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Failure to Appeal Ad Valorem Assessment During Inspection Period for Tax Year is Fatal to Appeal

09.29.2008

In Jefferson County Property Valuation Administrator v. Cromwell Louisville Associates, LP, Case No. 2007-CA-001128 (Ky. App. Aug. 8, 2008), the Court of Appeals (“Court”) held that in order to appeal an ad valorem assessment on real property, a Taxpayer must request a conference with the property valuation administrator during the open inspection period during the year of the assessment.

Cromwell Louisville Associates, LP (“Cromwell”) owned two parcels in Jefferson County. On January 1, 2001, the Jefferson County PVA (“PVA”) assessed both parcels, increasing the combined assessment of value by over $5,000,000 from the prior year. The PVA assessed these parcels for the same amount in both 2002 and 2003 as it did for 2001.

In May 2002, Cromwell appealed the 2001 and 2002 assessments to the PVA during the 2002 inspection period and then appealed the 2001 and 2002 assessment to the Jefferson County Board of Assessment Appeals (“BAA”) in July, 2002. The BAA reassessed the value of the parcels for tax year 2002 but declined to address the 2001 assessment. Cromwell appealed both the 2001 and 2002 assessments to the Kentucky Board of Tax Appeals (“KBTA”) which held that Cromwell’s appeal of the 2001 assessment was untimely pursuant to KRS 133.120 and dismissed that appeal.

Cromwell appealed the KBTA’s determination that the appeal of the 2001 assessment was untimely to the Jefferson Circuit Court. That Court held that the 2001 appeal was timely because KRS 133.120 and KRS 133.045 did not contain specific language that required the appeal to the PVA to occur within the inspection period of the same year as the contested assessment. The PVA appealed to the Court of Appeals which reversed the Circuit Court and remanded the case for dismissal.

The Court of Appeals held that KRS 133.045(1) mandates the time and length of an open inspection period of the real property tax roll for the “current year.” Pursuant to KRS 133.120(1), a taxpayer who wishes to appeal an assessment must request a conference with the PVA to be held during the inspection period provided in KRS 133.045. If the taxpayer wishes to appeal after the conference, such appeal must be made no later than one day after the end of the inspection period provided in KRS 133.045. KRS 133.120(2). The Court held that the only reading that harmonizes the statutes governing the appeal of an ad valorem assessment on real property is that the “current year” inspection period must be the inspection period during the tax year of the assessment.

This case emphasizes the importance of contesting a real property tax assessment during the open inspection period for that assessment year. This has been the current practice for real property tax appeals in Kentucky. If the Kentucky Supreme Court takes this case, and holds for the taxpayer as did the Circuit Court, it would represent a significant change in the real property appeal process by allowing taxpayers to contest multiple years at the same time.

If you have questions about this topic or any other legal issue, please contact any member of the firm's State and Local Tax Team.

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