WASHINGTON D.C. - Rhode Island received a “D” grade for its property tax administration and scored sixth worst among the states, according to a report released by the Council of State Taxation.
The report grades states in three categories: how standardized their property tax procedures are among municipalities, whether they have fair procedures for appealing taxes and whether business properties pay the same taxes as residential properties.
Rhode Island received “C-” grades in the first two categories and a “D” in the last.
The grades are based on a point system in which zero earns the highest grade. Rhode Island earned 32 out of 48 possible points, the same as Louisiana. Only Hawaii (34 points), Illinois (35 points), Delaware (35 points), Pennsylvania (36 points) and New York (43 points) scored worse.
Maryland was the only state to score in the “A” range, earning an “A-” with 11 points. The other states to make the top five were Georgia (13 points), Oregon (13 points), Florida (14 points) and Kentucky (15 points).
Rhode Island was marked down in the first category because each municipality sets its own due date for filing taxes, which COST said is onerous for businesses, though all municipalities use the same forms and are subject to state oversight. The state also mandates that municipalities revalue properties every 10 years, instead of COST’s preferred two-to-three-year timeline, and does not require towns and cities to apply equal interest rates for taxpayer underpayments and government overpayments.
Rhode Island earned 10 out of 16 possible points in COST’s assessment of its tax appeal procedure. The Ocean State lost points for placing the burden of proof on the tax payer, lacking an independent tribunal that reviews administrative decisions and mandating that taxpayers pay the disputed taxes before the appeal.
In the final category, comparing business and residential property taxes, Rhode Island received a low score because its assessment ratios and tax burden on businesses compared to residences varies across municipalities. COST prefers a statewide assessment ratio valuing property at 100 percent of market value and an equal property tax burden between businesses and residents.
Property taxes account for more than 70 percent of local government revenues, according to the report, and 98 percent of property taxes are local.
“Because state and local jurisdictions rely so heavily on the property tax, it is essential for state legislators and tax administrators to ensure the tax is administered fairly and without perceptions of bias or undue administrative burdens,” according to the report.
COST released the property tax scorecard in May and also issues reports evaluating states on their administration of state taxes and unclaimed property laws.
COST said it strives to “preserve and promote equitable and nondiscriminatory state and local taxation of multijurisdictional business entities.”
Council of State Taxation,
property tax procedures,