High Court:
State continues
in
‘dereliction’ of duties
By John Dougherty
CARSON CITY, Nev. — The Nevada Tax Commission has violated state law for
more than 10 years by failing to issue a statutorily required tax-policy
manual to ensure that the state's 17 county assessors uniformly and equally
appraise property parcels across the state.
The lack of the tax manual has resulted in significant disparities among
county assessors in how they value property for tax purposes, state records,
court rulings and interviews with assessors show.
The state constitution requires property to be equally and uniformly valued
and the Nevada Supreme Court has ruled that county assessors must use
state-approved methods when they assess any of the more than one million
property parcels in the state.
The commission's failure to publish the tax policies and procedures manual
for a decade is not its only major shortcoming. The commission has not yet
promulgated a precise definition for "land," a fundamental element of
property-tax assessment. The commission has also been reprimanded by the
Nevada Supreme Court for "dereliction" of its duties to provide guidance to
county assessors on how to conduct appraisals in complex situations.
The
commission's violation of NRS 360.215(9), the provision requiring the policy
manual, has played a central role in the ongoing property-tax revolt in
Washoe County. North Lake Tahoe residents have won several Supreme Court
cases over that county's illegal use of property-tax-assessment methods
never approved by the state.
The Nevada
Assessors Association has repeatedly requested the tax commission to issue
the manual, but so far, nothing has happened. The result: Assessors must
make seat-of-the-pants judgments on often-complicated property-tax issues,
sometimes consulting with each other for guidance.
"The
assessors are in limbo," said Dino DiCianno, executive director of the state
Department of Taxation, the agency that implements regulations passed by the
Tax Commission. "What we need to do is update the manual and incorporate it
into our regulations."
So far,
however, the department has given no indication it plans to begin the
rule-making process to issue a new tax-policy manual
DiCianno said the old policy manual was withdrawn
from assessors in 1999 after the Nevada Legislature amended a law on
administrative procedures. The revision required policies and procedures
within the manual to go through the state's lengthy and cumbersome
regulatory rule-making process. Ten years later, DiCianno said, that
still has not happened.
Additionally, some counties are quietly pressing
for no tax-policy manual to be issued, because they want to retain
ultimate authority on how to implement state property-tax laws and
regulations, a former state tax department official and a former tax
commissioner said.
Joel Flamenbaum, a former tax department
supervisor, said that after he was hired in 2001 to oversee the
appraisal division he was ordered by superiors in the Guinn
administration not to work on the tax manual. Flamenbaum said he later
learned that the department decided not to reissue the tax policy manual
in order to provide cover for elected county assessors and allow them to
implement their own property assessment procedures without being held
accountable for straying from state standards.
"If nothing is written down, then no one could be
admonished," said Flamenbaum, who was fired from the department in 2006
after he leaked internal information to a taxpayers group.
Former state tax commission chairman Thomas Sheets
said there is disagreement between taxpayers and some assessors over the
need for the policy manual. Some taxpayer groups, he said, want a tax
manual with "rigid instructions" to provide assessors with as much
guidance from the state as possible.
But, Sheets said, some elected assessors don't
want to be subjected to the state-mandated directives that would come
with a policy manual. Instead, they want general guidelines within which
they can flexibly deal with varied situations.
"You don't have unanimity of opinion among the
county (assessors)," Sheets said during an August interview in his Las
Vegas law office. "All of these things factor into why there is no
manual at this point."
Sheets, who served as tax commission chairman for
four years, was unaware at the time of the interview that the commission
was required by state statute to issue the policy-and-procedures manual.
"Frankly, if the statutes say you should have a
[manual], then shame on me for not making sure we have done that during
my watch," he said.
Sheets resigned from the commission in September
to accept a position as chief counsel for the Federal Energy Regulatory
Commission. Gov. Jim Gibbons named tax commission member Robert Barengo
as the panel's new chairman. Barengo did not return a phone call seeking
comment on the lack of a tax manual.
A half-dozen assessors interviewed for this story
from large and small counties from across the state said they would
welcome a new tax-policy manual.
Josh Wilson, the Washoe County assessor and
current president of the Nevada Assessors Association, said, "assessors
across the state would like to see an updated manual." Wilson said the
tax department had scheduled hearings in the summer of 2007 on preparing
a new manual, but nothing ever came from the meetings.
Wilson said the old manual provided information on
how to implement regulations passed by the tax commission. "We want
guidance in carrying out the statutes and regulations consistently and
appropriately," he said.
Douglas County assessor Doug Sonnemann said his
staff still has a copy of the 1990s manual and he would welcome an
updated version to assist in explaining to taxpayers how the assessor
determined the value of their property. Douglas County includes high-end
properties on the southeastern shore of Lake Tahoe.
"Nothing is better to me than to pull out the book
and say, ‘Here is the law and the regulation,'" he said.
Lyon County Assessor Mike Glass said the lack of
the manual has made his job increasingly more difficult because of the
complicated tax regulations that have resulted in the last few years
after the Nevada Legislature imposed the property-tax caps in 2005. The
rapidly growing county is east of Carson City.
"It's been a bit rougher because the rules seem
obscure and hard to follow," Glass said. "There's lot of things where we
don't know what to do."
Glass said that he and many of his fellow
assessors in the 14 rural counties would welcome a policy manual because
it would help ensure uniformity in property-tax assessments across the
state.
"It would be nice if all the assessors could get
on the same page," he said. "It would be nice for the department to say
this is what this means. We all want to do it the same way and that's
been our goal forever."
Mark Schofield, the assessor of Clark County,
which includes Las Vegas, said, "a manual certainly would have
added some clarity, but it hasn't really impeded or hampered our ability
to do our jobs. We do rely heavily on the [state] statutes and the
Nevada Administrative Code."
At the same time, Schofield said he does not
understand why the tax department has not requested that the tax
commission begin hearings on a new manual. "Why haven't you taken the
tax manual back to the commission for adoption?" Schofield asks. "Why?"
Barbara Smith Campbell was chairwoman of the tax
commission in 1999 when the legislative changes were made and the
commission withdrew the manual, which up to then had not been made
generally available to the public.
She said the tax department even then couldn't
keep up with a statutorily required, 10-year review of about 100
regulations each year, let alone put a 350-page policy-and-procedures
manual through the regulatory process.
In addition, she said, opening the policy manual
to public comment during required regulatory workshops would quickly get
bogged down in a debate over how much discretion should be given to
assessors.
Taxpayer groups, such as the Village League to
Save Incline Assets, Inc., which is leading a seven-year tax revolt at
Lake Tahoe, would push for policies and procedures that strictly limit
the amount of discretion given to assessors to determine property
values, she said.
And assessors would counter, she said, arguing
that some degree of subjectivity is necessary in order to fairly and
equally assess property.
"The two sides shall never come together,"
Campbell said. "Not in our state."
The fact that it would be a contentious and
difficult series of hearings to approve a new tax manual is not a
legitimate excuse for the tax commission to have ignored the law for
more than a decade, said Norm Azevedo, a former attorney for the tax
commission.
"They have a statutory duty to do it and they
should do it," said Azevedo, who after leaving the commission
represented Lake Tahoe taxpayers in litigation that led to several
significant Nevada Supreme Court decisions. The rulings force Washoe
County to issue property tax refunds because the assessor used valuation
methods unapproved by the state.
In December 2006, the high court ruled in
Bakst vs. the State Board of Equalization that county assessors
must use appraisal methods approved by the state tax commission. In the
same ruling, the court also said the tax commission had been derelict in
its duty to provide detailed guidelines to assessors.
Now, three years later, the tax commission
continues to ignore state law and the Supreme Court by failing to
provide taxpayers and assessors a required policy-and-procedures manual
that would help ensure that property across the state is being fairly
and equitably assessed.
"From my perspective, that is the heart of the
issue," Azevedo said. "You have to have a uniform system of valuation."
John Dougherty is the principal of InvestigativeMedia.com and has
long been one of America's
leading investigative reporters. He has been retained by
the Nevada Policy Research Institute to report on critical issues of
Nevada governance.
