The Montana Tax Appeal Board is the final administrative arbiter of property tax values in Montana. The Montana Tax Appeal Board hears property tax appeals coming from county tax appeal boards, among its other duties.
In Department of Revenue v. Leland, Case No. PT-2020-5 (Sept. 2020), the Montana Tax Appeal Board recently heard a property tax appeal involving a landlocked parcel of land where there was no guaranteed legal land access. The Montana Department of Revenue had reduced the property value by 21 percent due to the lack of legal access. The county tax appeal board had ruled in favor of the taxpayer and valued the land at the minimal amount of $1,122. The Montana Department of Revenue appealed the low value to the Montana Tax Appeal Board.
In analyzing the case, the Montana Tax Appeal Board set out rules of procedure and legal presumptions that guide appeals of property tax values:
- “All taxable property must be assessed at 100 percent of its market value except as otherwise provided.” Code Ann. § 15-8-111(1). “All taxable property must be assessed at 100 percent of its market value except as otherwise provided.” Mont. Code Ann. § 15-8-111(1). [1]
- “Market value is the value at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Mont. Code Ann. § 15- 8-111(2)(a).[2]
- “As a general rule, … the appraisal of the DOR is presumed to be correct, and the taxpayer must overcome this presumption. The Department of Revenue should, on the other hand, bear a burden of providing documented evidence to support its assessed values.” Carey v. DOR, 2018 Mont. Tax Bd. PT-2018-9.[3]
The Montana Tax Appeal Board rejected the Department of Revenue’s assessed value on grounds that it did not adequately provide a reduction in value for lack of legal access to the land. The Board also rejected the taxpayer’s proposed value on grounds that the value was too low, which value was computed under the property tax class of nonqualified agricultural property. The Board noted that, “That value seems artificially below market value, considering he [the taxpayer] paid over $8,000 for the land four decades ago, and other exhibits show sales of adjoining land considerably higher value than $1,122.”[4] It is curious that the Board rejected non-qualified agricultural status on grounds of low value rather than providing any analysis why or why not the nonqualified agricultural status legal criteria were not met. It begs the question of why non-qualified agricultural status wasn’t decided on its merits.
The Board ultimately adopted an average amount per acre of what a neighboring landowner had paid for surrounding land.
Leland is instructive of how a property tax value appeal should be undertaken and the curious rules that may be handed down during a hearing.
Please contact Jared Le Fevre if you have questions about Montana property tax appeals.
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] State of Montana, Department of Revenue v. Leland, 2020 WL 5530230, at 3.
[2] Id.
[3] Id.
[4] Id. at 4.