The Wisconsin Department of Revenue (DOR) is cracking down on assessors for reducing real estate assessments on individual properties in non-revaluation years based on recent sales prices.
Several assessors across the state have been updating assessments on an annual basis, including years where that jurisdiction was not performing a community-wide revaluation. The adjustments were made as a result of informal appeals by taxpayers or based on local sales activity.
The DOR has taken the position that the state Constitution’s uniformity clause bars the procedure known as “chasing sales.” DOR rules also prohibit the practice of revising the assessment of a single property while leaving unchanged the assessments of similar properties in that neighborhood or community.
To illustrate the scope of this issue, Wisconsin's largest contract firm that conducts assessments recently had one of its assessors decertified by the DOR for chasing sales. Several other local and contract assessors are also reportedly under scrutiny for this practice.
There is a wide variation in the frequency of revaluations in Wisconsin municipalities. Generally, Milwaukee and Madison are the only jurisdictions that update values annually. In other jurisdictions, it could be seven-to-ten years between revaluations. Accordingly, the DOR’s crackdown potentially has statewide implications.
Assessors are defending their procedures based on a conflict between the uniformity statutes and well-established case law. That case law mandates that a recent sales price for the subject property is the best evidence of value. Some assessors believe this confirms the validity of changing values in non-revaluation years based on sales price.
Impact on Property Owners
What is the potential impact on taxpayers from this controversy? It is likely that some assessors will stop changing values in non-revaluation years, even when there is good cause to do so, for fear of having their assessor certification revoked by the DOR. If that happens, it is possible that a taxpayer’s evidence of an over-assessment will not be considered for as long as seven-to-ten years, after which time their evidence may no longer be valid. As this situation evolves, it seems likely that it will generate a significantly higher number of costly court cases as aggrieved taxpayers search for a remedy to their plight.
Media pundits have championed the DOR crackdown as necessary to restore fairness to the system under the premise that uniformity of assessment is fairer than assessing specific properties at the correct value. This produces a system where current market evidence is not considered for many years, access to timely and inexpensive appeal venues is limited, and a higher percentage of taxpayers are paying taxes based on incorrect assessments. It would be difficult to design a more unfair assessment system.