Brief(1)
H.B. 2602, as amended, would replace the Kansas State Board of Tax Appeals (SBOTA) with a new Kansas Tax Appeals Commission (TAC) and make a number of changes in the appeals process. Cities and counties seeking to grant economic development property tax exemptions (EDXs) also would be required to adopt resolutions containing specific factual findings that the property is being used for manufacturing, research and development, or warehousing purposes.
The Tax Appeals Commission
The bill would abolish SBOTA on January 1, 1999 and transfer all of its powers, duties, functions, property, and personnel to the new TAC. The TAC would be an independent agency within the executive branch.
The main body of TAC would consist of five commissioners appointed by the Governor, all of whom would be subject to Senate confirmation. No more than three of the commissioners could be members of the same political party. All commissioners would be required to be Kansas residents, and one would be appointed from each of the state's congressional districts along with one at-large member. The Governor also would be authorized to appoint a commissioner pro tem when a conflict prevents a commissioner from hearing an appeal or a commissioner is otherwise unavailable. The votes of three commissioners would be required for any TAC action.
Three of the five commissioners would be required to have been "actively practicing" law in Kansas for at least five years. Any non-lawyer commissioners would be required to be selected with special reference to training and experience for duties imposed by the bill. In hearings involving more than one commissioner, one of the active-practice lawyer commissioners would be the presiding officer. Hearings involving only one commissioner could only be conducted by one of the active-practice lawyers. All commissioners would be subject to the Supreme Court Rules of Judicial Conduct applicable to all district court judges and would be bound by the doctrine of judicial precedent to adhere to published decisions of the appellate courts. The TAC would be required to give due deference to prior TAC decisions and to state reasons and justifications for overruling a prior decision based on similar facts. Commissioners could be removed by the Governor for cause, after public hearings had been conducted in accordance with the Kansas Administrative Procedures Act. Commissioners would be required to complete various courses to assure familiarity with property appraisal theory.
The TAC would be required to appoint, subject to approval by the Governor, an executive director.
The executive director, who would be required to have familiarity with the tax appeals process, would be authorized to employ all persons necessary, including appraisers and hearing officers, to implement the provisions of the act.
The Small Claims Division
The bill establishes one division within the TAC as the Small Claims Division (SCD). Hearing officers appointed by the executive director would have authority to hear and decide SCD cases. Taxpayers could elect to appeal decisions, findings, orders, or rulings of the Kansas Director of Taxation to the SCD when the amount of tax in controversy does not exceed $20,000, or, in the case of property tax valuation disputes, when the property in question is single-family residential property or the appraised valuation of the property in question is less than $3,000,000, except that no cases involving agricultural use value could be considered in the SCD. SCD hearings would be required to be conducted within 60 days after appeals are filed, and hearing officers would be required to render decisions within 30 days of the hearings. Such hearings also would be required to be held in the counties where the property is located or in adjacent counties. Documents provided by taxpayers and county or district attorneys for SCD hearings would be returned and would be considered confidential. Taxpayers appealing to the SCD would not be precluded from appealing subsequently to the regular division of TAC. SCD hearing officers also would be required to complete courses in property appraisal theory.
TAC Proceedings and Requirements
Proceedings before the regular division of TAC would be governed by the provisions of the Kansas Administrative Procedures Act. Taxpayers could be represented by an attorney, any person enrolled to practice before the United States Tax Court, or could appear pro se. All final actions of the TAC, including final actions on nonstate-assessed property tax cases, could be appealed to the Court of Appeals. Under current law, property tax valuation cases not involving state-assessed property are appealed from SBOTA to district court before being eligible for appeal to the Court of Appeals.
The TAC would be required to provide any property owner information and assistance sufficient to allow the preparation of a proper request for exemption. All decisions denying property tax exemption requests of any kind would be required to be published.
TAC commissioners, the executive director, and SCD hearing officers would be prohibited from being subjected to any quota system or on amount or percentage of tax collected.
Property Tax Appeals Process Changes
Taxpayers appealing valuations for single-family residential property or of other property except agricultural land with a valuation of $3,000,000 or less would have the option of skipping the local hearing officer step in the appeals process and moving directly to the SCD or to the regular division of the TAC.
The requirement under current law that counties with 10,000 or more parcels of real estate appoint local hearing officers also would be repealed.
Taxpayers who own leased property and who are appealing valuation or protesting taxes would be required to provide income and expense information to county appraisers. Such information would be required to be kept confidential by county appraisers.
A current requirement that county appraisers during SBOTA hearings are responsible for initiating the production of evidence and demonstrating by a preponderance of evidence the validity of appraisals for certain kinds of property also would be extended to hearings within the SCD.
IRB and EDX Exemptions
With respect to locally-granted property tax exemptions, the amount of time parties seeking exemption have to request reconsideration of a decision would be expanded from 15 to 30 days. All such exemptions would be deemed approved unless TAC scheduled a hearing within 30 days. Cities and counties seeking to grant EDXs would be mandated to adopt resolutions or ordinances stipulating that:
CAMA Valuations
Appraisals produced by the computer assisted mass appraisal (CAMA) system would be deemed as acceptable only when (1) clear and concise information is provided on how the appraisals were generated; (2) they are based upon income, cost, or market valuation appraisal processes; and (3) comparable residential properties are provided as part of the written appraisals.
Property Tax Exemption for ATVs
The bill also would amend the definition of farm machinery and equipment for purposes of the property tax exemption in K.S.A. 79-201j to include all-terrain vehicles, effective for tax year 1998.
Motor Vehicle Property Tax Exemption Filing Requirements
Finally, owners of motor vehicles exempt from property taxation pursuant to K.S.A. 79-201 Ninth would also be removed from exemption filing requirements pursuant to K.S.A. 79-213 when one of the purposes of the organizations is to provide transit for elderly and disabled persons.
Background
The original bill was introduced without recommendation by the interim Special Committee on Assessment and Taxation. A number of the amendments to the original version were recommended by a House Taxation subcommittee. House Taxation Committee amendments included expanding the proposed TAC membership from three to five members; relaxing a requirement that all members be active-practice lawyers; providing that not more than three commissioners be members of the same political party (identical to a provision under current law with respect to SBOTA); providing that one member be appointed from each of the state's congressional districts along with one at-large member (identical to current law with respect to SBOTA); eliminating the ability of local units of government to grant property tax exemptions for job retention; and extending to the SCD a requirement that, during hearings, county appraisers initiate the production of evidence and must demonstrate by a preponderance of evidence the validity of appraisals.
House Committee of the Whole amendments included eliminating a $50 docket fee at the TAC level; inserting the CAMA provisions; and changing the definition of farm machinery and equipment for property tax purposes to include ATVs.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.