KAO LAW ASSOCIATES ATTORNEYS AT LAW WILLIAM CORNELL ARCHBOLD, JR* JOSEPH PATRICK O'BRIEN** JOHN YANOSHAK CHRISTOPHER H. PEIFER*** OF COUNSEL FRED KREPPEL GLEN MADERE EDWARD KASSAB 1927-2010 *ALSO MEMBER DC BAR **LLM TAXATION *** ALSO MEMBER NJ BAR FORMER PA HOUSE SPEAKER MATTHEW J. RYAN 1932-2003 2013 APPEAL DATES APPROACHING! ANATOMY OF A REAL ESTATE TAX ASSESSMENT APPEAL IN PENNSYLVANIA GENERAL OBSERVATIONS ON THE PA REAL ESTATE TAX APPEAL PROCESS AS OF SPRING 2012 1 DUE DATES All real estate tax assessment appeals in Pennsylvania are initiated in the County Board of Assessment Appeals in the County where the appealed property is situated. (In some counties the Board may have a slightly different name). All annual appeals (excluding Allegheny County) are appeals of the following tax year. Appeals must be filed on September 1 of the year preceding the tax year appealed except for counties which can elect an appeal date anywhere between August 1 and September 1. 2 For example, Delaware, Chester, Montgomery and Bucks County have elected August 1 while Berks County has elected August 15th as a filing date. 1 For a more comprehensive review of real estate tax assessment Law in Pennsylvania see the FAQ s on our website www.kaolawassociates.com 2 The Philadelphia filing date is the First Monday of October preceding the tax year e.g. October 4, 2012 for 2013. The appeal date for Allegheny County is April 1 and is of the current tax year, e.g. April 1, 2012, for the 2013 year.
Montgomery County, in May 2012 elected to use the August 1, 2012 appeal date for 2013. An appeal filed on August 1, 2012, August 15, 2012 or September 1, 2012 in these counties is an appeal of the January 1, 2013 county and municipality (city, borough, township) and the July 1, 2013-June 30, 2014 school fiscal year tax. Appeals must be actually received by the Board on or before the due date; the mailing date does not do it. 3 However, if the due date falls on a Saturday, Sunday, or a Holiday, the next legal business day becomes the due date. FORMS Each Board has its own forms to be used for the Appeal. There are no standard state wide forms. Typically, the form asks for more information than may be available but it is best to complete it as thoroughly as possible. (Arguably, a letter identifying the assessment being appealed is the only statutory requirement.) Many counties have different residential and commercial forms and many have a website with its own rules and forms published there. BOARD FILING FEE Some counties impose a filing fee, just to file an assessment appeal to the Board of Assessment Appeals, e.g., Chester County: $25.00 for residential and $50.00 for commercial property; Delaware County: $50.00 residential, $100.00 commercial; and Montgomery County $50 -$100 residential and $200 commercial. (Many attorneys question the legality of such fees and also any distinction between types of property. This is being litigated.) 3 Some counties will accept postmarked dates but this is questionable; and there is no authority to extend the filing date. 2
SCHEDULING OF BOARD HEARINGS Most annual appeals are scheduled for Board hearings in August, September or October but no sooner than 10 days following the filing and they are held in the year preceding the tax year appealed. 4 Annual Board of Assessment Appeals Hearings have to be completed and acted upon by the Board by October 31 of the year preceding the tax year. 5 The tax roll of the county as adjusted by any appeal changes closes on the November 15th preceding the tax year, so any changes due to Board appeal must be mailed before then. INTERIM APPEALS An exception to the above is an interim appeal due to any improvement over $2500, new construction, or subdivision (with improvement), typically increasing an assessment immediately during the current year and effective as of the date in the notice date. (as compared to future effect of annual appeals) Stringent notice requirements must be met by the Board. The interim appeal date to the Board is 40 days from the date of that interim notice (not the effective date of the increase). BOARD OF ASSESSMENT APPEALS HEARING APPEARANCE: NECESSITY The taxpayer and/or his or her attorney must personally appear at the Board hearing (although some counties do permit an appeal, without personal appearance, by written waiver). The failure of either to appear can result in the appeal being deemed abandoned which means 4 Except Philadelphia and Allegheny Counties 5 Different rules apply for Philadelphia and Allegheny Counties and for counties undertaking a county wide reassessment 3
there is no right to appeal the Board s denial to the Court of Common Pleas of the County. There must first be a completed written appeal to the Board, a Board hearing attended by the taxpayer or representative, and a Board result even if there is a denial. ATTENDING THE HEARING Except in rare instances, it is better practice for the attorney to attend the Board hearings without the client attending. However, many circumstances are such that the clients availability may be helpful on an individual case by case basis. Practice varies as to whether the County Board of Assessment Solicitor and/or the School District and/the Municipality Solicitor, or all of them attend the Board hearings. BOARD HEARING FORMALITY AND LENGTH A few counties are very formal with swearing in of witnesses and almost court like procedures. Most are very informal. Most hearings last only a few minutes. EVIDENCE AT HEARING-APPRAISAL In a perfect world, where value is the issue, each real estate owner should have an appraiser with appraisal report available for the Board hearing (each county varies by the number of copies, and number of days in advance, etc.). In some instances a copy of a recent appraisal from a recent sale or refinance is sufficient while in others, the actual appearance of the appraiser to testify is necessary. There are however, many instances where past experience suggests that working earnestly to have an appraisal ready for a Board Hearing (which is usually scheduled 30-60 days after the appeal has been filed) is often difficult or impossible. Additionally, many Boards, as a matter of common practice, simply deny most appeals forcing the taxpayer to 4
appeal to court anyway. In some counties, the attendance of an owner making a persuasive argument may be helpful to persuade the Board, without an appraisal, using only relevant comparables or income and expense information from income properties. Also, even if one obtains an appraisal and is granted a Board reduction, either side (owner or any taxing district) still has the right to appeal the Board decision to the Court of Common Pleas, either because the owner thinks there wasn t a sufficient reduction, or because a taxing district (county, municipality or school) concludes that the reduction was unjustified. In some counties, Board s ignore the case law holdings that a taxpayer may only be represented by an attorney licensed in Pennsylvania but then will often make a minor under adjustment to the assessment appealed perhaps making the callous determination that the accountant tax consultant or other non-lawyer attempting to represent the taxpayer before the Board will accept or recommend a minor, less than justified, reduction rather than admit to the client that the non-lawyer will not be able to file a de novo appeal of the Board s decision to the County Court of Common Pleas. EFFECTIVE DATE OF BOARD DECISION A change in assessment resulting from an annual appeal (hopefully a reduction but theoretically the Board could increase the assessment) at the Board level, whether or not appealed to court, is still effective immediately for the following tax year (January 1 for County and Municipality and July 1 for School) and will be reflected on the tax bill of the tax year following the Board Hearing even if appealed to court by a taxing district or the owner. If there is a Board denial, the old assessment remains and appears on subsequent tax bills until a 5
reduction is ordered by Court; that later change is then retroactive to the beginning of the original tax year appealed. A pending appeal in the Court of Common Pleas acts as an appeal of subsequent tax years without another, e.g. annual appeal to the Board. WHEN IS THE BOARD S RESULT ANNOUNCED? After the hearing before the Board (which could last from one minute to one hour depending on county), the appellant is told that the Board s decision will be mailed and it is not announced at the hearing (except in a few counties e.g. Dauphin and Cumberland counties). While some counties may mail Board hearing results before all the hearings are completed most counties wait until after October 31, and mail all of their hearing results at once on or before November 15, following the hearing. The Board notice is sent to the person who filed the appeal but if the attorney filed, it is mailed to the attorney. In either event, the owner should notify the attorney if the result is sent to the owner. It is good practice to inquire to be certain the result was correctly sent. CAN THE BOARD S DECISION BE APPEALED? As indicated, either side, taxpayer or taxing district(s), can appeal the result of the Board hearing to Court. A petition to appeal the Board s decision to court must be filed within 30 days from the date printed on the Board s decision. If the taxpayer appeals, the Petition must not only be filed in the Court of Common Pleas of the County but also served by certified mail on the various taxing districts. (see local Court rules) There typically is a several hundred dollar filing fee paid to the Prothonotary or similar County Office for the Petition to the Court in each County. Generally one Petition must be filed for each property parcel (one filing fee per 6
Petition). (Class Actions can differ). In some counties where there are multiple properties on the same appealed site owned by one owner, a single Petition may be permitted but generally not. The Petition requires the written Verification (like an affidavit) by the owner, and a copy of the appealed Board decision. WHAT HAPPENS AFTER THE APPEAL TO COURT? Once the appeal Petition is filed to Court of Common Pleas of the County, typically in the beginning of the December preceding the tax year being appealed,(but within 30 days of the Board Result Notice) shortly thereafter, the taxing districts direct their lawyers to file an Answer or Entry of Appearance, meaning they are actively involved in the case. Where the taxing district has filed an appeal to Court of the Boards decision, the owner is given notice, and the owner of the property has his or her attorney file an Answer and or Entry of Appearance depending on county practice. Once a Board decision is appealed to the Court of Common Pleas, County practice varies substantially. Only an attorney licensed in PA may represent an owner. EFFECTIVE DATE/REFUNDS/CREDITS/INTEREST If the Board did not make a reduction, the original assessment remains on the county tax rolls and continues to show up on the county, municipality and school district tax bills until the case is resolved. Once a tax assessment case is resolved, if there is a reduction it dates back to the first January of the original tax year appealed (July 1 for School) and usually results in a refund to the owner (or a refund from one or two districts and a credit from the other). Case law 7
and statutory changes require payment of interest on refunds from the date of overpayment, but this is often negotiated away as part of the settlement and rarely agreed unless there is a Court decision. ASSESSMENT INCREASE If there was an assessment reduction at the Board, and/or upon appeal to Court the taxing district obtained an increase in assessment, (or, essentially, rolled back or negotiated some of the reduction granted at the Board level) this likewise dates back to the first day of the tax year(s) pending. There is no interest due on an increased assessment since the increase is a new assessment and interest does not start until it is assessed. DO I HAVE TO PAY MY TAXES WHILE UNDER APPEAL? All taxes must be paid at the current assessment until the appeal is settled or resolved. Non payment results in the 10% late payment penalty plus interest and could result in a delinquency and Upset/Judicial sale of the property by the County Tax Claim Bureau for a delinquency of more than two years. PAYMENT UNDER PROTEST-ESCROW BY TAXING DISTRICT While taxes must be paid pending an appeal to avoid delinquency and possible judicial sale, the Taxpayer should pay each tax with the statement UNDER APPEAL IN COURT CCP # - PAID UNDER PROTEST-PLEASE ESCROW 25% on the check and in a separate letter, identifying the property and the folio/parcel number. The taxing district receiving this notice supposed to escrow 25% and not use it pending resolution. Not all taxing districts follow this directive. 8
WHAT HAPPENS IF THE APPEAL CARRIES OVER INTO SEVERAL TAX YEARS? Once an appeal is filed in the Court of Common Pleas, whether an annual appeal or interim appeal, this acts as a continuing appeal of each subsequent tax year until resolved in the County Court so it is unnecessary to file a new Board Appeal each year. This does not prevent a separate strategic subsequent year appeal to the Board, but it is not common. COUNTY PROCEDURES: DELAWARE COUNTY In Delaware County, once the Petition has been filed to Court and appearances entered, there is a Call of the List generally held in the early Spring following this filing of the appeal at which time tax cases involving a dispute of less than $50,000 in real estate taxes for a particular year (based upon the disputed value difference times the assessment ratio times the total millage) are assigned to arbitration before an arbitration panel of three lawyers in the county. 6 Under the Delaware County rule, for arbitrated cases, both taxing district and tax payer are supposed to exchange their appraisals simultaneously before the hearing date. (For income properties, three (3) years operating statements [income and expense] and a current rent roll and sample lease must be supplied to the taxing district). In practice, both sides often agree to get informal numbers or, if one side has an appraisal, it will be shared with the other side, usually the taxing district, to determine if an amicable resolution can be reached without the taxing districts, or the taxpayer, undertaking the cost of a full hearing ready appraisal (or update of an 9
existing one including the hearing attendance fee of the expert appraisers). This usually results in the first scheduled arbitration being continued because it is often difficult for the taxing district to obtain a negotiable number from its appraiser that quickly; and while there are sometimes, simply, scheduling conflicts, this is the most usual reason for continuing tax appeal arbitration hearings in Delaware County. Furthermore, often times, both parties might tentatively agree as to an assessment value but still need the formal approval of the owner and the taxing districts which often happens just before an arbitration is scheduled. If a tax appeal case is appealed from the Board to the Court, it is rare if it is resolved in less than 1-2 years. Furthermore, by the time a case is first assigned an arbitration date, the new Common Level Ratio for the tax year following the year appealed has been published or is generally known. The new CLR may be used to argue for a further reduction for the subsequent tax year(s). Appeals over the %50,000 arbitration threshold, or those involving novel legal issues, are assigned to a Judge and procedure differs. MONTGOMERY COUNTY Montgomery County is problematic because it is very difficult to get a court hearing once an appeal is filed to Court. (There is no arbitration in any county court except Delaware County.) As a general rule, you cannot get a case assigned to a pool to be assigned for a hearing before a judge, until all parties will stipulate that the case is ready. Another problem with Montgomery County is that it permits Discovery which, in general terms, means delay, interrogatories, depositions, etc. There is a Commonwealth Court decision Borough of Churchill, which has held that there is no Discovery in tax appeals unless it is specifically permitted by local rule of court but Montgomery County permits it. In most other counties the discovery is limited to an 6 See discussion Trial v. Arbitration See also Delaware County Local Rule 1301* 10
exchange of appraisals. This is not the case in Montgomery County, so that usually extensive interrogatories are issued by the taxing district which must first be answered. There is a tremendous case backlog of several years or more in Montgomery County before one may get a tax appeal case even listed for trial let alone scheduled for a hearing date. This is important because most cases tend to get settled once there is an actual date of trial. A 2-4 year lag is not uncommon. As a means of expediting an individual appeal, good procedure is to file an immediate Request for Production of the Taxing Districts Appraisal. After the taxpayers appraisal is ready and has been turned over to the School District a common technique is to file a request for agreement to file a Trial Praecipe. 7 Additionally, a Rule 212 Conference with the Judge should be requested. CHESTER COUNTY In Chester County there is no arbitration and the local Court rule requires that the taxpayer must provide its appraisal to the taxing authority within sixty (60) days after the filing of the Petition to Court; and there is no requirement as to mutual exchange of appraisals. Income and Expense and rent rolls of investment properties must be supplied by the taxpayer to the taxing districts. (Rule 500(c)(3)) This can work as a disadvantage because this means the taxpayer almost always has to undertake the cost of an appraisal report which eliminates the ability to save cost for the school district and the taxpayer but, depending upon the parties, it is pretty much the rule to be followed. If one fails to provide an appraisal to the county in 60 days, 7 President Judge s note: Local Rule 212.1*(d) Conferences - Members of the Bar are advised that the Board of Judges has agreed to discontinue the practice of ordering cases on the civil trial list where discovery has not been completed, and allowing for discovery to be ongoing. Delays in completing discovery may be addressed through traditional available mechanisms; court orders, with sanctions for failure to comply. - President Judge Joseph A. Smyth,February 1998. 11
a Motion is often filed by the Solicitor of the County Board of Assessment seeking to prevent any evidence to be offered from appraisal testimony. Here, the county solicitor is the primary attorney except in the larger cases where the school district attorney becomes involved. A case is usually on the judge s trial list less than six (6) months from the Petition being filed. Most cases are resolved in less than a year. BUCKS COUNTY Bucks County, which has an August 1, Board appeal date, is another county where it is difficult to have a case listed for trial. Discovery is generally allowed which means that it is difficult to get the parties to agree to list the case for trial. The longer the delay the less relevant any appraisal obtained early will be, and so typically parties postpone appraisals. Thus, discovery is drawn out over a long period of time. As a result, a 2-4 year delay is common. OTHER COUNTIES As indicated, practice varies. LAWYER S INVOLVEMENT It should also be mentioned that practice within the counties varies as far as the involvement of counsel is concerned. In some counties like Delaware County, the lead counsel is the school district solicitor (the school districts generally always have about 80% of the tax millage involved) through and including the trial of the case; the involvement of the county and municipality attorney is minimal except in very large cases. In other counties such as Montgomery County, the school district lawyer, the county lawyer, the county Board of Assessment lawyer and the municipality lawyer are all involved and while one would be 12
primarily dealing with the school district lawyer there is a greater involvement with all the other attorneys. In the other counties, particularly in the smaller counties, the county solicitor or Board of Assessment solicitor is the only attorney involved except in very large cases. SETTLEMENT If a settlement before trial is reached the parties lawyers sign a Joint Stipulation to a Court Order to the new assessment(s) and it is submitted to the Judge for approval. With 3-4 lawyers involved and a judge to sign after all of the lawyers have obtained client approval, this can take 6-12 weeks. Refunds take about 4-12 weeks from that date. TRIAL vs. ARBITRATION Except in Delaware County, tax appeal cases are generally handled like all other non-jury civil trial cases. In Delaware County, the matter is assigned first to arbitration with a date usually two (2) to four (4) months away and if not settled beforehand it is arbitrated in front of a three lawyer panel just as it would be tried in front of the judge. 8 That arbitration panel renders a decision the day of the arbitration and either side has 30 days to appeal that further for a non-jury trial in front of a judge. If the arbitration result is appealed by either side then it becomes de novo meaning that it is assigned to a judge and the judge hears it without giving any weight to the arbitration panel s decision. There is a filing fee of $300 to appeal the arbitration result for a hearing before a judge. Most cases do get settled before an arbitration unless there is a difficult legal matter. Not many cases are appealed beyond the arbitration level to Court. 8 There are some tax appeal matters in Delaware County, in addition to those involving more than $50,000, which involve new evolving issues of law and regardless of the dollar amount are assigned to a judge. Likewise, any exemption cases are assigned to a judge or if the amount involved is more than $50,000, it is assigned to a judge. 13
In Delaware County, cases are assigned to individual judges and they notify the parties of the hearing date or of a trial term when the case may be called for a hearing. Other counties may simply assign the case to a trial pool. Needless to say, at this point both sides have appraisals and those appraisers will have to testify as expert witnesses at the hearing before the judge. If it is an appeal after the arbitration, the expert has already given the testimony before the arbitrators but it must be repeated. Rarely is the owner s attendance necessary for a hearing before the arbitrators (except for unique questions about the property). TRIAL BEFORE A COUNTY JUDGE All tax assessment appeals before any County Court of Common Pleas judge are non-jury trials and follow usual trial procedures. After trial before a judge, depending on the judge, there may be an instant finding from the bench, a later opinion, or there will be a request from all attorneys for written Proposed Findings of Fact and Conclusions of Law 9 after which the judge will render an opinion based upon what he or she has made Findings upon. This could take 2-6 months. Generally, a transcript of the testimony will first have to be made as a reference which can cause further delay. APPEAL FROM COURT OF COMMON PLEAS DECISION Once the judge had rendered a decision, either side can appeal that decision to the Commonwealth Court of Pennsylvania within 30 days as a matter of right. If a case is appealed to the Commonwealth Court there is generally a fairly expensive printing of the transcript and record that is necessary as well as full final printed briefs from each side and an actual argument of the case before this appellate court. When the Commonwealth Court renders a 14
decision,(usually 3-9 months after argument) this may be appealed to the Supreme Court of Pennsylvania but the Supreme Court has the discretion of whether or not to accept such an appeal and it rarely does. The Supreme Court s decision to even allow an appeal may take 1-2 years. 9 Required by local rule in Chester County. 15