Taxpayers unjustly pay more than their fair share of the cost of government when other property owners “game” the system and pay less than their fair share in real estate taxes.
In Pennsylvania, our law recognizes the “principle that a taxpayer should pay no more or no less than his proportionate share of the cost of government. ” The Law Firm of DiOrio & Sereni, LLP successfully defended a trial court’s finding that a property owner must pay its fair share when our Pennsylvania Supreme Court rejected its Petition for Allowance of Appeal from the Commonwealth Court’s Order affirming the trial court’s decision.
In In re: Springfield School District , the property owner asserted that its properties should be valued—and assessed—based upon 1998 “base year” market values “as they are configured and exist” in 2011 and 2012, rather than on the actual 2011 and 2012 market values. Thus, the property owner sought to pay real estate taxes based upon an absurdly low $3,150,000 “base year” value rather than pay taxes on the current market value of $11,400,000.
Simply put, a court in a tax assessment appeal first determines the current market value and then applies the established predetermined value—or common level ratio. The common level ratio is a tool that Pennsylvania uses to equalize the assessments of properties that are valued in different years by taking into consideration the base year of a county-wide assessment and previous years’ sales data. Thus, the common level ratio ensures uniform treatment of all property owners within the taxing authority’s jurisdiction.
Allowing this property owner’s “base year methodology” of valuation would result in an inequitable distribution of taxes owed by other taxpayers. The remaining taxpayers would be forced to pick up the slack because today’s government cannot run on 1998 values.
For example, if a property owner whose land value has sharply risen over the years were permitted to use a fifteen year old base value for its current assessment, it would end up paying a proportionately far lower amount in taxes than a property owner whose real estate value has remained comparatively static over the same time period.
The Pennsylvania Commonwealth Court flatly rejected the property owner’s purported “base year methodology.” And because the Pennsylvania Supreme Court refused to hear the property owner’s appeal, this important decision remains the law of Pennsylvania, thereby ensuring that our taxpayers do not end up unfairly paying for this property owner’s fair share of the cost of government.
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i Deitch Company v Board of Property Assessment, 209 A.2d 397, 401 (Pa. 1965).
ii In re: Appeal of Springfield School District, 101 A.d 835 (Pa.Cmwlth 2014) (Reargument or Reharing En Banc Denied Nov. 7, 2014).
iii In Delaware County, the last county-wide assessment was conducted in 1998.
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