Opinion handed down August 4, 2009.
Link to Mo. Sup. Ct. Opinion
I. Introduction
The Supreme Court of Missouri held that the State Tax Commission of Missouri could require a complaining taxpayer to provide evidence of the true market value of the properties in dispute, that the tax commission is not bound to accept the true market value originally calculated by the assessor, and that, while the assessor cannot advocate for a higher assessed value than the one he determined for the relevant assessment period, he is free to put forth evidence of higher true market value in defense of a discrimination claim.
A group of commercial property owners alleged that the St. Louis County assessor had discriminated against them by assessing their properties at a higher percentage of true value than other similar commercial property in the area.[2] Each complaining property owner asserted that its own property was accurately assessed at the statutorily mandated thirty-two percent of true market value while other similarly situated commercial properties were assessed at a lesser percentage of true market value.[3] On review by the state tax commission, a hearing officer assigned to the property owners' case ordered them to select a lead case to determine market value and the assessment ratio.[4] The property owners objected to this order, arguing that it was unnecessary for them to prove the market value of their own properties when they did not dispute the values determined by the assessor.[7] The property owners feared that the assessor would use their market value evidence to advocate a higher value for their properties and argued that Missouri Revised Statute Section 138.060 prevents an assessor from advocating for a higher valuation than the value originally set for that assessment period.[8]
The commission rejected the property owners' claims and held that they were required to prove the true market values of their properties in order to make a successful discrimination claim.[9] The property owners then sought a writ of prohibition from the circuit court to prevent them from having to prove the true market value of their properties.[10] The circuit court denied the property owners’ petition.[11] The Supreme Court of Missouri affirmed the circuit court’s judgment and held that the tax commission could require the taxpayers to provide evidence of the true market value of the properties, that the tax commission is not bound to accept the true market value calculation by the assessor, and that, while the assessor cannot advocate for a higher assessed value than the one he determined for the relevant assessment period, he is free to provide evidence of higher true market value in defense of a discrimination claim.[12]
III. Legal Background
The Missouri Constitution requires uniform taxation on real property of the same class or subclass.[13] In order to calculate the tax due on a parcel of property, the assessor must first determine the true market value of the parcel.[14] Once the true market value is established, the assessor then multiples that value by the statutory assessment percentage rate.[15] The resulting product is called the “assessed value.”[16] Finally, the assessed value is multiplied by the applicable tax percentage rate to calculate the tax due.[17]
Tax assessors are presumed to act in good faith, and their assessments are entitled to a rebuttable presumption of validity.[18] Thus, the taxpayer has the burden of proving discrimination.[19] When claiming discrimination by undervaluation of other property, the taxpayer must show “intentional systematic undervaluation by state officials of other taxable property in the same class.”[20] To do this, the complaining taxpayer must establish the true market value of his own property and other comparable properties.[21] The ratio of assessed value to true market value is then compared between the complaining taxpayer’s property and other comparable properties.[22] While the tax commission cannot compel the taxpayer to present evidence in any particular form,[23] the tax commission is not required to accept the assessor’s determination of the true market value of the property in dispute.[24]
Section 138.060.1 prohibits an assessor from advocating “a valuation higher than that value finally determined by the assessor . . . for that assessment period” in any hearing of an appeal from a first-class charter county.[25] While this language prohibits the assessor from arguing for a higher assessed value than what he ultimately determined for the relevant assessment period, it does not bar him from introducing proof of a higher true market value in defense of a discrimination claim.[26] Instead, the purpose of the language is to “prevent[] an assessor from putting a taxpayer at risk of being penalized with a higher assessment for challenging an assessor’s prior determination of the value of the taxpayer’s property."[27] The statute does not limit what relevant evidence the tax commission can request in investigating a discriminatory assessment claim.[28] In fact, Section 138.430 specifically authorizes the tax commission to “inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property.”[29] Because the tax commission is free to accept or reject the assessor’s prior determination of true market value, the taxpayer risks losing his discrimination claim if he uses the assessor’s valuation as his only evidence of true market value.[30]
IV. Commentary
With the Supreme Court of Missouri’s decision in Ashby Road, it is clear that the tax commission is not required to accept the true market value calculated by the assessor for the relevant taxing period and that the assessor is free to advocate for a higher true market value in defense of a discrimination claim. As a result, a complaining taxpayer should not expect to win his discrimination case by relying solely on the true market property values determined by the assessor.
-Chad E Voss
[1] No. SC 89529 (Mo. Aug. 4, 2009). The West reporter citation is State ex rel. Ashby Road Partners v. State Tax Commission, 297 S.W.3d 80 (Mo. 2009) (en banc).
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id. at *4.
[12] Id. at *4-6.
[13] Mo. Const. art. X sec. 3.
[14] Mo. Rev. Stat. § 137.115 (2000).
[15] Ashby Road 2009 WL 2381329, at *4 n.6.
[16] Id. at *4.
[17] Id. at *4 n.6.
[18] Koplar v. State Tax Commission, 321 S.W.2d 686, 693 (Mo. 1959).
[19] Ashby Road, 2009 WL 2381329, at *6.
[20] Id. at *4
[21] Id.
[22] Id.
[23] Id. at *6.
[24] Id. at *4.
[25] Mo. Rev. Stat. § 138.060.1.
[26] Ashby Road, 2009 WL 2381329, at *6.
[27] Id.
[28] Id. at *5.
[29] Mo. Rev. Stat. § 138.430.2.
[30] Ashby Road, 2009 WL 2381329, at *6.
