UPDATED — Commercial property owners who want to appeal their property tax valuations now have something else to complain about.
The Kansas Court of Tax Appeals in Topeka today voted to change the filing fees for those appeals after the Legislature slashed its funding earlier this summer.
“We now have the highest filing fees in the nation for commercial tax appeals,” said lawyer Jim McIntyre.
Fees have doubled, tripled or gone even higher. McIntyre said a lot depends on the number of parcels within a property and what county it is in.
What used to cost, say, $125 to appeal now might cost $1,600 due to the number of parcels, he said.
“It’s going to be a mess.”
He plans to file a lawsuit against the state this week to stop the fees from taking effect.
“A lot of people have a lot of money at stake here,” McIntyre said.
According to Sedgwick County, there were 3,618 appeals of commercial property taxes in 2010.
Since January, there have been 522, all of which required fees.
Until a few years ago, the entire budget for the Court of Tax Appeals came from the state’s general revenue fund and property owners didn’t have to pay to contest their valuations.
In recent years, the majority of the budget still came from the state, and commercial property owners made up most of the rest with filing fees.
Now, commercial property owners will fund about two-thirds of the court’s budget.
“What it does, it restricts access to the courts,” said Jim Hudson, co-owner of Tax Adjustment Specialists, which is one of several Wichita-area companies that help commercial and some residential property owners appeal their taxes.
For small tax issues, he said, the increased fees will mean “it’s just no longer feasible to take those cases.”
Hudson said $25 is about the most commercial property owners have to pay in other states in this area.
“In fact, most of the surrounding states don’t charge anything to file,” he said.
All Kansas property owners — residential and commercial — can make an informal appeal to their county appraiser’s office through a hearing for no fee.
The next level is a small claims division of the Court of Tax Appeals that’s generally used for residential property appeals.
The highest level for appeals is to the judges with the Court of Tax Appeals.
Residential property owners generally don’t have to pay anything to appeal their property taxes unless they take it to the highest level of the court, which isn’t as common as taking it to the small claims division.
That’s part of why McIntyre is filing the suit.
“They’re treating commercial taxpayers worse than residential taxpayers — far worse,” McIntyre said.
He said the suit will allege denial of federal constitutional rights of due process and equal protection.
He said the new fees also violate the state Constitution’s classification scheme in which commercial properties are taxed at 25 percent of their fair market value and residential properties are taxed at 11.5 percent.
“In my opinion, that classification requires that residential . . . homeowners pay based on a proportion of use,” McIntyre says. “That prohibits the Legislature from setting the filing fee at zero.”
McIntyre says that companies asking for industrial revenue bonds or that groups, such as churches, asking for tax exemptions also will have to pay significantly more.
McIntyre says he’ll name Gov. Sam Brownback in the suit.
“Brownback says he’s a big supporter of business, yet the people being gouged here are businesses,” McIntyre said. “The bigger the commercial taxpayer, the more they’re getting gouged.”
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