Taxpayer Must Contest Real Property Assessment During the Involved Tax Year
In Cromwell Louisville Associates, LP v. Jefferson County Property Valuation Administrator, 2008-SC-000644 (Ky. Sep. 23, 2009), the Kentucky Supreme Court held that in order to appeal an ad valorem tax assessment on real property, a taxpayer must request a conference with the Property Valuation Administrator (“PVA”) during the open inspection period during the year of the assessment.
Cromwell Louisville Associates, LP (“Cromwell”), owned two parcels in Jefferson County. The Jefferson County PVA assessed both parcels as of January 1, 2001 for the 2001 tax year, increasing the combined assessment of value by almost $5,000,000 from the prior tax year. The PVA later assessed these parcels in both 2002 and 2003 at the same value it used for 2001.
In May 2002, Cromwell contested both the 2001 and 2002 assessments to the PVA during the 2002 inspection period. It then appealed both assessments to the Jefferson County KBTA of Assessment Appeals (“BAA”) which reassessed the value of the parcels for the 2002 tax year 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 then sought judicial review of the matter. It 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. Finally, Cromwell appealed to the Kentucky Supreme Court which granted discretionary review.
Kentucky provides taxpayers a statutory right to inspect the real property tax rolls during the first thirteen days of May. KRS 133.045(1). A taxpayer may appeal a real property tax assessment only after it requests a conference with the PVA “prior to or during the inspection period provided for in KRS 133.045.” KRS 133.120(1)(a). Cromwell argued that this “inspection period” restricts only the period of days, not the year, of the initial conference and subsequent appeal challenging the property assessment can occur. Cromwell’s position was that the applicable restriction for the conference and appeal for a tax year was instead the two year statute of limitations found in KRS 134.590. Therefore, Cromwell contended that by requesting a conference the year after the property assessment, it met the two year statute of limitation. The Kentucky Supreme Court disagreed.
The Court held that KRS 133.045(1) mandates the time and length of an open inspection period of the real property tax roll and limits such to the “current year.” Pursuant to KRS 133.120(1), a taxpayer that wishes to appeal an assessment must request a conference with the PVA to be held during the inspection period provided in KRS 133.045 for that year. If the taxpayer wishes to appeal after the PVA conference to the BAA, such appeal must be made no later than one day after the end of the inspection period provided in KRS 133.045.
The Court further concluded that Cromwell’s contention that KRS 133.120 does not restrict the conference to the current tax year would bring about “absurd results.” It stated that the only reading that “harmonizes” the statutes governing the appeal of an ad valorem tax assessment on real property is that the “current year” inspection period must be the inspection period during the tax year of the assessment. In addition to holding that KRS 134.590’s two year statute of limitations was inapplicable to administrative proceedings for challenging the PVA’s property value assessment, the Court also characterized Cromwell’s procedural due process argument that it was entitled to a pre-deprivation determination as disingenuous.