In Part 1 of this article, I discussed the effect of Mont. Code Ann. § 15-7-139(6), which permits the Montana Department of Revenue to estimate property value for property tax purposes if the taxpayer will not permit a property inspection. I also addressed § 15-7-139(7) which bars the county and state tax appeal boards from reducing assessed property value on appeal if the taxpayer refuses to permit a property inspection.
Despite these statutes that pose significant hurdles to a taxpayer that will not permit a property inspection, the Montana Tax Appeal Board recently provided a limited workaround that a taxpayer who does not want to permit an inspection may consider.
The Montana Tax Appeal Board recently construed Mont. Code Ann. § 15-7-139 favorably to the landowner who refused to permit an inspection. In Kozimer v. Department of Revenue[1], the taxpayer refused to permit the Department of Revenue assessor into his townhome even after the taxpayer had appealed the property value. The Department argued and the County Tax Appeal Board agreed that the taxpayer was therefore not entitled to a reduction in value on appeal under Mont. Code Ann. § 15-7-139(7) which bars the Boards from reducing value if the landowner refuses inspection.
However, the Board ruled that the statute only applied to entry onto land, not entry into the townhome building. The Board stated:
- Finally, the law states, “on the land,” not inside the building. The law was written at a time when the DOR was being denied both types of inspections. Until and unless the Montana Legislature expands the law to include inside inspection, we will continue to consider disputes on a case-by-case basis where the facts surrounding inspection and the method of valuation are in dispute.
Thus, the Montana Tax Appeal Board narrowly construed the statute to apply only to land, which the Department assessor had access to, and not inside of buildings.
Practice Point No. 1: While the taxpayer won the battle over not allowing Department assessors into his townhome, the taxpayer ultimately lost the war. The Board sustained the Department’s value other than for correcting errors in the property tax record card that the Department acknowledged. The Board observed, “Had the Taxpayer allowed internal inspection, this whole matter could have been corrected early on, and there may not have been the need for both tax appeal hearings.”[2]
Practice Point No. 2: When a taxpayer challenges the value of his or her property, typically via a Request for Informal Review (Form AB-26), it is the Montana Department of Revenue’s typical practice to personally visit the property. The taxpayer should either be prepared to work with the Department on a property inspection or take the risk of not allowing the inspection, which at its worst results in the Department estimating a value and the taxpayer being barred from challenging the value on appeal or at its best having the Boards remain inclined to accept the Department of Revenue’s value.
Taxpayers with property tax disputes are encouraged to contact Jared Le Fevre to discuss property tax appeals and valuations before taking the property tax appeal to the tax appeal boards.
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] Case No: PT-2020-36 (Dec. 30, 2020).
[2] Id. at 8.