The Connecticut General Assembly

OFFICE OF LEGISLATIVE RESEARCH

September 26, 1994 94-R-0733

TO:

FROM: John Rappa, Principal Analyst

You asked us to describe how towns assess and tax property and how property owners can appeal an assessment.

SUMMARY

Property taxation is a state power the legislature has granted to towns. Towns can tax only the real and personal property that the statutes do not explicitly exempt. The tax is based on a property's fair market value. Towns must follow specific statutory procedures for assessing property, hearing appeals, and granting tax relief.

AUTHORITY

Property taxation is a state power the legislature has granted to towns. The statutes control how towns can assess and collect property taxes. They require towns to elect three tax assessors unless their charter provides otherwise (CGS § 9-199). The assessors must insure that all properties are properly and uniformly assessed and that the town's grand list includes all tax and tax-exempted properties. The secretary of the Office of Policy and Management can develop assessment practices and procedures and provide for the training and certification of tax assessors and assessment companies (CGS § 12-2).

PROPERTY SUBJECT TO TAXATION

Types

Towns obtain most of their revenues by taxing real and personal property. Real property consists of land and everything permanently attached to it, such as houses, factories, and stores. Personal property consists of moveable objects or things that are not permanently attached to the land. It includes tangible property, such as airplanes, furniture, and drill presses, and intangible property such as copyrights, stocks, and franchises.

Exemptions

By law, all property is taxable (CGS § 12-64). But the law specifically exempts certain properties from taxation and allows towns to exempt others. Some of these exemptions depend on a property's owner, such as those granted to veterans, elderly, and disabled people.

As Table 1 shows, most exemptions are mandatory, and only a few are reimbursed by the state.

Table 1

Property Tax Exemptions

State Reimbursement

Type Yes No Total

Local Option 1 28 29

State Mandate 11 47 58

Total 12 75 87

Attachment 1 lists and describes the exemptions.

VALUATION

Standard

Towns must assess property based on its present true and actual value (i.e., fair market value), which means the price the owner can obtain in any transaction that is not a forced or auction sale (CGS § 12-63). They must tax all real and personal property at 70% of its fair market value (CGS § 12-63). Some states allow towns to classify properties based on their use and then tax them at different rates (tax classification).

Frequency

Towns must periodically reassess or revalue properties since their values fluctuate and change over time. Reassessment allows towns to capture changing property values, upon which the tax is based. This helps to iron out the inequities in the tax burden that arise when property values change.

Real Property. Each town must revalue land, homes, office buildings, and other types of real property every 10 years (CGS § 12-62). The tax assessor is responsible for doing this, even when he hires a private company to do the job. He can hire only companies certified by OPM (CGS § 12-2c).

Personal Property. Towns must annually revalue personal property. All personal property is taxable, but the statutes specifically exempt clothes, furniture, and other types of personal property generally owned by individuals.

On the other hand, the statutes require businesses to pay taxes on most of the personal property they own. This property includes such items as drill presses, cash registers, and dining tables. The statutes exempt certain items, such as newly acquired manufacturing machinery and pollution control equipment.

A business must list and report its nonexempted personal property to the town in which the property is located by November 1 each year. The assessor must publish a notice of this requirement. The list must include the property the business owned on or before October 1 (CGS § 12-41). The assessor can impose a 25% penalty on a business that fails to submit the list (CGS § 12-42). He can prepare the list and assess the property based on the best available information.

There are several methods for assessing personal property, but most assessors use depreciation schedules. The assessor can also audit a business, and the business owners must assist him. He must notify those property owners whose tax assessments have increased within 10 days after completing the grand list, which is the consolidated list of all real and taxable personal property in the town. (CGS § 12-55). The assessor must also notify owners about assessment increases resulting from previously unlisted properties (CGS § 12-53).

Assessors can correct a clerical omission or mistake with regard to an assessment within three years after the taxes are due. They must notify the owner if the correction increases the assessment. (CGS § 12-60). The assessors can also add taxable property to the owner's list or remove a tax-exempted one. They can do this any time before the owner pays the tax or within year of the due date (CGS § 12-57).

Motor Vehicles. Assessors must assess motor vehicles according to a schedule prepared by OPM. The schedule must list the average retail price of each vehicle as of October 1st of that year. OPM must annually issue the schedule on or before that date (PA 94-4 May Special Session).

MILL RATE

The mill rate is the rate at which a town taxes properties and depends on the town's budgeted expenses. A mill is $1.00 of tax for every $1,000 of assessed value. The town calculates the rate after determining its grand levy and net taxable grand list. The grand levy is the town's total budget expense that is to be raised through taxes. The net taxable grand list is the total value of all property minus the total value of exempted property.

The town calculates the mill rate by dividing the grand levy by the grand list. It then multiplies this percentage against the assessed value of a property to determine the tax bill. For example, assume that the town's grand levy is $18 million and its net grand list is $600 million. The mill rate would be 30 mills:

$18,000,000

$600,000,000 = .030

A home assessed at $100,000 would be liable for taxes on 70% of that amount or $70,000. The tax bill would be $2,100 (.030 X $70,000).

TAX RELIEF

Towns can provide tax relief to homeowners whose assessment increases after a revaluation. They can do this by phasing in the increase over five years or providing five-year property tax credits. Attachment 2 details these options.

APPEALS

Board of Tax Review

In most cases, taxpayers can appeal assessments to their local boards of tax review (BTR). The BTRs meet in February (and September for motor vehicle appeals) and must complete their sessions by the last business day of the month. But they can ask OPM for extensions, if the town's chief elected officer approves. OPM can grant extensions for one month, or if the town just completed a full-scale revaluation, two months. Unless a special act provides otherwise, taxpayers can appeal only during the months in which the BTRs are in session. They can also appeal during extended sessions (CGS §§ 12-110 to 12-112 and 12-117).

A taxpayer who wants his assessment reduced must appear in person or be represented by an attorney or agent and must be willing to answer questions under oath (CGS § 12-113). After hearing the appeal, the board can reduce or increase the property's valuation or add or subtract items on the taxpayer's list. But, if the taxpayer has already been subjected to the 10% penalty for failing to file a tax list, the board may not reduce or delete the list (CGS § 12-114).

If the board increases the assessment or adds items to the taxpayer's list, it must notify him by mail at least one week before the change is made and give him a chance to show why the change should not be made, And the board must report its final determination of all appeals, in writing, within one week of its decision (CGS § 12-111).

Court Appeals

From Action of BTR (12-117a). A taxpayer aggrieved by the BTR's decision can appeal to the Superior Court for the judicial district in which the town is located. He must do this within two months of the board's action. He must also post a bond running to the town. The citation to the town is subject to the same service and return process as a summons in a civil case; pleading follows the same procedure as an ordinary civil case (Conn. Prac. Book, § 257 (d)).

While the appeal is pending the town may collect up to 75% of the tax assessed on the property (or up to 90% on real property assessed at over $500,000). If a new assessment year begins while the case is pending, the taxpayer can amend his action to cover the new year and does not have to reappear before the BTR.

If the court reduces the taxpayer's assessment, the town has to reimburse him for the tax overpayment, plus interest and costs. Or the taxpayer can choose to receive a tax credit (plus interest and costs). The court-ordered assessment becomes the property's grand list valuation for succeeding years, until the tax assessor determines that its value has changed.

If the court finds that the appeal was made without probable cause, it can assess double or triple costs, at its discretion.

Appeals Directly to Superior Court (CGS § 12-119). The statutes provide a narrow avenue for a taxpayer to appeal directly to the Superior Court in cases of claims that (1) an assessment was “manifestly excessive” and was calculated with disregard to the statutes or (2) that the property was not taxable in the town imposing the tax. The appeal must be taken within one year from the last valuation. It is treated like a civil action. The appeal does not stay the collection of the tax on the property in dispute. The burden of proof is on the appellant. The court may grant equitable relief and assess costs at its discretion. If the court reduces the taxpayer's assessment, the town must reimburse him as the court directs.

JR:pa

Attachments