The Tax Abatement Process

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A. Local Level – Assessors

1. Filing of Abatement Application

The abatement procedure is commenced at the local level by filing an application for abatement with the local board of assessors. In general, there are four categories of persons who may apply for an abatement: the assessed owner or subsequent owner who acquires title after January 1; the tenant under obligation to pay more than one-half the tax on the property; a person with an interest in the property or in possession thereof; the holder of the mortgage on the property provided such mortgagee pays at least one-half the tax due.

Deadlines for filing abatement applications depend on the frequency (semi-annual or quarterly) in which the applicable city or town sends its tax bills. For semi-annual communities, if the first half tax bills are issued on or before October 1, then applications are due on or before November 1. Where tax bills are issued after October 1, then applications must be filed within 30 days after the tax bills are sent. For quarterly communities, applications are due on or before the last day for payment of the first installment of the actual tax bill issued upon the establishment of the tax rate for the fiscal year in question. In nearly all cases, this is February 1, the due date for payment of the third quarter tax bill. Occasionally, where a community has not established its tax rate in a timely fashion, the community will issue a third quarter estimated tax bill. In such instances, actual tax bills will not issue until the fourth quarter, and abatement applications will not be due until May 1.

Statutory compliance is measured by the date the application is received or if the application is sent by United States mail, first class postage prepaid, by the date of the United States postmark affixed on the envelope containing the application. Cities and towns do not have to accept as timely an application sent by an overnight carrier, such as Federal Express, on the due date for the application.

2. Requests for Information issued pursuant to Massachusetts General Laws Chapter 59, Sections 38D and 61A

There are two different statutory mechanisms utilized by assessors in Massachusetts to request from taxpayers information concerning a property. The first, M.G.L. c. 59, §38D (“38D”), allows assessors to send requests for information prior to the setting of the assessments in order to provide the assessors with the information they need during the valuation process. The second, M.G.L. c. 59, §61A (“61A”), allows assessors to send requests for information following the filing of an abatement application but before an appeal is taken in order to allow assessors to evaluate a taxpayer’s application. Requests for information under §38D must be responded to within 60 days of receipt while requests under §61A must be responded to within 30 days. Both statutes require that responsive information be provided “under oath”. Moreover, the consequence for a failure to respond under either statute is a complete bar from taking an appeal to the Appellate Tax Board from the assessors’ denial of an abatement request.

It is important to note that requests for information under §38D are typically sent directly to the taxpayer while requests issued under §61A are usually sent to the taxpayer’s representative listed on its application for abatement.

Over the past several years, the Appellate Tax Board has issued numerous decisions which drive home the importance of responding timely to requests for information issued either pursuant to §38D or §61A. In Marketplace Center II v. Assessors of Boston, 25 Mass. App. Tax Bd. Rep. 781 (2000), the assessed owner of Marketplace Center, an office/retail property located next to Faneuil Hall in the City of Boston, failed to respond to requests for information issued by the Assessors of Boston pursuant to §38D for each of fiscal years 1995 through 1999. Although the owner admitted to such noncompliance, it contended that it had substantially complied with the City’s requests by submitting income and expense information in each year in response to the City’s requests issued pursuant to §61A following the owner’s filing of abatement applications. Id. at 782. The Appellate Tax Board stated that, in order to resolve the issue, it must determine the following: (1) whether the information sought under §38D was “reasonably required” to determine the property’s fair cash value; (2) whether the owner failed to respond to the requests; (3) whether the owner was unable to respond due to reasons beyond its control; and (4) whether the plain language of §38D barred an appeal by the owner. Id. at 784. The Board found in favor of the City on each question and dismissed all of the appeals. Id. at 784-788.

More recent examples of this consequence were seen in the cases of Forty Four – 46 Winter Street, LLC v. Assessors of Boston (2005), Herman Banquer Trust v. Assessors of Boston (2005), Dilibero Family LP v. Boston (2006) and Bayview of Boston v. Assessors of Boston (2006). All four matters were decided on Motions to Dismiss brought by the Assessors of Boston for the taxpayers’ failure to respond to requests for information pursuant to §38D. In all four instances, the Appellate Tax Board again asked the questions asked in Marketplace Center and found the same answers. The appeals in question were dismissed.

As evidenced in these cases, the consequences of not timely responding to assessors’ requests for information has become a serious issue in Massachusetts. While assessors are learning the value of issuing such requests more frequently and seeking dismissal of appeals of taxpayers who do not comply, taxpayers are quickly learning the importance of a timely response. Taxpayers must be mindful, however, that a balance may be struck between providing legally sufficient information to the assessors, without disclosing unnecessary or sensitive business information. Accordingly, guidance from experienced counsel is recommended.

3. Hearings before Assessors

Although the Supreme Judicial Court has stated that abatement statutes contemplate hearings before Assessors, there is no explicit requirement that a hearing take place upon the filing of an abatement application. Accordingly, a hearing will generally not take place at the local level unless requested by the taxpayer and agreed to by the board of assessors.

If a hearing or settlement meeting takes place, the taxpayer should be prepared to demonstrate overvaluation by the use of an accepted method of valuation. Also, taxpayers frequently avail themselves of a comparable assessment approach, wherein the assessment of the subject property is compared with the assessments of other similar properties. This method may be difficult to utilize if the subject property is unique, however, it can be effective at the local level.

4. Decision of Assessors

A board of assessors may either grant, deny or take no action on an application for abatement. Generally, applications are denied or the assessors fail to act. The assessors’ failing to take any action on an application within three months after the date on which the application was filed, unless consented to in writing by the applicant, is the equivalent of a denial of that application. M.G.L. c. 58A, § 6, M.G.L. c. 59, §§ 64-65.

B. State Level – Massachusetts Appellate Tax Board

1. Procedure

A taxpayer aggrieved by the assessors’ refusal to abate a tax on a parcel of real estate may appeal to the Appellate Tax Board by filing a petition within three months after the date of the assessors’ decision, or within three months of the deemed denied date, whichever is sooner. M.G.L. c. 59, § 64. Failure to comply with these time requirements will result in dismissal of an appeal.

In addition, to preserve the right to appeal to the Appellate Tax Board, the actual tax bills must be paid on or before the due date, that is, within 30 days after the bill is sent (when mailed, not when received by the taxpayer). Quarterly bills, which are used by the majority of communities in Massachusetts, are an exception: payments are due August 1, November 1, February 1 and May 1, unless the actual third quarter bill is mailed after December 31, in which case there is a single payment of one-half the tax due on May 1. Payments for the third and fourth quarters must be received by the collector on or before the due dates (along with any outstanding interest due on the preliminary taxes, if applicable), or the right to appeal is lost.

Taxpayers may file under the formal or informal procedure. Under the informal procedure, all formal rules of pleadings, practice and evidence are eliminated to the extent practicable. Rule 37, Rules of Practice and Procedure of the Appellate Tax Board. A taxpayer electing the informal procedure, however, limits its rights to appeal any decision of the Tax Board. Accordingly, the informal procedure should be avoided for significant residential properties and for commercial and industrial properties.

2. Standard of Review

On appeals to the Appellate Tax Board from decisions of assessors it is the function of the Board to hear and determine anew every issue of fact raised by the pleadings, on evidence that is introduced before the Board.

The assessment under review is presumed valid until the taxpayer sustains its burden of proving otherwise. Schlaiker v. Board of Assessors of Great Barrington, 365 Mass. 243, 245 (1974). In appeals before the Board, a “taxpayer may present persuasive evidence of overvaluation either by exposing flaws or errors in the assessors’ method of valuation, or by introducing affirmative evidence of value which undermines the assessors’ valuation.” General Electric Co. v. Assessors of Lynn, 393 Mass. at 600, quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983).

If on hearing, the Board finds that the taxpayer’s property has been “overrated” by the assessors, “it shall make a reasonable abatement”. M.G.L. c. 59, § 64.

1. Record on Appeal

Prior to a hearing, either party may request that the proceedings be reported officially by a stenographer. G.L. c. 58A, § 10. If neither party requests that the proceedings be reported, all parties shall be deemed to have waived all rights of appeal to the Appeals Court and the Supreme Judicial Court on questions as to the admission or exclusion of evidence, or as to whether any factual finding was warranted by the evidence.

The Appellate Tax Board must render a decision in every case in which it hears. G.L. c. 58A, § 13.

If the Board renders a decision under the formal procedure, either party, within ten days of the Board’s decision, may request that a report be issued. Id. If neither party requests a report, both parties are deemed to have waived all rights of appeals to the Appeals Court and the Supreme Judicial Court. Id.; H-C Health Services Inc. v. Assessors of South Hadley, 42 Mass. App. Ct. 596, 597 n. 3 (Assessors’ failure to request findings of fact meant that only “pure questions of law” were preserved on appeal.)

2. Refunds

Whenever an abatement is granted, the taxpayer is entitled to receive a certificate of abatement from the assessors or other proper officer. G.L. c. 59, § 70.

Once an abatement certificate is issued, the municipal treasurer shall reimburse the taxpayer for the full amount of the abatement, plus interest on the amount so abated at eight percent from the time of payment or the due date of the tax, whichever is later. G.L. c. 59, § 69.

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