[1] In the case, the Montana Supreme Court ruled that the Montana county commissioners refund statute, Mont. Code Ann. § 15-16-603(a)(1), did not require the county assessors to correct errors in valuation of property for Montana property tax purposes. Rather, the assessment of property falls within the purview of the Montana Department of Revenue, whereas the county (through the county treasurer) is responsible for the collection of property tax. The commissioners refund statute may be used to correct errors of erroneous or illegal tax collection, but not tax assessment.
So, what is a taxpayer to do if he or she believes the assessed value of the taxpayer’s property is incorrect or erroneous? Typically, if the taxpayer disagrees with the value of property, there is a statutory process for challenging property tax values.[2]
However, in K & J Investments, the Montana Department of Revenue refused to retroactively lower the assessed value of the property in question because the property was no longer owned by the taxpayer who owed the property at the time of the original assessment. Thus, the current taxpayer was left without a process for challenging the tax due to error of property tax assessment. The taxpayer was too late to challenge the Department of Revenue’s previously assessed value and the taxpayer didn’t have grounds to argue error in collection of tax under the commissioner’s refund statute. Therefore, the taxpayer was stuck with paying the tax on the overvalued property.
Practice Point: Taxpayers may appeal property tax values determined by the Department of Revenue. However, the taxpayer must be mindful of tax appeal deadlines. If errors in value are discovered too late, the normal course of valuation appeal will be time barred. In the case of
K & J Investments, the taxpayer was not the owner of the property at the time it paid the taxes due to the unique process of paying taxes under the Montana tax deed statutes, so the taxpayer may not have had knowledge of the property valuation issues that would have prompted the taxpayer to timely appeal values. This is an odd quirk of the tax deed process. Most taxpayers should be aware of valuation issues so that they can timely appeal those values.
If you have concerns about property taxation of Montana property, please contact Jared Le Fevre to discuss what grounds you may have to challenge the property taxation.
Jared M. Le Fevre is a tax attorney and partner in the Tax, Trusts and Estates Practice Group of Crowley Fleck PLLP. Mr. Le Fevre represents taxpayers before the IRS, IRS Independent Office of Appeals, Tax Court, Federal District Court and state tax agencies throughout Montana, Wyoming, North Dakota, Idaho, and Utah. Mr. Le Fevre is involved in federal and state and local tax audits, appeals, and tax resolution throughout these western states. Mr. Le Fevre also advises clients on the tax effects of business and real estate transactions.
[1] K & J Investments, LLC v. Flathead Cty. Bd. of Cty. Commissioners, 2020 MT 277, 2020 WL 6481683.
[2] See, e.g., Mont. Code Ann. § 15-7-102(3) (the taxpayer may request informal review of the Montana Department of Revenue to discuss or challenge tax assessments); § 15-6-101 (the taxpayer may appeal property tax assessments to a county tax appeal board); § 15-8-601 (the Montana Department of Revenue may reassess erroneously assessed property for up to 10 years).