This year, 17 Rhode Island communities will go through the rite of passage known as the revaluation cycle. State law requires a full property revaluation by the tax assessor in each city and town every nine years with less-detailed updates every three years. These values are important because, absent additional improvements or damage to the property, the values will stay the same for the entire cycle even though the tax rate will change each year. For many of us, that means this spring we’ll learn that the tax assessor, or a company hired by the assessor, has come up with a new tax value for any real estate we own.
In most cities and towns, the tax values are supposed to be set at a “full and fair cash value or a uniform percentage thereof not to exceed 100 percent.” Upon receipt of a notice from the tax assessor of the new proposed value, the taxpayer will be given an opportunity to come in and discuss the new value. Then, after the tax bills actually come out, the taxpayer can institute a formal appeal to the town. The taxpayer will then have an opportunity to present evidence to a board of review in an effort to show why the assessor got it all wrong. But what recourse does a taxpayer have if the board does not agree?
Unbeknownst to many Rhode Island taxpayers, state law requires that every person and business file an annual account of all “ratable estate” with the tax assessor by Jan. 31 of each year. This accounting is supposed to include both real and personal property. Businesses are more likely to be aware of this requirement because of tangible property taxes that they have to pay on their inventories and other business assets – but not all. Most private citizens pay little heed to these statutes and never know the difference.
Most of us have enjoyed the benefit of rising real estate values for many years. Unfortunately, that usually also means the tax assessor ends up increasing the valuation of your real property for tax purposes. When the tax valuation of your property goes up, you the taxpayer have an automatic right to appeal to the town. You also have the right to pursue an appeal in court if you are still unhappy with what the town decides.
In order for the taxpayer in a declining market to pursue a tax appeal in court, it is necessary to have filed an annual account in a timely manner. In legal jargon, the filing of an annual account is a condition precedent to the filing of any lawsuit.