Georgia Property Tax Appeals: SB 346

Did you know that there is a new law in Georgia as it relates to appealing your taxes? I took the 39 page bill and tried to summarize it as best I could. Suffice it to say, 39 pages down to 3 pages (single spaced at that!) means that I may have missed something. In general, however, this should give you a good 'go by' to follow. Good luck!

Summary of SB 346: Property Tax Assessment and Appeals Reform Bill of 2010
In 2010, Senate Majority Leader Chip Rogers pushed to reform property tax assessments as a result of a 2009 study committee on property taxes. The resulting Senate Bill 346 aimed to ensure that all Georgia properties were properly assessed at their true “Fair Market Value” (FMV) and set forth a clear path so that property owners have guaranteed rights to appeal. The bill had strong bi-partisan support and easily passed both the Senate (54-0) and the House (157-1) and was signed into law by the Governor last summer. The majority of the changes took affect January 1st of this year. The major changes include:
• Requirement that property owners receive an annual “Notice of Assessment”
• Guaranteed right to appeal the valuation
• Expansion of deadlines from 30 to 45 days
• The property owner ‘wins’ if the county fails to respond within 45 days
• Requirement to use ALL relevant sales for FMV, including distressed sales
• Requirement that owner receive access to all data used to determine FMV
• Sales price = FMV for following year

In years prior to the new law, how would you appeal your property taxes? If you happened to receive a “Change of Assessment Notice” it spelled out what to do. What if you just felt you paid too much in taxes the year before? You would have to know to file a form with the county’s Tax Assessor called a “Property Tax Return”. This confusing form has blanks for you to state what you felt was your property’s value as of January 1st. If the county agreed with your valuation, life is good! If they did not, you would have to appeal as if you received the Change of Assessment Notice. Regardless of how the old processes worked, it wasn’t easy to sort through-even if you happen to be a real estate professional! With that background in mind, let’s look at some of the new provisions of the law in detail.
Every year, prior to July 1st, a “Notice of Assessment” must be sent to all owners of real property. This notice has to be in a standard format statewide and will give the previous and current assessed value, an estimated tax bill (based on last year’s millage rates!) and info on how to file an appeal, including contact information for questions. If you choose to file an appeal, it must be submitted in writing—either actually received or postmarked within 45 days of the date on the Notice. It is highly recommended that you take steps to ensure that it is actually received by the county tax assessor (consider hand delivering, certified mail or overnight delivery services) as there is NO grounds for an extension of the 45 day deadline.
Why appeal? The main issue is value. Would your property sell for the amount given as assessed value? Another typical issue relates to how your home compares to others nearby. Was the appraisal uniform or similar to other properties in your neighborhood? Did you have all the exemptions you were entitled to claim? You can go to the Department of Revenue’s website to see what exemptions are offered in your county: http://www.etax.dor.ga.gov/ptd/county/index.aspx
The Notice of Assessment gives three appeal options, one of which must be chosen at the time you appeal: 1) you can go before a Board of Equalization (BOE) with an option to appeal to the Superior Court 2) Binding arbitration without the option to appeal to the Superior Court and 3) for non-homestead properties valued over $1M, you would be assigned to a hearing officer with the option of appealing to the Superior Court. There will also be a uniform form to use for your appeal. If you appeal to the BOE or Hearing Officer there are no filing costs; if you file for arbitration, the loser will pay for that process. Most people will typically choose to appeal to the BOE, so let’s take a look at that process.
So you filed a timely appeal, congratulations! The county Board of Tax Assessors (BTA) will acknowledge and review your appeal. Once a decision is made (within 180 days) you will receive a written notice. Again, if you approve of the value, you are finished! If you are still not happy, you will appeal to the BOE within 30 days after receiving your notice. If the county doesn’t respond to you within 180 days as above, your appeal automatically heads to the BOE.
The BOE is made up of 3 people and they will hear your appeal. At the end of your hearing they must give you a decision on the spot—from there you can appeal to the Superior Court within 30 days of the BOE’s decision. One thing to note—if you and the county come to an agreement on your value at any time along the way, you can choose to stop the appeals process at that time and that value appears to be fixed for three years.
What if your taxes are due in the middle of this process? You will receive a temporary bill, set at 85% of the current year’s valuation. If you win, you’ll get a refund of any overpayment—with interest! (don’t get too excited, the interest cap is $150) If you lose… well, you owe the amount due plus the interest as well (same cap).
Either party (you or the county) can appeal to the Superior Court and it’s treated like a completely new trial. You either go before a judge (a bench trial) or have a jury trial. There are costs to file the suit (currently around $200) and you may want to have an attorney. The standard of proof of the trial is called ‘preponderance of the evidence’ which more or less means that the person with the ‘best’ proof will win. If you are successful, you will have lower taxes and will receive ‘reasonable’ attorney’s fees back. If you lose, you will have the higher taxes reinstated, with interest, as above, capped at $150.
One of the other changes relates to the definition of an “arms length, bona fide sale”. The goal is to clarify “the new normal” as it relates to real estate (including short sales, foreclosures and other distressed sales). The new definition in the Georgia Code is:
“Arm’s length, bona fide sale” means a transaction which has occurred in good faith without fraud or deceit carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his or her own self-interest, including but not limited to a distress sale, short sale, bank sale or sale at public auction.
What’s the big deal? Now assessors are forced to use ‘distressed’ sales when they consider values, so it’s not just the ‘full-price’ sales that are used. One bit of clarification—any sale “under power” such as a foreclosure on the courthouse steps is NOT considered arm’s length/bona fide sale since the bank is considered a related or affiliated party. When the bank turns around and sells it to someone else, yes, that is counted. What about Fair Market Value? That language has changed as well:
“Fair market value of property” means the amount a knowledgeable buyer would pay for the property and a willing seller would accept for the property at an arm’s length, bona fide sale. The income approach, if data is available, shall be considered in determining the fair market value of income-producing property. Notwithstanding any other provision of this chapter to the contrary, the transaction amount of the most recent arm’s length, bona fide sale in any year shall be the maximum allowable fair market value for the next taxable year…”
The Department of Revenue is unsure about the affects of the new language. What if the house is remodeled/repaired after the sale? Ditto for new construction added, parcel splits or even acreage added… It appears that the property will be ‘stuck’ at the lower value for at least a year! Likewise, there are questions remaining if that sales price is higher than the current “Maximum Allowed Value” (based on current tax freezes for example)—in theory the tax assessor would have to stick with the lower value.
What if you chose to file your appeal using arbitration? There are positives and negatives related to this process—the main issues relate to costs. If you file your appeal and ask for arbitration, you need to order a ‘certified appraisal’. A certified appraisal is “…an appraisal or appraisal report given, signed, and certified as such by a real property appraiser as classified by the Georgia Real Estate Commission and the Georgia Real Estate Appraisers Board.” A typical residential appraisal should cost $350-$500. Once you forward your written appeal to the County along with that certified appraisal (and filing fees) one of three things can happen: 1) they accept the value—congrats! 2) they disagree, and the appeal is forwarded to the Clerk of the Superior Court who sets up Arbitration or (the big one) 3) if the county does NOTHING (e.g. they don’t agree, disagree, or even call to say “boo”) after 45 days, then the value on your certified appraised value becomes ‘the’ value! If you do end up in arbitration and lose, then you are responsible for the costs of filing and the costs of the arbitration so you better be sure! Likewise, the arbitration is now final (e.g. no appeal to the courts!). As noted earlier, if you and the county come to a written agreement on your value at any time along the way, you can choose to stop the appeals/arbitration process.
That’s a lot of information to try to summarize! I hope that this has cleared up some of the new provisions found in SB 346. One thing to note about taxes—even though you may be able to lower your property values, the county can always raise the millage rates, which would lead to higher taxes. With that being said, most leaders are hesitant to do that and you would hear about any such changes in advance and have the opportunity to comment and be in touch with your elected officials. Regardless, good luck with your appeal! Feel free to contact me with any questions!