By Howard Stephenson
In the past two months three important tax cases were decided before the Utah State Tax Commission and the Utah Tax Court. All three of the cases were decided in favor of the Taxpayer. All three of the cases were decided in favor of the taxpayer. Each case is an example of county governments attempts to fleece deep-pockets business taxpayers. Fortunately, these three victories set precedents in eliminating flawed methods of valuing business properties in Utah. A paper describing the three decisions has been written by Maxwell Miller a Taxpayers Association board member, and Randy Grimshaw, both of the law firm Parsons Behle & Latimer. The complete paper along with links to the cases can be found under Special Reports at www.utahtaxpayers.org .
Holcim v Property Tax Division and Morgan County
The first case involves Holcim, a world wide cement company which has a manufacturing operation in Morgan County. The way Holcim was evaluated in previous years changed in 2001 when the Tax Commission and the county assessor abandoned evaluating Holcim with the cost approach and for the first time used the income approach.
Holcim argued before the Tax Commission that the income approach should not apply, and that Holcim’s manufacturing plant cannot lawfully be assessed under an income approach when all other manufacturers were being evaluated under the cost approach. The Tax Commission agreed with Holcim that an income approach was inappropriate for this type of property.
American Skiing Company v Summit County
The second taxpayer victory involves American Skiing Company dba the Canyons, located in Summit County. The significance of this case is the gigantic disparity over the county assessed values and the fair market value of the property which the taxpayer should have been assessed. Initially the county assessed the property at $104 million, the taxpayer challenged the evaluation and the Tax Commission eventually agreed that the taxpayer’s value of $20 million was correct. This case should make taxpayers aware of the flaws that can exist in county assessor’s evaluations of property. In this case the taxpayer avoided being taxed $84 million more than the property’s fair market value.
Alliant Techsystems v Salt Lake County
The third victory for taxpayers involves Alliant Techsystems located in Salt Lake County. Alliant manufactures rocket motors in West Valley, in the same plant Alliant operates the naval Industrial Reserve Ordinance Plant (NIROP), owned and supervised by the U.S. Navy. In this case the county assessed Alliant as if it was the owner of NIROP. The court ruled that Alliant should have been assessed on their proportionate use of NIROP rather than the full value; otherwise the state would be taxing government property, which the U.S. Constitution forbids.
All three of these results are good news for Utah taxpayers. It shows that the assessor’s rulings are not always correct and that challenges to the Tax Commission are appropriate and needed checks on the system.
Centrally Assed Properties
Recently, there has been a renewed interest by county governments in increasing the taxable values of centrally assessed properties. These are properties assessed by the Property Tax Division of the Tax Commission and include mines, utilities and railroads, airlines, trucking companies, and pipelines. These companies have always been the target of county governments who feel they should be paying more taxes. The arguments used in court challenges have attempted to include the intangible values of these companies such as good will and going concern in the values of the tangible assets owned by these companies. Similar to the cases cited above, the courts have refused the counties’ attempts to tax intangibles. However, with every new state administration, counties are expected to be back, trying to convince new officeholders of the need to get more out of these deep-pockets companies.
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For more information go to WWW.utahtaxpayers.org |