The Montana Department of Revenue is responsible for assessing the value of property in Montana for property tax purposes. The Department of Revenue may use various methods to determine property value, including mass appraisal for residential and commercial properties which often relies on data of many properties to determine value. But in the course of the Department’s assessment duties, it may be helpful or necessary for the Department of Revenue to inspect the individual property subject to property tax.
Montana property tax statutes set forth a notice method by which the Montana Department of Revenue may give a taxpayer notice of the Department’s request to inspect property. See Mont. Code Ann. § 15-7-139.
However, if the property owner refuses to permit the Department of Revenue to inspect the property, the Department is empowered to estimate the property value:
(6) If a landowner or the landowner’s agent prevents a person qualified under subsection (1) from entering land to appraise or audit property or fails or refuses to establish a date and time for entering the land pursuant to subsection (5), the department shall estimate the value of the real and personal property located on the land.[1]
Moreover, if the taxpayer refuses to permit the inspection and does not provide a qualified appraisal, the tax appeal boards, which hear appeals of property tax assessments, may not reduce the property value on appeal.[2]
The taxpayer is then left with a difficult choice if he or she does not want the Department of Revenue to enter on the property. The taxpayer can permit the inspection or risk two consequences: (1) the Department issuing an assessment based only on an estimate, which may be higher than actual market value, and (2) the taxpayer being barred from challenging market value on appeal unless the taxpayer provides a certified appraisal. In my experience, most taxpayers do not want to undertake the cost of a certified appraisal other than for high value commercial or industrial property.
In Part 2 of this article, I will examine a recent case from the Montana Tax Appeal Board which ruled in favor of a taxpayer who did not permit the Montana Department of Revenue to enter his townhome. The Board thus opened the door a crack to a taxpayer who does not want Department of Revenue assessors in his or her property.
Taxpayers with property tax appeals are encouraged to contact Jared Le Fevre to discuss the appeal, including whether the Department of Revenue will wish to inspect the property.
About the author: 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] Mont. Code Ann. § 15-7-139(6).
[2] Mont. Code Ann. § 15-7-139(7).