Property Tax Update
Wednesday, September 07, 2011
Most ITA members received preliminary assessments for
property taxes on September 1st.
We have been advised that the new assessments continue to
assess personal property and inside equipment. However, the new
assessments do include some changes from last year’s assessments – the
"adjustment factor” is no longer used; the equity rate has been increased;
deferred taxes were eliminated from the cap rate formula;
and the equity to debt ratio was standardized at 85/15.
On August 26th, ITA has published a Special
Report analyzing the August ruling by Polk County Judge Novak in favor of Qwest
in its claim that Qwest’s property consisting of inside plant -- switches and
related central office equipment -- is "similarly situated” to the nearly
identical property of IXCs and wireless providers and
it is unconstitutional to assess Qwest for that property but not IXCs or
In light of Judge Novak’s ruling, and the September 1st
preliminary assessment letter, ITA members have asked their accountants and ITA
whether they need to respond to this preliminary assessment.
ITA’s recommendation is this –
will notify the Department of Revenue that all (or most) ITA members are likely
to file formal protests regarding the constitutional issue of assessing
personal property. Each company will be responsible for filing its
own formal protest, and ITA will provide additional guidance well in advance of
the November 14th deadline to do so. If the constitutional
issue of taxing personal property is your only reason for protesting your
assessment, you need not take action until after the October 15th
final assessment is distributed.
any LEC has a problem or question or concern with any other calculations or
methodologies in their preliminary assessments, ITA urges you to either
coordinate with your accountants or notify the Department of your request to
gather more information and conduct an informal meeting.
Here is some more explanation of the Department of Revenue’s
procedures for appeal/protest:
According to the letter accompanying the Department of
Revenue’s preliminary assessment on September 1st, a taxpayer has 10
days to request an informal meeting to discuss their preliminary
assessments. Because September 10th falls on a Saturday, the
deadline for the informal response is Monday, September 12, 2011. The
Department of Revenue will then conduct informal meetings to attempt to resolve
any issues prior to distributing the final assessment on October 15th.
If the Department receives no informal response from the
taxpayer in early September, it will issue a final assessment on October 15th
that is unchanged from the preliminary assessment. Taxpayers who request
a meeting by the September 12th deadline have the opportunity to
discuss their concerns with the Department in the hopes of impacting the
final assessment figures.
With respect to the constitutional issue of taxing personal
property, ITA will provide the notification to the Department on behalf of all
ITA members. Therefore, ITA suggests that individual members need not
raise the constitutional issue with the Department during the informal
process. This recommendation is based on discussions with both ITA’s
General Counsel and accountants.
While ITA will bring the constitutional issue to the
Department of Revenue, ITA will not be able to handle or impact individual
assessment questions that do not address the constitutional issues.
We have been advised that Kiesling Associates conducts
property tax consultation for the vast majority of ITA members, and that
Kiesling has already obtained the underlying calculations for their
clients. Please contact your accountant for assistance on specific
property tax assessment appeals or protests.
Taxpayers then have until November 14th (30 days
after October 15th) to file a formal protest. Taxpayers may
file a formal protest whether or not they filed the informal response in
September. Additionally, taxpayers may request the underlying
calculations used to determine the property tax assessments at any time, and
are not bound by the September 12th deadline for requesting that
ITA will provide guidance on procedures for
filing formal protests or appeals well in advance of the November 14th
deadline. We anticipate that the DavisBrown firm will be grouping a large
number of ITA members together to file protests, but the decision on which
counselors to use is up to each ITA member.