Tax bills for 2011 were sent and taxpayers who wish to challenge their Minnesota property tax liability need to be aware of Minnesota's filing deadline and associated requirements. Minnesota requires that valuation complaints (appeals) be filed by April 30 of the year following the tax year being challenged. Any 2011 appeal against a taxpayer's property tax liability must be filed by April 30, 2011. Minnesota law offers no exceptions to the statutory deadline.
Taxpayers may be surprised to learn that while their assessed values have dropped, their taxes may have actually increased. Due to widespread cuts in both commercial/industrial and residential valuations, the effective tax rates at which properties are assessed have exploded.
Taxpayers should ask these questions when considering an appeal:
- Is my property overvalued and in excess of its fair market value? Owners should have an appraisal performed by a qualified appraiser to support their value for an appeal.
- Is my property properly classified? The assessor must classify all property according to its use. Each class, such as single-family residential, apartment, cabin, agricultural, or commercial/industrial, is taxed at a different classification rate or percentage of its value.
- Is the property exempt? While it may be clear that exempt properties include schools, hospitals, churches, public property and purely public charities, there is often litigation as to determine what is a "church" and what qualifies as a "purely public charity." There are, in addition, gray areas under the law. For example, is an assisted-living facility more like a taxable apartment or an exempt nursing home? When do farming activities qualify for the agricultural exemption? The answers may not be simple.
- Is the property valued higher than other similar properties and therefore is discriminated against? The Uniformity Clause of the Minnesota Constitution requires that not only must a property be assessed at market value, it also must be assessed uniformly with similar properties. A discrimination challenge by a tax appeal is established through the Department of Revenue's assessment/sales ratios. If the ratio for your type of property in your city or county is under 90 percent, the Tax Court can give a reduction to the determined value by applying 95 percent minus the actual sales ratio as an additional percentage off the assessed value.
It also is important that owners thinking of appealing their property values be aware of the procedural 'traps for the unwary' in filing their real property tax appeals. For example, service requirements in addition to the appeal being filed on or before April 30 with the District Court, require filing on other various parties, including the county auditor, the county treasurer and the county attorney. Failure to make proper service will require dismissal of your action as being nonjurisdictional.
Further, even though you are challenging the property taxes, the real property taxes are still due by the May 15 and October 15 deadlines and failure to pay the taxes on time will cause the appeal to be automatically dismissed.
Moreover, for income-producing properties, the taxpayer is statutorily required to produce income and expense information, usually rent rolls and financial documents and other information to the assessor by June 30, or the appeal also might be dismissed.
Lastly, the Court has the power to increase the valuation and has used that power when it has found evidence to support a higher value. This is why an owner needs an appraisal to effectively evaluate the merits of its appeal.
Owners of property should carefully review their property tax statements before April 30 to determine if they have a meritorious claim and seek further assistance if needed.