Deciding to Appeal a Hospitality Assessment Is Just the Beginning
By David Chitlik Vice President, Atlus Hospitality Tax Group | February 18, 2018
Deciding to appeal seems straightforward, but before the decision is made, the hotelier needs to understand that appealing a property assessment can be more art than science. It’s not just the facts and figures to consider. These have a supporting role, but an appeal puts them in context with other data to persuade an appeals board and, perhaps eventually, a judge that a property assessor with years in the business has made a mistake. It’s showing convincingly that an appellant’s opinion of value outweighs that of a professional assessor who works under strict laws, rules, regulations, guidelines and interpretations, many of them nuanced by the tax jurisdiction. Assessors can also benefit from a greater understanding of the appeal process than the appellant.
These elements of law and judicial culture are practices under which members of an appeals board and, if the case reaches that level, a judge will operate. In most jurisdictions, the assessor is considered correct until the appellant proves otherwise.
First, the hotelier has the right to handle the appeal alone. Realistically, though, it’s best to limit those efforts to small jurisdictions to which the hotelier is local, and where familiar players can be easily approached, often informally. Perhaps there is an easily remedied mistake: Assessment working papers say the hotel has 250 rooms, but there are only 225. Maybe there has been extensive remodeling that has been done in stages, necessitating taking rooms out of service for a considerable time. A fire closed 25 rooms or the events ballroom for most of a tax year. Those are errors that might merely require an assessor correct the work papers.
When the appeal involves more than simple factual errors, an appeals board will generally become involved. At that level, the appeal can become more complicated. Take, for example, a hotel that was refinanced during the past year at a greater amount than the property tax assessment. If a member of the board asks to see the appraisal supporting the refinance, the appellant’s case could become harder to prove. Though the facts and figures of a mortgage are generally not applicable to an assessment, an appellant might well provide that information. A lawyer or tax consultant, knowing that the mortgage amount should not be part of an appeal, could claim no knowledge of that amount.
Pride in the property, however justifiable, can work against an appellant if a board member challenges the basis for an appeal. It can be difficult for an owner to argue for lowering an assessment on property in which he or she has invested considerable money and time.
There are limits in which a layman can be effective in an appeal, and hoteliers’ time is usually best spent in managing the business operation of the hotels. Also, occasional legal landmines in a property assessment appeal require specialized expertise to defuse. Options for such help generally include a lawyer, an accountant or a tax consultant – or any combination of the three. Each has positives and negatives, and there can be quirks in the process of choosing any.
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