August 2021 Newsletter

August 17, 2021 | Newsletter
  • TENNESSEE – Tenn. Code Ann. § 67-5-501(10)(B)(iii), which classifies certain pipelines and other property as real property for purposes of classification and assessment, applies to pipelines located within easements
  • LOUISIANA – Trucks and trailers used by taxpayer to transport cut cane sugar to a sugar mill do not fall under manufacturing machinery and equipment exclusion and are subject to personal property tax
  • WISCONSIN – Court of Appeals holds that taxpayers must go to the Wisconsin Tax Appeals Commission before bringing a state court claim that the Department of Revenue issued an unpromulgated rule on a new personal property tax exemption
  • ARIZONA – Court of Appeals rejects Tax Court ruling that an electrical generating plant on land leased from a Native American tribe was a permanent structure subject to property tax
  • OREGON – Tax Court agrees with taxpayer that ORS 308.162 applies to preclude revaluation of pipeline system transferred because taxpayer acquired the entire centrally assessed “unit of property” from seller

May 2021 Newsletter

May 8, 2021 | Newsletter
  • NEW MEXICO – Power purchase agreements between wholesale electricity generators and customers are intangible property not subject to property taxation.
  • MISSOURI – Court of Appeals rejects appraisal utilizing all three approaches to value, and holds that assessors must use reproduction cost approach to value natural gas pipeline companies’ real and personal property.
  • LOUISIANA – Tax Commission properly relied on the purchase price of wells to establish their fair market value.
  • NEW YORK – Opt-out provision of NY Real Property Tax § 487 which exempts from taxation any increase in the value of real property by reason of the inclusion of a solar energy system for a period of 15 years must be filed with New York State Energy and Research Development Authority to become effective.
  • OHIO – Board of Revision considering assessment appeal lacks jurisdiction to determine ownership rights in real property.
  • NEW HAMPSHIRE – Transmission poles and conduits within land which becomes a public highway are subject to property tax whether or not they are subject to an agreement providing for payment of the tax, but guys and anchors are not taxable.

January 2021 Newsletter

January 18, 2021 | Newsletter
  • MINNESOTA – Tax Court has discretion to depart from default weightings to place equal weight on the cost and income approaches in unit valuation of petroleum pipeline.
  • SOUTH CAROLINA – Assessor’s use of third-party mailing service to deposit property tax assessment notices with United States Postal Service constitutes service on addressee and triggers statutory 90-day appeal period.
  • ILLINOIS – Tax abatement resolution to induce construction of power generation facility does not benefit subsequent property owner absent express indication that it runs with the land.
  • KANSAS – Property Valuation Division’s use of the minimum lease value for marginally producing gas wells causes an assessed valuation greater than the fair market value and violates the statutory directives to determine the actual fair market value rather than an arbitrary value for assessment purposes.
  • NORTH CAROLINA – Court of Appeals rejects taxpayer’s use of depreciation schedules based on market sales of comparable used equipment to value grocery store chain’s personal property.
  • NINTH CIRCUIT COURT OF APPEALS – Court of Appeals upholds railway’s challenge to Oregon’s intangible property tax under 4-R Act.

August 2020 Newsletter

August 29, 2020 | Newsletter
  • MASSACHUSETTS – Thermal energy provider’s tax appeal dismissed for failure to file abatement application with City Assessors; protest letters accompanying quarterly tax payments deemed insufficient
  • HAWAI'I – County lacked power to redefine “real property” to include wind turbines for property tax purposes; wind turbines are not “fixtures” and therefore not otherwise taxable as real property
  • MISSOURI – State Tax Commission determines depreciation of natural gas distribution company’s real property based on evidence of actual physical depreciation and economic obsolescence, rather than relying on Commission's 2013 form recommending depreciation be calculated pursuant to IRS Publication 946
  • NEW JERSEY – Tax Court rejects taxpayer’s claim that highest and best use of watershed property was as timberland due to lack of sales demonstrating a market for such property
  • NEW YORK – Cell phone service provider’s cellular data transmission equipment (rooftop equipment and antennas) subject to taxation as real property under New York Real Property Tax Law 102 (12) (i)
  • MINNESOTA – Tax Court is obligated to follow administrative rule requiring use of income approach, rather than cost approach, in valuation of petroleum company’s pipeline system
  • LOUISIANA – Taxpayer’s failure to pay property tax assessments precluded any challenge to assessments in court
  • MINNESOTA – Tax Court improperly relied solely on recent sale price of property in IRS § 1031 like-kind exchange when determining value under sales comparison approach

February 2020 Newsletter

February 12, 2020 | Newsletter
  • MINNESOTA – Tax Court holds that Commissioner of Revenue had understated system and allocated valuations of crude oil pipeline based on cost and income approach analyses.
  • WEST VIRGINIA – Regulation authorizing use of annual average “Steam Coal Price Per Ton” and coal seam thickness averages for ad valorem tax valuation does not violate statutory requirement that natural resources property be assessed at its “true and actual value.”
  • ARIZONA – Supreme Court holds that Department of Revenue lacks statutory authority to value leased solar panels but remands on issue of whether they may be valued by county assessor and, if so, whether A.R.S. § 42–11054(C)(2)’s zero-value provision applies.
  • TEXAS – Separate appraisal for ad valorem taxation of saltwater disposal wells and the land on which they are located does not constitute double taxation, and different appraisal methods may be utilized for each.
  • ARIZONA – Amendment to statute governing valuation of renewable energy equipment which allows deduction of tax incentives from cost, enacted after valuation date but prior to date of final valuation, is not retroactive.
  • CALIFORNIA – Airport terminal lessee’s exclusive duty-free concession right is intangible right not subject to property tax.

June 2019 Newsletter

June 13, 2019 | Newsletter
  • MASSACHUSETTS – Letters that accompanied a thermal energy provider’s quarterly tax payments did not satisfy statutory requirement of filing an abatement application
  • MINNESOTA – Tax Court is bound by Rule 8100, which requires use of both the cost and income approaches in the valuation of utilities, including pipeline systems, even where the Tax Court believes it will result in an inaccurate valuation
  • ARIZONA – Court of Appeals holds that unless the Legislature indicates otherwise, the law governing the valuation method and classification of property for property tax purposes is the law in effect on the valuation date
  • NORTH CAROLINA – Equipment used “directly and exclusively for the conversion of solar energy to electricity” was tax exempt under N.C. General Statutes § 105-275(45), even though under construction
  • OREGON – “New property” exception to Article XI § 11 of the Oregon Constitution, which provides that the assessed value of a unit of property in any given year cannot exceed the previous year’s assessed value by more than three percent, does not apply to property previously subject to, but not subjected to, central assessment
  • OREGON – Department of Revenue erroneously relied on power purchase agreement that provided biomass cogeneration facility with revenues significantly in excess of what a purchaser of the property on the assessment dates would have been able to negotiate for electricity, capacity, and renewable energy credits, and erroneously considered intangible assets by valuing taxpayer’s entire property and business under the income approach, subtracting only an amount for working capital

February 2019 Newsletter

February 15, 2019 | Newsletter
  • INDIANA – Sales Price of Contaminated Property Not Reliable Indicator of Market Value where Evidence Did Not Show Property was Reasonably Exposed to Market at Time of Sale, Failed to Relate Sales Price to Appropriate Valuation Date, and Did Not Disclose Sale Under Duress
  • LOUISIANA – Pipeline Owner Failed to Show Tax Assessor Abused her Discretion in Finding Insufficient Evidence to Substantiate 85% Reduction in Fair Market Value for Economic Obsolescence of its Intrastate Pipeline
  • OREGON – Supreme Court Rejects Department of Revenue Valuation based on Power Purchase Agreement Favorable to Taxpayer that Erroneously Considered Intangible Assets by Valuing Taxpayer’s Entire Property and Business
  • MINNESTOTA – Tax Court Rejects Calculation of External Obsolescence of Ethanol Production Facility Based on “Inutility” and Operating Capacity in Arriving at Taxable Fair Market Value of its Assets
  • MONTANA – Supreme Court Agrees that Taxpayer’s Crude Oil Gathering Pipelines Were Misclassified by Department of Revenue
  • CALIFORNIA – Assessor May Assume that Option to Extend Lease of Federal Land Will Be Exercised in Valuing Leasehold for Property Tax Purposes

December 2018 Newsletter

December 7, 2018 | Newsletter
  • MINNESTOTA – Tax Court Rejects Sales Comparison and Cost Approaches in Valuing Pipeline, Relying Solely on Income Approach
  • ARIZONA – Taxable Situs for Dealer-Held Heavy Equipment Is Location Where Dealer Maintained Inventory, Rather Than Various Locations Where Leased Equipment Might Have Otherwise Been Physically Located
  • OREGON – Tax Court Holds Experts Providing Valuation Testimony Need Not Be Licensed Appraisers.
  • WISCONSIN – Income-Generating Capability of Oil Terminals Inextricably Intertwined with Land; Thus Properly Included in Assessment
  • MINNESOTA – On Remand, Tax Court Did Not Improperly Apply Eurofresh Standard in Rejecting Pipeline’s Claim of External Obsolescence
  • CALIFORNIA – Court of Appeals Holds that Revenue from Broadband and Telephone Service May Be Included in Valuing Cable Company’s Possessory Interests, With Appropriate Deduction for Intangible Assets

August 2018 Noteworthy Case

August 21, 2018 | Newsletter ARIZONA – “...Property was actually transferred between two very sophisticated players in an arms-length exchange. The valuation approach used by both the buyer and seller in that transaction was, in fact, the income approach. The Court puts a great deal of weight on the fact that, outside the ethereal, hypothetical world of lawyers and experts in courtrooms and in academia debating appropriate valuation methods, outside the vacuum of learned treatises commenting on accepted practices, and with hundreds of millions of dollars at stake, two very sophisticated real-world actors both used the income approach to determine the subject’s value.”

July 2018 Newsletter

July 24, 2018 | Newsletter
  • CALIFORNIA – Proper appraisal unit to be used under California Property Tax Code when comparing base year value to current full cash value of property improved with active solar energy generating systems containing non-solar backup systems was property with entire unit, rather than property with backup system alone.
  • ARIZONA – Unless the substance of a State Board of Equalization decision on an assessment appeal is materially affected, a re-issued decision correcting mere clerical errors does not trigger the start of a new appeal period.
  • ARKANSAS – Under the statute governing determination of fair market value for utilities and carriers in assessment of property taxes, the Public Service Commission’s Tax Division may, but need not, consider physical or economic obsolescence in valuing a company.
  • NEW MEXICO – Cable Television provider determined to comprise part of a “communications system” subject to central assessment under New Mexico Tax Code.
  • MISSOURI – Reproduction cost approach, using original cost less depreciation, is to be employed for calculating assessed value of both personal and real property belonging to natural gas companies.