Virtually Eliminating Tax Appeals With Unlimited “Virtual” Tax Appeals

By | June 27, 2014

A powerful tool is now available to tax assessors and others faced with the daunting challenging of developing and maintaining fair and equitable value estimates on thousands or even tens of thousands of properties.  Even though advances in CAMA (Computer Assisted Mass Appraisal) and other software tools are a great help in maintaining assessments, local governments are often faced with a costly and cumbersome appeal system that puts a tremendous strain on both budgets and resources.  Under the current system, not only here in New Jersey but in many other locations, every appeal must be resolved individually by the tax assessor’s office – either through settlement, a hearing at the county tax board, or in tax court.  The pressure to resolve hundreds or thousands of cases can place a tremendous burden on local tax assessment offices and county tax boards, and the process often leaves taxpayers frustrated and lacking confidence in the fairness of the system.

In recent years, however, tools for online collaboration have been developed that could enable a fundamental shift in the approach to not only developing and maintaining property assessments, but also resolving disputed assessments.  Under an Appeal-Guided Valuation™ system, preliminary values are released up to a year prior to finalization and subject to continual online appeals that help to “shape” the final values.  As new sales, listings, and other data come in, this information is added to the system and any property owners (or their agents) within a given municipality are free to post online challenges to either their own assessment or any other assessment within the district.  The tax assessor is not required to respond to individual appeals, but instead uses the data provided to identify “appeal clusters”, in which “global adjustments” can be made to certain neighborhoods or property types in order to update or correct assessments on those properties.  The process can also be used to identify inconsistent assessments within neighborhoods, and appropriate adjustments can be made to raise or lower assessments for more consistency.  In some cases, it would be acceptable for an individual assessment to be raised or lowered based upon evidence provided that impacts a single property.

This would be a huge advantage over the current approach for a number of reasons:

  1. Exposing proposed assessments to vigorous challenges before they are finalized will result in a higher percentage of supportable assessments that are not likely to be changed through formal appeals.
  2. Unlike traditional assessment appeal systems which tend to focus almost exclusively on correcting over-assessments, an AGV system is a balanced approach that will correct all assessments, including those that are incorrectly low.
  3. Continually adjusting assessments in real time prevents large disparities between assessed and true values with the resulting inequitable distribution of the tax burden.
  4. Annual reassessments remove the possibility of multi-year appeal settlements that increase the incentive to file formal tax appeals.
  5. The ability to analyze and preemptively correct “appeal clusters” rather than be required to address all appeals individually is a much more efficient approach to developing fair and equitable assessments.
  6. Encouraging taxpayers to compare assessments of similar properties in similar locations will help correct inconsistencies and give property owners confidence in the fairness of the system.
  7. The need for expensive and inefficient mandatory property inspections will be greatly reduced.  Interior inspections will be only be needed to resolve conflicts in a limited number of cases.

This system could initially be used to complement traditional assessment systems and any resulting values would need to be tested in order to insure that they would stand up to formal appeals.  Some NJ county tax administrators would like to have the benefits of annual reassessments offered by the Monmouth Assessment Demonstration Program but are hesitant to implement such a system.  A cost-effective “pre-valuation” system using Appeal-Guided Valuation™ will provide great assistance to both municipal assessors and county tax boards by helping to develop and maintain current assessments while reducing the incentive to file formal appeals.

Systems for web-based collaboration will certainly become more sophisticated in the future, and NJ taxpayers are becoming increasingly comfortable using technology.  Using AGV systems, assessors will become more adept at making appropriate adjustments to proposed assessments based upon feedback and data provided by taxpayers, resulting in solid values that accurately reflect the correct allocation of the property tax burden within the municipality at a given time.  This will make Appeal-Guided Valuation™ a valuable tool for New Jersey municipalities to consistently and efficiently develop fair and equitable property assessments.

Please feel free to comment here or on our Facebook Page.  We welcome your thoughts about property assessment and related issues in New Jersey.  Any personal attacks or otherwise malicious comments will be deleted.


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