Refunds for overassessed ag land discussed during commission meeting
Brown County commissioners and a local attorney discussed Tuesday whether landowners will be able to recoup property taxes paid on overvalued agriculture land despite not appealing their assessment notices.
Aberdeen attorney Harvey Oliver visited with commissioners during their weekly meeting about the prospect of landowners who have paid more than their fair share of taxes since 2010 taking legal action in pursuing refunds.
Oliver asked commissioners whether their ag assessment plans have resulted in over assessments or an illegal tax — a question commissioners weren’t able to answer.
He said the county might have to refund property taxes on overassessed ag land even though no appeals were filed.
Another option, Oliver said, is that the county could offer credits on future property tax bills to affected landowners.
The county has been assessing ag land 15 southern townships at 118 percent of the top-dollar production value as determined by the state Department of Revenue based on land productivity. That has been done using a map the county crafted years ago. It was designed so that ag land that would likely sell for more money would have higher assessments. It divided Brown County into three neighborhoods.
Other townships in Brown County have been assessed at either 97 or 87 percent of top productivity, resulting in a shift of property taxes.
Brown County’s top per-acre value under the state’s productivity model is $3,620 for this year. That’s the state number as determined by gross revenue per acre during the previous eight years.
South Dakota changed the way it determines the value of ag land from a process based on market sales to one based on productivity about a decade ago.
None of the commissioners knew Tuesday the amount of property taxes overpaid by Brown County landowners since 2010.
“Because someone didn’t appeal it, that there was no remedy for the taxpayers to address it — I think that’s not true,” Oliver said. “There are two statutes that deal with taxpayer remedies. One involves payment under protest and the other is a requirement that the taxpayer sue the county within 30 days to seek a refund for an illegal assessment.
“There’s no reason, in my view, to have taxpayers or landowners and the county be adversaries. If there is an error, it was a well-intentioned error. The next question is how do we remedy it within statue, or in addition to the statute?” he added.
Oliver said Attorney Genera Marty Jackley has offered to help the county sort things out.
“Jackley has offered his office and is willing to get tax attorneys involved to address those issues. He doesn’t know whether a county can employ their own procedures in addition to the (state) statutes as remedies. He said the Department of Revenue is not under him, it’s an executive branch. Our No. 1 thing is to get it fixed. Nobody is out to get anybody here,” Oliver said.
“I was getting myself,” said Commissioner Tom Fischbach, who owns farmland near Warner.
He was referring to his property being overtaxed under the old county map.
Commissioner Duane Sutton said the county needs to get a consensus on what it can do.
“We merely collect the taxes. Are the school districts, or rural fire departments or James River Water Development District willing to offer tax credits or refunds? Let’s try to get a consensus on what the law is, on what we can do with it, and if we can’t (do anything), so be it. The other entities are going to have to agree to offer a credit or refund. So it’s kind of a convoluted answer to a series of questions,” Sutton said.
Interim Director of Equalization Gene Loeschke plans on using a map with four neighborhoods based on productivity to determine this year’s assessments. He said it has been verbally approved by Michael Houdyshell, division director for the state Department of Revenue.
“I’m sending a letter requesting (Houdyshell) to respond (in writing). Then we’ll go forward with trying to prove to them that the adjustments we make are production-based,” Loeschke said.
The county cannot set values higher than the top per-acre total determined by the state, according to an evaluation of Brown County’s ag assessment plan by the state, which was discussed during last week’s meeting.
The evaluation found some truth to concerns raised in January by former Director of Equalization Michael Hauke Jr. He claimed the county was illegally and improperly assessing ag land by splitting the county into neighborhoods based on market sales.
Hauke was fired during the Jan. 9 commission meeting. But his concerns led to the county requesting that its ag assessment plan be evaluated by the state.
The commission told Loeschke to author a written response to the state Department of Revenue review and to request formal approval to use county’s reformatted ag assessment plan for this year’s property taxes, which are payable next year.
In other action Tuesday, commissioners:
• Approved a motion to go into executive session to discuss legal matters, including issues regarding the state’s ag assessment plan, with Loeschke and State’s Attorney Chris White. No action was taken as a result of the closed session.
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