March 31st is the Deadline to Challenge Your Property Tax Valuation and This Year, the Rules Have Changed
The March 31 deadline to file property tax challenges rapidly approaches. This is the first cycle after Ohio enacted fundamental property tax reform. House Bill 126 now restricts the school districts’ ability to challenge property tax values for most taxpayers. But for the remaining taxpayers subject to these challenges, they can expect contentious tax hearings.
Under the old law, both taxpayers and school districts had broad authority to file property valuations complaints (and counter-complaints) at the county Board of Revision (BOR). The new law severely restricts the school district’s rights to file these complaints, while the taxpayers’ ability to file complaints remains unchanged.
Under the old law, both taxpayers and school districts had broad authority to file appeals of BOR decisions to the Ohio Board of Tax Appeals (BTA). Now, only taxpayers can appeal adverse decisions.
Under the old law, taxpayers and school districts could settle these property tax disputes by multiple means, including by “private pay” settlement agreements. These types of settlements are now outlawed.
Board of Revision (BOR) Complaints and Counter-Complaints:
New Law Limits Governmental Property Tax Challenges
House Bill 126 limits the filing of BOR complaints by school districts (and other governmental entities) to instances where:
(1) The property was sold in a recent arm’s length transaction (this ends school district complaints based on mortgages, contentions of under-valuation, and seemingly “drop and swap” transactions”),
(2) The recent sales price is both at least 10% and $500,000 (indexed for inflation annually) more than the County Auditor’s valuation, and
(3) The school district first adopts a resolution authorizing the complaint.
Seven-Day Notice of Governmental Resolution
As noted in part (3) above, before filing a BOR complaint, a school district must pass a resolution authorizing the complaint. At least seven days before adopting such a resolution, a notice of the pending resolution must be sent to the property owner. This gives the targeted property owners an additional opportunity to argue against a property tax increase at a school board meeting even before the school district files a BOR complaint.
The New Law Makes It Harder for a School District to File a Counter-Complaint
When a taxpayer files a BOR complaint:
(1) The school board will no longer be sent an official notice from the BOR (but in response, some BORs are now posting all complaints online).
(2) The sending of the official notice used to trigger a 30-day period for the school board to file a counter-complaint. That 30-day notice period now begins when the initial complaint is filed, even if the school district never learns of the taxpayer’s complaint.
The BOR will still send official notices to taxpayers if the initial complaint is filed by the school district. So, if a school district files a BOR complaint, the taxpayer will receive multiple notices. But if the taxpayer files the complaint, the school board will not receive any notice.
New Law Speeds the BOR Decision Process or Mandates a Dismissal
House Bill 126 limits the time for BORs to decide these property tax complaints to one year. If this is not done, the challenge must be dismissed. Prior law had no mechanism to deal with a late decision.
Many school districts are unhappy about this because the new law contains no provisions requiring the BOR to hold a hearing within a year. So potentially a BOR could sit on a school district’s complaint for over a year, at which time the case will simply be dismissed; and the school district would have no right to appeal (see below).
Board of Tax Appeals (BTA) Appeals:
School Boards Can No Longer Appeal BOR Decisions
The new law takes away a school district’s standing to appeal any BOR decision to the BTA. So, the school district’s only chance to initiate a property tax challenge is now at the BOR. Because of this, BOR proceedings will become more complex and contentious.
Taxpayers still have the right to appeal an unfavorable decision to the BTA. (Taxpayers also maintain the alternative right to file these appeals at the local common pleas court.)
When deciding whether to appeal, the taxpayer should consider its strategy because by doing so, the school district will likely be able to participate in the appeal. This could include the school district issuing subpoenas and making extensive discovery requests.
School districts around the State have already filed court challenges to this new restriction against BTA appeals. So far, the new law has been upheld. But school districts are now appealing those decisions.
Potential Settlements:
New Law Eliminates “Private Pay” Settlement Agreements
Historically, private pay settlements have been a valuable tool for taxpayers and school districts to resolve these cases. In so doing, school districts would accept a monetary payment from taxpayers in lieu of a change in the property valuations. These direct payment settlements are no longer allowed. This is the only provision in House Bill 126 that is detrimental to taxpayers.
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Because of the new House Bill 126, the property tax appeal process is the most favorable it has ever been for taxpayers. But your window to file a BOR complaint this year expires after March 31.
If you have any questions or would like to discuss the information provided in this Client Alert in more detail, please do not hesitate to contact us.
