Taxation Legal Update - Protesting Stealth Tax Increases to Commercial Real Estate in Nebraska

Year after year, Nebraska businesses often face increases to their property taxes, even when the tax rate has remained steady, or even lowered. These “stealth” tax increases happen as a result of the County Assessor increasing the value of the business’s property. When the same tax rate is applied to a higher property valuation, businesses pay more in property taxes.

The Importance of Monitoring Property Valuation

To attempt to minimize the amount of property taxes a business pays, on an annual basis it is important for business owners to monitor whether the County Assessor’s valuation of the business’s real estate reflects the actual market value and is equalized with other real property in the taxing jurisdiction. For a taxpayer in Douglas County, Nebraska, this yearly process begins on January 15th when the County Assessor posts preliminary, or estimated, property values on the Assessor’s website. If the preliminary/estimated value of a business’s property is not the market value or is not equalized with comparable property, business owners can provide additional information to the Assessor justifying a reduction. This informal preliminary process concludes at the end of February each year.

Protesting the County Assessor’s Final Property Value

On June 1st of each year, the County Assessor posts the final property values, which are mailed to the owners. If the Assessor’s valuation is incorrect, business owners must file a protest with the Douglas County Board of Equalization (“BOE”) by no later than June 30th. If a business fails to file a protest by June 30th, then the Assessor’s June 1st valuation becomes final and will be used to calculate a business’s property taxes.

Once a protest is filed, business owners may submit additional information justifying why the Assessor’s June 1st valuation is improper. Business owners are afforded the opportunity to meet with a Referee to explain the reasons why a different valuation should be used. The Referee then makes a recommendation regarding whether the protest should be dismissed, or the Assessor’s value changed. The Referee’s recommendations are reviewed by the Referee Coordinator, who can make a different recommendation. The Referees’ recommendation is then submitted to the BOE as part of an omnibus recommendation regarding all protests filed in the County during that tax year—which can often be more than 5,000 protests. Business owners will not be provided notice of the recommendation made by the Referees.

The BOE must set the values of real estate at a public hearing by August 10th each year. Typically, a few days before the BOE meets at the public hearing, a spreadsheet of the Referees’ recommendations is posted online on the Douglas County Board of Equalization’s website. Taxpayers can make a five-minute presentation to the BOE regarding their protests at the public hearing. The BOE then votes on the Referees’ recommendations and sets the value of a business’s property.

Appealing the BOE’s Approved Property Valuation

If dissatisfied with the BOE’s approved valuation, taxpayers may appeal the valuation to the Tax Equalization and Review Commission (“TERC”). This appeal must be filed by September 10th, or the appeal will be barred. TERC will hold a litigated evidentiary hearing and either affirm the BOE’s valuation or modify it. The TERC process can often take two years or more. A taxpayer dissatisfied with the TERC decision can appeal to the Nebraska Court of Appeals.

Questions Regarding Protesting Business Property Tax Increases

Employing the skills of knowledgeable legal counsel can make a difference when navigating the complex real estate tax protest process. Fraser Stryker’s taxation attorneys have assisted corporate clients in reducing real estate valuations through both the county-level protest process and through appeals to TERC, resulting in significant tax savings for many clients. Our attorneys can assist in evaluating whether protesting your valuation might make sense for your business.

 

Author: Tim Thalken

Timothy J. Thalken

Timothy J. Thalken

Partner

(402) 978-5285
tthalken@fraserstryker.com

This article has been prepared for general information purposes and (1) does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney. Always seek professional counsel prior to taking action.