Protest Deadline Issues: Timing and Notice

With the value protest season at hand, property owners and consultants should be aware of two issues that might impact the filing deadline. The first is the extension rule for holidays. The second is the potential extension relating to the value notice requirement under the Texas Tax Code.

Failing to pay attention to either issue could result in a waiver of protest rights. Depending in part on the position of the appraisal district or review board, a protest that a property owner might think is timely could be late (and thus subject to dismissal). Or, the property owner might find himself waiting for a value notice that never comes as his protest opportunity disappears.

Timing

The normal deadline for filing a value protest is before June 1, as provided in Section 41.44(a) of the Texas Tax Code. A later protest is allowed if the appraisal district sends the owner a notice of value, but that will be discussed later in this article.

It is important to understand that the standard deadline is before June 1, which essentially makes the deadline May 31. However, in 2004, May 31 is also the day on which the United States observes Memorial Day (which is currently by law always the last Monday in May). As a recognized federal holiday, this means that the postal service is closed. The date is also a state recognized holiday, meaning that state government offices are also closed.

So, how do you file a protest if the post office is closed and the appraisal district is closed?

These circumstances are covered by the Tax Code. In Section 1.06, the Code provides: "If the last day for the performance of an act is a Saturday, Sunday, or legal state or national holiday, the act is timely if performed on the next regular business day."

Therefore, with May 31 being a state and national holiday, the deadline for the filing of a value protest in 2004 is pushed to Tuesday, June 1, the next regular business day. Similar circumstances occurred in 2003, when May 31 fell on a Saturday. Under the Code, the filing deadline was thus pushed to the following Monday, which was June 2. In effect, if May 31 falls on a Saturday, Sunday, or the last Monday in May, then the filing deadline is pushed to the next regular business day of the appraisal district.

However, that is not necessarily the end of the story. There is a separate section of the Tax Code which deals with the timeliness of actions taken by mail. In Section 1.08, the Code provides that, when a property owner is required to file some paper (such as a value protest), his filing by mail is considered timely if it is sent by regular first-class mail, properly addressed and postage prepaid and is sent "before the specified date."

A technical reading of this statute would provide that the deadline for a mailed protest would thus not be May 31, but the last day before May 31 that the post office is opened. With May 31 being a holiday and May 30 being a Sunday, the deadline for mailing would therefore be Saturday, May 29.

Many appraisal districts do not follow this hypertechnical reading to this section, and the statute has yet to be interpreted by the courts. However, property owners and tax consultants need to be aware of this issue.

Some value notices from appraisal districts delivered in 2004 indicate a June 1 protest deadline for this year. While this is in keeping with the provisions of Section 1.06, it does not necessarily resolve the issue of Section 1.08 mailing.

It would be good business practice to be sure that all protests are filed in advance of any deadline that might exist, in order to avoid any issues regarding timeliness of the filing whether in person or by mail.

Notice

While "before June 1" is the normal deadline for a value protest, Section 41.44 actually provides for the possibility of a later deadline. The Code provides that the deadline is before June 1 or 30 days after the date that a value notice under Section 25.19 is delivered, whichever is later. Therefore, if the appraisal district delivers a Section 25.19 value notice after May 1, the protest deadline will be extended to the 30th day after such delivery.

One potential trap for property owners and tax consultants concerns the date of delivery. Pursuant to Section 1.07 of the Tax Code, delivery is accomplished when the appraisal district mails the notice, not when the owner receives the notice. Because it is not uncommon for a document from an appraisal district to be dated earlier than when it is actually mailed, it is important to retain not only the value notice but also the envelope in which the notice was received. That envelope, if it has a legible postmark, might show that the appraisal district did not mail the notice on the date indicated on the notice itself. If so, then it might be used as evidence to show the timeliness of a protest.

However, another potential problem occurs when the property owner or tax consultant delays the filing of a protest in anticipation of receiving a value notice. Such a delay could result in a waiver of protest rights.

Section 25.19 of the Tax Code indicates that an appraisal district is normally only required to send a notice of appraised value in three situations: (1) the appraised value increases from the previous year; (2) the appraised value is greater than the value rendered by the property owner; or (3) the property was not on the appraisal roll in the prior year. A notice must also be delivered if (1) the property was reappraised for the current year, (2) there has been a change in ownership, or (3) the owner requests notice in writing.

Technically, an appraisal district is not required to send an appraisal notice if the value remains the same as or drops (even by a single dollar) from the previous year. Also, if the appraisal district's board of directors give approval, then the appraisal district is not required to send a notice if the value increases no more than $1,000 from the previous year.

Furthermore, if an owner renders personal property showing only cost and year of acquisition with no opinion of value (a possibility even under the new rendition laws), an appraisal district technically might not be required to send a notice if the property is appraised at cost, even though cost might not be the proper taxable value of the property and the appraisal district might use improper depreciation schedules. This is uncertain, as a value based on a rendition might be considered a reappraisal.

Though many appraisal districts will send out notices of appraised value each year, they are not required to do so unless one of these specific situations occurs. Therefore, it is possible in any particular year that no notice of appraised value will be required or received from the appraisal district. In fact, there have been situations where certain appraisal districts did not send notices in prior years where no change in value occurred.

The failure to receive a value appraisal notice (when no notice is required to be sent by the appraisal district) might not be an excuse for the failure to timely protest the appraised value of the property for the 2004 tax year. Section 41.44 of the Texas Tax Code provides that a value protest must be filed "before June 1 or not later than the 30th day after the date that [the notice of appraised value] was delivered," whichever is later. In the event that no notice of appraised value is required, then the "before June 1" date would apply.

Failure to timely file a value protest could severely impair the right of the property owner to obtain a value correction, potentially prohibiting any correction at all or resulting in the imposition of penalties for a late correction.

Other types of protest

The protest filing deadline under Section 41.44 does not just apply to value protests. It also applies to other protests, such as denial of an application for special valuation or denial of an exemption application. If a notice of denial has been received in such cases, then the same protest deadlines will apply.

However, often a determination to deny an application will not be made until after the deadline for such a denial. Technically, the chief appraiser is required to deliver any notices of denial before submitting the appraisal records to the review board on May 15. Very seldom do chief appraisers follow this rule, instead ruling on the application at some later date.

Normally, an appraisal district will allow a protest on the denial to be filed within 30 days of the eventual delivery of the notice of denial. However, in the event that such a protest is denied as untimely under Section 41.44, then the property owner should consider filing a Section 41.411 protest concerning the failure of the chief appraiser to timely send the required notice of denial.

Of course, if a value notice is required and is not sent such that the protest deadline is missed, then the property owner should also seek relief under Section 41.411.

What to do

If a property owner has not received a value notice as the deadline approaches, then he should contact the appraisal district and inquire as to the anticipated 2004 appraised value. If the owner believes that such anticipated value is excessive, then he might wish to file a value protest prior to June 1, even if no notice of appraised value has been received by that date.

If no value notice has been received and the appraisal district indicates that a notice will be sent in the future, it would still be advisable to file a protest prior to June 1. If no notice has been sent and the appraisal district subsequently decides to roll over the value or even reduce it (though not to the degree that the property owner believes is proper), then no notice will be required and the taxpayer might forego correction remedies while waiting for a future value notice that never arrives.

Property owners and tax consultants might also want to consider filing defensive protests -- essentially filing a protest of all property accounts before the June 1 deadline. After such filings, the owner can decide whether or not to pursue each protest.

If you have any questions about the contents of this article, please contact the GPD Property Tax Section at propertytax@gpd.com.