March 20, 2020

Kentucky Taxpayers Shouldn’t Ignore Property Tax Valuations During Market Unrest

Owners of various types of commercial and industrial real estate are feeling the effects of an uncertain market. During a period of declining revenue and increasing expenses, property owners should carefully consider ways to improve the bottom line. Since property taxes are one of the largest expenses of owning property, taxpayers should evaluate ways to reduce their tax burden.

Owners of property in Kentucky will soon have the opportunity to do exactly that. Properties in the Bluegrass are assessed every year as of January 1 by the county Property Valuation Administrator (PVA). Each year in early April, taxpayers receive a notice of assessment from the local PVA informing the taxpayer of the fair cash value that the PVA will apply. When that notice is received, it is essential that taxpayers turn to it immediately, because a series of short, mandatory deadlines will soon be triggered. Missing these deadlines means that a taxpayer cannot challenge that tax assessment.

Kentucky’s Short Appeal Window

Before formally filing a property tax appeal, taxpayers have an informal opportunity to resolve the dispute through a mandatory conference with the local PVA. This conference must occur during the so-called Open Inspection Period, which begins the first Monday in May and continues for 13 days (excluding Sundays) thereafter. For the 2020 tax year, the Open Inspection Period begins Monday, May 4, and ends May 18, 2020, though some counties extend the deadline to file an appeal by either opening the Period early or extending the end of the Period.

This two-week Period is crucial, because the failure to confer with the PVA during this Period precludes any appeals for that tax year. The conference must usually be held in person, though many PVAs allow for, or even require, telephonic or online conferences. If a taxpayer provides compelling information or data to support its position, the PVA may agree to a reduction, but often an appeal is necessary.

Importantly, the property owner must file an appeal with the local Board of Assessment Appeals (BAA) no later than one (1) day after the close of the Open Inspection Period, though some larger counties will occasionally extend the deadline to appeal. But the failure to file an appeal before the deadline will preclude any further appeals for that year.

Stages of a Formal Appeal

The hearing before the BAA is still informal, though more formal than a PVA conference. Before the BAA, taxpayers have the opportunity to present information and data supporting a reduction in fair cash value, and the PVA can defend its fair cash value determination.

After the BAA issues its decision, a party aggrieved by the BAA’s decision may appeal the decision to the Kentucky Claims Commission, the successor to the Kentucky Board of Tax Appeals. Cases before the Commission are formal, and parties can serve discovery, retain experts, and make substantive and procedural filings leading to a full evidentiary hearing. Appeals can still be resolved informally once they have reached this stage, including through mediation.

Taxpayer Considerations

When selecting representation for a property tax appeal, taxpayers should consider not just the representatives’ experience with property tax litigation, but also their knowledge of appraisal and valuation methodology and relationships with knowledgeable appraisers. And because property tax appeals are data intensive by their nature, representatives being considered should have access to high quality property databases and market surveys, so the risks and opportunities of an appeal can be fully evaluated.

Because of Kentucky’s short appeal window, it is important that taxpayers not set aside their notices of assessment, even as the market continues to reel. Instead, a focus on the fundamentals, like reducing property tax exposure, can help a property stay afloat and position itself for success when the hard times pass.

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