The Law Office of Michael D. Mirne, L.L.C. discusses Evidence and Testimony in Tax Appeal Hearings

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In this article, we discuss some practical considerations of choosing what evidence should be submitted prior to a tax appeal hearing.

Michael Mirne

"[A]n appraisal report, prepared by a qualified real estate appraiser, setting forth the value of the property as of October 1 of the pre-tax year is almost always the best evidence."

Each year, the Law Office of Michael D. Mirne, L.L.C. fields calls from hundreds of taxpayers who are interested in appealing their assessments. Many taxpayers who qualify for the firm’s services ask what the best evidence is to prove that their properties are over-assessed. The simple answer is that an appraisal report, prepared by a qualified real estate appraiser, setting forth the value of the property as of October 1 of the pre-tax year is almost always the best evidence.

There are many reasons why appraisal reports are great evidence. One of the reasons is that the appraiser can make monetary adjustments to sale prices to account for differences in size, location, amenities, quality of construction, and amenities, just to name a few factors. Of course, the appraiser will always start by looking for the sales that require the fewest adjustments. But sometimes, sales of properties that are truly comparable simply are not available and adjustments are made. One of the other reasons why appraisal reports are so useful is that the appraisers who prepare them are generally very skilled at presenting their data in a way that the County Tax Board or the Tax Court will understand, no matter how complicated the adjustments tend to be.

While there are many advantages of getting an appraisal for a tax appeal, there are a lot of cases where it does not make sense to do so. These cases may include matters where there is already an abundance of identical comparable sales. The ultimate example of this is a case where the taxpayer is appealing the assessment of a condominium, in a development where several other similar condominiums have sold. Another type of matter where the taxpayer would not necessarily order an appraisal is a case where the anticipated tax savings will not be sufficient to justify the cost of an appraisal. Unlike the law firm, which often performs its services on a contingent fee basis, the appraiser who is retained as the expert witness is precluded from doing so under the Uniform Standards of Professional Appraisal Practice (USPAP). Under USPAP guidelines, an appraiser should not act as an advocate, and should not have a financial interest in the outcome of the appraisal report that he or she is preparing. Therefore, the appraiser will charge the same flat fee regardless of whether the case is won or lost.

In any tax appeal case where an appraisal is not ordered, it is up to the taxpayer to submit other evidence to support the reduction of assessment. For residential properties, the firm generally recommends using comparable sales. The taxpayer should find properties in similar neighborhoods within the taxing district (i.e.; the municipality) that have recently sold. Taxpayers should note, however, that since the assessing date is October 1 of the pretax year, sales that occurred substantially after that date may be deemed to be inadmissible. The houses should be of similar size, condition and amenities, and the location should be equally valuable. For instance, in a beach town, if the subject property is 2 blocks from the beach, the taxpayer should not rely upon the sale of a house that is 5 blocks from the beach, where the land may be a lot less valuable.

Other evidence that the taxpayer might submit may include photographs, engineering and environmental reports, wetlands delineations, and in the case of income producing properties, an income and expense statement is almost always submitted. However, in cases where an expert is not retained, the taxpayer must still produce a witness who will testify at the hearing. That witness is very often the taxpayer, who will testify about the size and condition of his or her house, and will then generally testify about the comparable properties that were submitted as evidence. One common misconception is that the taxpayer’s attorney may testify. This is unfortunately not true, since the attorney may only offer into evidence information that his or her witness is present to discuss.

Finally, and most importantly, all evidence that the taxpayer intends to discuss at the tax appeal hearing must be submitted to the Tax Board and the municipality at lease one week prior to the hearing date. In cases where the taxpayer is unable to gather evidence in advance, the firm will often assist in the information gathering process. For more information regarding Tax Appeals, please contact the Law Office of Michael D. Mirne, L.L.C.

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Michael Mirne
Law Office of Michael D. Mirne, L.L.C.
+1 (732) 859-8489
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