Bill would shift burden of proof in some valuation appeals

The Revenue Committee heard testimony March 1 on a bill that would shift the burden of proof from property owners to county boards in valuation appeals heard by an independent commission.

The Tax Equalization and Review Commission (TERC) hears property owners’ appeals of county board of equalization decisions regarding taxation, valuation or assessment of property and the annual equalization of assessed value.

Currently, a property owner must present evidence to the commission that the valuation of their property is wrong. Under LB385, sponsored by Omaha Sen. Brett Lindstrom, if the assessed value has increased by more than 5 percent from the previous year, the county board of equalization would be required to prove, by a preponderance of evidence, that the assessed value reflects the property’s actual value.

The change would not apply if the assessed value subject to appeal is based on improvements to the property made in the prior tax year.

The bill also would expand the list of people who may appeal to the TERC on a property owner’s behalf. Currently the property owner, a legally designated trustee or an officer, director or full-time employee of a legal entity owning the property may appeal. Under LB385, a person with a power of attorney or durable power of attorney, a trustee of an estate or a person or entity who is contracted by the taxpayer could appeal.

Lindstrom said the proposed changes would help taxpayers, businesses and landowners who own more than one parcel of land and would allow non-lawyers to file a TERC appeal on behalf of the property owners they represent.

“The changes proposed in LB385 help our taxpayers navigate the property valuation appeals system in a more beneficial and friendly manner,” he said.

Vanessa Silke, speaking on behalf of the Nebraska Association of Commercial Property Owners, testified in support of the bill. She said it would make simple changes to the appeal process that would make it fairer for taxpayers, especially in cases where assessed values increase significantly from year to year.

“As it stands right now, property owners that file an appeal have the entire burden of proof to show that this valuation is incorrect,” Silke said. “When it’s increased by this much, we do think that the county board should come and meet that burden.”

Testifying in opposition to the bill was Shakil Malik, speaking on behalf of the Nebraska County Attorneys Association. A deputy Douglas County attorney who handles the county’s TERC appeals and subsequent court actions, Malik said the change could create a situation in which the burden of proof lies on the owner for one year’s appeal and on the county for the next year’s appeal. This could disrupt the commission’s current practice of holding consolidated hearings, in which a property owner’s appeals of valuation for multiple years are heard at once.

“It’s going to get really messy,” he said. “In execution, it could really be a nightmare.”

Further, Malik said, the bill would allow contracted property tax representatives to file TERC appeals on behalf of property owners. Those representatives are not licensed, bound by a code of ethics or even authorized to practice law, he said.

Tom Placzek, Platte County Assessor, also testified in opposition. He said the current appeal system is working and that changing it could lead to many more appeals to the TERC.

“This change presumes the assessor is wrong,” Placzek said, “when in fact they are the most qualified to set the value, versus a homeowner who is motivated solely by personal gain and most of the time is unaware of the current market values.”

Rob Hotz, one of three TERC commissioners, provided neutral testimony on the bill. He said the list of those who may sign or execute a TERC appeal is already lengthy and includes anyone authorized by law to represent a property owner. The bill would add to that list contracted representatives who have no fiduciary duty to their clients. Additionally, Hotz said, shifting the burden of proof would upend existing law.

“There is longstanding settled law on presumptions in favor of assessors, presumptions in favor of county boards of equalization,” he said. “This bill would really tip … the burden of persuasion significantly.”

The committee took no immediate action on the bill.