Investing Money

  Oregon Chapter
Fifth Edition (1999-00)

Marilyn J. Harbur, Esq.
Peter R. Jarvis
Robert T. Manicke, Esq.
Bart D. Jeffress, Esq.

§ 38-000. INTRODUCTION. Oregon continues to adapt to property tax limitation provisions adopted in 1997 pursuant to Ballot Measure 50. Or Const Art XI, § 11. Measure 50 (a constitutional amendment) and its implementing legislation established a “cut and cap” system of rate limitations and introduced a new concept of “maximum assessed value” as an overlay on the existing key term “real market value.” The date for valuing property (the “assessment date”) was changed to the January 1 preceding the start of the tax year (which begins July 1). See definitions in § 38-110, et seq.

Real and tangible personal property, but not intangible property (except utility intangible property), generally is subject to property taxation. Exemptions exist for certain charitable and non-profit property uses. In addition, and to encourage certain types of land use, farmland, timberland and certain other property is entitled to either full or partial exemption. See § 38-610. Certain industrial properties and utility properties are centrally assessed by the Oregon Department of Revenue, while county assessors appraise and assess all residential, commercial and some industrial properties. See § 38-115. The Oregon Department of Revenue also has general supervisory authority over the administration of the assessment and taxation laws.

Also effective in 1997, Oregon returned to a unitary system of administrative appeals (county Boards of Property Tax Appeals), with judicial review in the magistrate and regular divisions of the Oregon Tax Court and final appeal to the Oregon Supreme Court. As is explained more fully in subsequent sections of this chapter, a taxpayer who wishes to challenge the value assessed for any particular tax year must file a petition with the Board of Property Tax Appeals between the date property tax statements are mailed for the tax year and December 31 of that year. See § 38-116. Effective September 1, 1997, appeals from the Board of Property Tax Appeals are heard by the magistrate division of the Oregon Tax Court, which was created by the 1995 legislature. Appeals formerly were heard by the Department of Revenue. See § 38-521.

§ 38-100. DEFINITIONS & CITATIONS

§ 38-110 Definitions of Terms Used in Chapter.

§ 38-111. Assessed Value (AV) is the term used in 1997 legislation to define the value by which the amount of tax will be measured. In general, the AV is the lesser of (1) the property’s “maximum assessed value” or (2) the property’s “real market value.” ORS 308.146(2).

§ 38-112. Maximum Assessed Value (MAV). For the tax year July 1, 1997 through June 30, 1998 the MAV is the property’s real market value for the 1995-96 tax year, reduced by 10 percent. 1997 Or Laws ch 541, § 2. (This is the tax “cut” portion of the 1997 changes.) For tax years beginning July 1, 1998 and later, the MAV may not exceed the lesser of (1) 103 percent of the previous year’s assessed value or (2) 100 percent of the property’s MAV from the prior year, whichever is greater. ORS 308.146(1). (This is the “cap” portion of the 1997 changes.)

Special rules apply to determine the MAV of new property, new improvements, and property that is subdivided, partitioned or rezoned, is disqualified from exemption or is subject to lot line adjustment. ORS 308.146(3). In those cases, MAV essentially is determined according to its RMV (defined below) multiplied by the so-called “changed property ratio,” which is the area-wide average of MAV over RMV for property of the same class for the assessment year. ORS 308.153(1), 308.156(5).

§ 38-113. Real Market Value (RMV) means the minimum amount in cash which could reasonably be expected by an informed seller acting without compulsion from an informed buyer acting without compulsion, in an arm’s-length transaction occurring as of the assessment date for the tax year. OR Const, Art 11b, § (2)(a); ORS 308.205(1). With this definition, Oregon essentially returns to the concept of “true cash value,” as in effect in tax years prior to 1991.

§ 38-114. Assessment Date, for purposes of determining RMV, has been changed from July 1 to the January 1 preceding the start of the tax year (which begins July 1). ORS 308.210(1) and 308.250(1). For the tax year 1997-98, the assessment date remained July 1. The 1998-99 tax year was the first year for which the shift in assessment date took effect; the assessment date for 1998-99 was January 1, 1998.

§ 38-115. The Oregon Department of Revenue (DOR) is charged, inter alia, with overall administration of property tax matters in Oregon. ORS 306.115. Specific responsibilities of the DOR include, but are not limited to:

assessing most utility property. ORS 308.505, et seq.

assessing industrial properties with a real market value during the prior year of $1 million or more. ORS 306.126.

conducting an annual training program for members of the county BPTAs. ORS 306.152.

§ 38-116. The Board of Property Tax Appeals (BPTA) (until December 31, 1997 known as the Board of Equalization) hears petitions for reduction of the AV, RMV, or MAV of property as of January 1 of the assessment year. In addition, the BPTA hears petitions for the reduction of assessors’ corrections to value made under the correction procedure discussed at § 38-312 and considers applications to waive liability for all or a portion of the penalty imposed under ORS 308.295 or 308.296 for the failure of certain individuals and entities to file a real or personal property return. The value that is the subject of the petition must have been added to the roll before December 1 of the tax year. Each board has three members, who must receive training approved by the DOR. The term of office runs from the date of appointment to the June 30 next following appointment. The BPTA must convene not later than the date necessary for the Board to complete the functions of the Board by April 15. ORS 309.020, 309.022, 309.026, 309.067.

Each county has its own board. Larger counties with heavy workloads may appoint board members in order to process the work through multiple panels. ORS 309.020(1)(b).

A petition must be filed with the clerk of the board between the date property tax statements are mailed for the tax year and December 31 of that year. ORS 309.100(2). With regard to the required contents of the petition, see ORS 309.100(3).

§ 38-117. Centrally Assessed Property. Utility, transportation and communications property, specifically described in ORS 308.510, et seq.

§ 38-120. Citations to Statutes, Regulations & Cases Cited.

§ 38-121. Oregon Revised Statutes (ORS). The provisions of the Oregon Revised Statutes (ORS) that address property tax matters generally can be found at ORS chapters 305 through 312. ORS 321 covers timber and forestland taxation.

§ 38-122. Oregon Administrative Rules (OAR). The DOR is authorized to adopt administrative rules pertaining to tax procedure as well as rules interpreting substantive taxing statutes. ORS 305.100. These rules can be found at chapter 150 of the Oregon Administrative Rules (OAR).

§ 38-123. Oregon Tax Reports (OTR). Decisions of significance by the Oregon Tax Court (OTC) are published in the Oregon Tax Reports (OTR), Oregon Appellate Courts Advance Sheets and computerized case services. ORS 305.450. Recent opinions of both the regular division and the magistrate division also are available on the court’s Web site at www.ojd.state.or.us/tax/tax.nsf/pages/home. Unpublished OTC decisions are available through the OTC for a copying charge, currently $.25 per page.

§ 38-124. Oregon Tax Court Rules (TCR). The TCR are a slightly modified version of the Oregon Rules of Civil Procedure which, in turn, are a modified version of the Federal Rules of Civil Procedure. The TCR recognize the Oregon Uniform Trial Court Rules (UTCR) as a guideline. The magistrate division has adopted a brief set of rules (MDR) and generally incorporates the TCR. The MDR and TCR are available on the court’s Web site. See §§ 38-123.

§ 38-200. CLASSIFICATION & VALUATION OF PROPERTY.

§ 38-210. Classification of Property.

§ 38-211. Real Property includes the land itself, above or under water; all buildings, structures, improvements, machinery, equipment or fixtures erected upon, above or affixed to the same; all mines, minerals, quarries and trees in, under or upon the land; all water rights and water powers and all other rights and privileges in any wise appertaining to the land; and any estate, right, title or interest whatever in the land or real property, less than the fee simple. ORS 307.010(1). Oregon courts recently held that concessions granted to car rental companies at a publicly-owned airport are taxable real property. Avis Rent-A-Car System, Inc. v. Department of Revenue, 14 OTR 487 (1998), affd, 330 Or 35, ___ P2d ___ (2000).

§ 38-212. Personal Property means (unless otherwise specifically provided) “tangible personal property” and includes all chattels and movables, such as boats and vessels, merchandise and stock in trade, furniture and personal effects, goods, livestock, vehicles, farming implements, movable machinery, movable tools and movable equipment. ORS 307.020(2) and (3).

§ 38-213. Inventory means certain types of tangible personal property among which are: 1) Farm machinery and equipment used primarily in the preparation and cultivation of land, or for the purposes of raising and selling livestock, poultry, fur-bearing animals or bees, for dairying, or in any other agricultural or horticultural use; 2) Any items, owned by or in the possession or under the control of the taxpayer, used primarily to maintain such farm machinery and equipment; and 3) Materials, supplies, containers, goods in process, finished goods and other personal property owned by or in possession of the taxpayer that are or will become part of the stock in trade of the taxpayer held for sale in the ordinary course of business. ORS 307.400.

Note that not all machinery and equipment engaged in bringing forth produce from the ground will satisfy the definition of inventory. The Supreme Court of Oregon recently held that machinery and equipment utilized in a winery to process and sell wine did not constitute inventory under ORS 307.400 and thus did not qualify for a property tax exemption. King Estate Winery, Inc. v. Department of Revenue, 329 Or 414, 988 P2d 369 (1999). ORS 307.400.

In another recent case interpreting ORS 307.400, a magistrate of the tax court ruled that equipment used to remove timber from property in order to convert that property into pastureland is not farm machinery and equipment within the meaning of the statute and thus is not exempt from property tax as inventory. Peterson v. Lincoln County Assessor (Oregon Tax Court Magistrate Division, February 17, 2000).

§ 38-214. Land means land in its natural state. For purposes of assessment of property other than special-use property, land includes any site development made to the land. “Site development” includes fill, grading, leveling, underground utilities, underground utility connections and any other elements identified by rule of the Department of Revenue. ORS 307.010(3).

§ 38-215. Intangible Property includes money at interest, bonds, notes, claims, demands and all other evidences of indebtedness, secured or unsecured, including notes, bonds or certificates secured by mortgages; all shares of stock in corporations, joint stock companies or associations; media constituting business records, computer software, files, records of accounts, title records, surveys, designs, credit references, and data contained therein. “Media” includes, but is not limited to, paper, film, punch cards, magnetic tape and disk storage. ORS 307.020(1).

§ 38-220. Valuation of Property.

§ 38-221. Valuation Methods. As a general proposition, Oregon law requires consideration of market, cost and income approaches. ORS 308.411. The OTC greatly prefers market approaches whenever market data are available. See, e.g., Rhodes v. Department of Revenue, 12 OTR 24 (1991). For a general discussion of valuation methods in Oregon, see Brummell v. Department of Revenue, 14 OTR 303 (1998). Production of documents and information to support the three approaches may be required of the taxpayer by the DOR under ORS 305.190 and 305.192; See also ORS 308.316.

Under ORS 308.411, the owner of an industrial plant may elect not to provide income information to an assessor. Under certain circumstances, legislation enacted in 1999 will require an owner making such an election to furnish an itemization of operating expenses. The statute formerly prevented the Department from considering functional or economic obsolescence for an electing taxpayer’s property. However, 1995 amendments repeal that prohibition for property tax years beginning on or after July 1, 1996. For application of ORS 308.411, see, e.g., Roseburg Forest Products v. Department of Revenue, 14 OTR 417 (1998); Grant County v. Department of Revenue, 14 OTR 324 (1998). For an extensive discussion and application of functional obsolescence, see, Les Schwab Tire Centers of Oregon, Inc. v. Crook County Assessor, 14 OTR 588 (1999).

The Oregon legislature passed House Bill 2043 in 1999, a taxpayer relief provision that allows the maximum assessed value and assessed value of property to be reduced due to fire or other destruction that occurs during the property tax year. In particular, the Act is designed to prevent overvaluation of improvements that replace the damaged property. ORS 308.146 to 308.153.

§ 38-223. Valuation of Centrally Assessed Utilities, Telecommunications, Railroads and Airlines. For purposes of assessment of designated utilities, telecommunications, railroad, airline, and other companies, ORS 308.510 defines property subject to taxation as “all property, real and personal, tangible and intangible, used or held by a company as owner, occupant, lessee, or otherwise, for or in use in the performance or maintenance of a business or service or in a sale of any commodity * * *.” Typically, the appraisal approaches used in valuing centrally assessed property are the cost approach, income approach and a stock and debt approach (in the absence of comparison sales information). When valuing leased property, or other unowned property, the property tax is imposed on all interests in the operating property – not the firm – regardless of who holds ownership of the property, so the value of the lessor’s interest must be added to the value of the lessee’s interest when determining the value of the leased property. See Delta Air Lines, Inc. v. Dept. of Revenue, 13 OTR 372, 377-78 (1995), affd 328 Or 596, 984 P2d 836 (1999). Equalization issues raised by the same airlines were resolved in favor of the state in Northwest Airlines, Inc. v. Department of Revenue, 325 Or 530, 943 P2d 175 (1997).

§ 38-300. ASSESSMENT PROCEDURE.

§ 38-310. By Local Assessing Agency.

§ 38-311. Tax Assessment Notice to Taxpayer. By October 25, the county tax collector prepares statements showing real market and assessed values entered on the assessment and tax roll by either the county assessor or the DOR. Tax statements are mailed to taxpayers on or before that date. Payments may be made in thirds on November 15, February 15 and May 15. A three percent payment discount is applied if payment is made in full on November 15. ORS 311.250 and 311.505.

§ 38-312. New Correction Procedure. Pursuant to 1997 legislation, the county assessor may correct the value of property as shown on the current roll after the roll has been certified and prior to December 1. ORS 311.205 and 311.208. If the correction increases the value of the property, notice of the correction must be mailed to the property owner. The correction may be appealed to the BPTA pursuant to ORS 309.100. See § 38-511.

§ 38-313 Request for Hearing/Conference. An owner of any taxable property or any person who holds an interest in locally assessed property that obligates the person to pay taxes imposed on the property including a lessee may appeal valuation by filing a petition with the clerk of the county BPTA as discussed in § 38-511.

§ 38-314. Hearing Procedure at Local Level. See § 38-511.

§ 38-315. Practice & Procedure at Local Level. The district attorney is the legal advisor to the BPTA. The board hires one or more appraisers registered under ORS 308.010, or licensed or certified under ORS 674.310, and not otherwise employed by the county, and other personnel as necessary. ORS 309.024. The BPTA may convene on or after the first Monday in February of each year, but not later than the date necessary for the board to complete the functions of the board by April 15. ORS 309.026.

§ 38-320. By Department of Revenue–Central Assessing Agency.

§ 38-321. Tax Assessment Notice to Taxpayer. For property that is centrally assessed by the DOR, the DOR is required to publish in three weekly publications of the state capital newspaper that it will publicly review and examine the tentative assessment roll on the second Monday in June. ORS 308.580. By August 1 of the tax year, the Director of the DOR is required to complete the examination, review, correction, equalization and apportionment of the assessment roll. ORS 308.600.

§ 38-322. Request For Hearing. Before the Director increases the valuation of any property on the tentative assessment roll or adds omitted property thereto, six days’ written notice must be provided to centrally assessed property owners to appear and show cause, if any, why the valuation of the assessable property should not be increased or why the property should not be added to the roll. The DOR mails a notice of the value it intends to place on the roll at least 20 days prior to the beginning of the review period on the second Monday in June. Appeal from this notice of assessment may be filed no later than the second Monday in June prior to the July 1 beginning of the tax year, or within 10 days thereafter if no notice of assessment is mailed. ORS 308.595.

§ 38-400. ASSESSMENT PRACTICE BY TAXPAYERS

§ 38-410. The Property Tax Case Summarized. An owner of property receives a tax statement in late October or early November. The owner may appeal the property value shown on the statement by filing a petition with the county BPTA by December 31. Some industrial property appeals may be filed directly in the magistrate division of the Oregon Tax Court.

The order of the BPTA generally is issued before April 15 and may be appealed within 30 days by filing a complaint in the OTC magistrate division. Before September 1, 1997, appeals were to the DOR. Several of the present magistrates are former DOR hearing officers. Proceedings are informal, and hearings may be conducted by telephone or at a location other than the courthouse in Salem. A matter may be assigned to nonbinding mediation at the request of a party or on the motion of the magistrate. A small claims proceeding (which results in a nonappealable decision) is available if the assessed value of the property is $250,000 or less. More complex cases may be removed from the magistrate division to the regular division upon motion of either party and order of special designation from the Tax Court Judge. Appeals from the OTC magistrate division are to the OTC regular division, where the case is heard de novo. A case management telephone conference typically is held by the Tax Court approximately 30 days following the filing of the answer or a responsive motion. Depending on the complexity, the schedules of the parties and the need for discovery, the trial will be scheduled within 4 months to 9 months thereafter. The court encourages stipulation of undisputed facts. Discovery conferences will be held at the request of a party, or upon the court’s own motion.Trial is generally scheduled between the hours of 8:30 – 9:00 am and 5:00 pm, with an hour lunch break and 15 minute breaks mid-morning and afternoon. Opening statements are typically given by counsel (or the taxpayer without representation) and closing arguments are frequently submitted in briefs after trial.

The OTC regular division decision may be appealed to the Oregon Supreme Court within 30 days after entry of judgment. Review is limited to errors of law or lack of substantial evidence in the record. ORS 305.445.

§ 38-420. The Appraiser. A certified, licensed, or registered appraiser may represent a taxpayer in appeal proceedings before the BPTA and magistrate division of the OTC. ORS 305.230 and 309.100. In cases in the regular division of the OTC, the appraiser usually appears as an expert witness. See TCR 57D(5).

§ 38-430. The Attorney.

§ 38-431. Appearance by Non-Resident Attorneys. Attorneys may appear on behalf of any taxpayer/owner or other sufficiently interested/aggrieved person, if duly licensed in Oregon, pursuant to ORS 9.320. Attorneys not licensed to practice law in Oregon may not appear on behalf of clients in Oregon proceedings, except upon application and after association by local counsel in accordance with pro hac vice rules. ORS 9.241. See TCR 11.

§ 38-432. Appearance by In-House Attorneys & Officers. Notwithstanding ORS 9.320, licensed attorneys, public accountants, tax representatives, persons licensed by the State Board of Tax Service Examiners, stockholders in S corporations, licensed real estate brokers, certified, licensed, or registered appraisers, and general partners in a partnership may represent a taxpayer before the OTC magistrate division in any conference or proceeding with respect to the administration of any tax. ORS 305.230. In addition, non-resident in-house attorneys and officers may represent the corporation in proceedings before the magistrate division of the OTC. ORS 305.230(1). Typically such persons must first file a written authorization with the magistrate, a form for which is available on the court’s Web site. See § 38-123. ORS 305.230(7). However, in proceedings before the judge of the regular division of the OTC, corporations may appear only by an attorney licensed in Oregon (subject to the pro hac vice rules noted above). ORS 9.320.

§ 38-440. The Consultant. A licensed real estate broker and a certified,licensed, or registered appraiser may represent the taxpayer in appeal proceedings before the BPTA or the magistrate division of the OTC. ORS 305.230(4) and 309.100(4)(a)(D) and (E). In trials in the regular division of the Tax Court, witnesses must be qualified under the Oregon Evidence Code (OEC) to give opinions of value or other opinions in support of valuation testimony, e.g., economists or other finance experts. Realtors have not generally been recognized as valuation experts in Tax Court.

§ 38-450. Other Persons. A stockholder in an S corporation may, with written authorization, represent the corporation in any proceeding before the magistrate or regular division of the OTC in the same manner as if the stockholder were a partner and the S corporation were a partnership. ORS 305.230(3) and 305.494.

A general partner, designated by the partnership as a “tax matters partner,” may represent the partners before the Department of Revenue in any conference or before a tax court magistrate in any proceeding with respect to the administration of any tax on or measured by net income. ORS 305.230(5) and 305.242.

§ 38-500. APPEAL OF TAX ASSESSMENT.

§ 38-510. Hearing/Conference at Local Level.

§ 38-511. Petition to BPTA. A taxpayer dissatisfied with the assessed value, specially assessed value, real market value, or maximum assessed value, entered on the tax rolls has a right of appeal to the county BPTA. ORS 309.100(1) and 309.026. A petition to the BPTA must be filed after the date the tax statements are mailed for the year (generally on or before October 25) and on or before December 31 of that year. ORS 309.100(2). The petition must state the facts and the grounds upon which the petition is made. ORS 309.100(3)(b). The BPTA gives petitioners requesting a hearing at least five days’ written notice of the time and place to appear. ORS 309.100(5). The BPTA keeps a written or audio record of all proceedings. ORS 309.024. The BPTA acts on petitions by entry of a formal order mailed to the petitioner and delivered to the assessor. ORS 309.110. See also OAR 150-309.022(1) to 150-309.110(1)-(A).

In accordance with its general supervisory powers under ORS 306.115, the DOR may, in its discretion, also act on a petition to change the tax roll, even if a taxpayer failed to appeal within the ordinary time periods set forth above. OAR 150-306.116. Over time, however, the authority and willingness of DOR to accept such petitions has been reduced. A supervisory order of the DOR may be appealed to the OTC magistrate division. ORS 305.275(1)(a)(A). With regard to the effect of values adjudicated for prior years, see ORS 305.285 and 309.115.

§ 38-520. Appeal from Order of BPTA.

§ 38-521. Complaint in Oregon Tax Court Magistrate Division. Beginning September 1, 1997, after an adverse decision by a county BPTA, the taxpayer or assessor may appeal to the OTC magistrate division by filing a complaint in the Oregon Tax Court magistrate division, along with a $25 filing fee. ORS 309.110(7) and 305.490(1)(a). The general period for the filing of the complaint is 30 days. ORS 305.280(4). A copy of the BPTA order must be attached to the complaint. ORS 305.560(1)(c)(B).

Proceedings before the magistrate division are informal and de novo. Hearings may be conducted by telephone or, at the discretion of the magistrate, at locations other than Salem. ORS 305.501(4)(a). A matter may be assigned to mediation, either at the request of a party or on the motion of the magistrate. If the mediation does not result in an agreed settlement within 60 days of the assignment, the appeal is reassigned to the magistrate division. ORS 305.501(2). New OTC magistrate division rules may be obtained from the court by calling (503) 986-5650 or on the Tax Court’s Web site. See § 38-123.

A taxpayer may elect to file pursuant to a small claims procedure if the assessed value of the property is not in excess of $250,000. Such a proceeding is not recorded, and the magistrate’s decision is final. ORS 305.514.

Appeals formerly were heard by the DOR. Transition rules apply to appeals filed before September 1, 1997. See Or Laws 1995, ch 650 §§ 11, 116.

§ 38-530. Further Judicial Appeal & Review.

§ 38-531. Appeal to OTC Regular Division. The regular division judge of the OTC reviews magistrate division decisions de novo. ORS 305.501(5) and 305.425(1). An appeal is perfected by filing a complaint in the OTC regular division, with the $50 filing fee, within 60 days of the date of mailing of the magistrate’s decision. ORS 305.490(1)(c) and 305.501(6), (7).

§ 38-532. Standing. The issue of taxpayer standing in property tax cases before the OTC was the subject of two recent cases. Both of those cases arose under former ORS 305.570(1) (1997), which granted a right of appeal from BPTA orders. The court opinions took a strict interpretation of the statute and denied standing to a lessee and a contract seller of property. See Kaup v. Department of Revenue, 13 OTR 432 (1996) (lessee lacked standing because not “directly affected” by DOR order, as required by former ORS 305.570(1)); Columbia Sun, Inc. v. Department of Revenue, 321 Or 514, 900 P2d 1039 (1995) (seller of property who was contractually obligated to reimburse purchaser for taxes lacked standing under former ORS 305.570). Taxpayer is not “aggrieved” and therefore has no standing, unless real market value reduction claimed reduces value below assessed value. Parks Westsac L.L.C. v. Deptment of Revenue, TC No. 4366 (Sept. 1999).

Recent legislative changes appear to have overturned the result in both cases. New amendments to ORS 309.100 now allow any person who holds an interest in property that obligates that person to pay taxes imposed on the property, including a person so obligated by lease or contract, to petition the BPTA for a reduction of assessed, specially assessed, real market, or maximum assessed value. But, see Ron Staley Enterprises v. Dept. of Revenue and Linn Co., TC No. 4403 (Nov. 1999). Under ORS 309.110(7), the BPTA decision may be appealed to the magistrate division.

§ 38-533. Appeal to Oregon Supreme Court. An adverse decision of the regular division of the OTC may be appealed to the Oregon Supreme Court. ORS 305.445. Pursuant to 1995 statutory amendments, the standard of review is no longer de novo on the record, but is limited to errors of law or lack of “substantial evidence in the record.” The new “errors of law” standard of review for issues of law does not differ from the former de novo. See Miller v. Department of Revenue, 327 Or 129, 132 n. 1, 958 P.2d 833 (1998); Schuette v. Department of Revenue, 326 Or 213, 215 n. 1, 951 P.2d 690 (1997). A notice of appeal must be filed within 30 days after the tax court enters judgment. ORS 19.255.

§ 38-540. Practice & Procedure.

§ 38-541. Use of Appraisals. Appraisal reports are a common part of property tax litigation in Oregon as elsewhere. Pursuant to TCR 56.B, as amended, documents relied upon by the appraiser generally must be exchanged at least 30 days prior to trial, and all other documents and exhibits to be introduced in support of a party’s case in chief must be exchanged at least five working pays before trial. Failure to exchange the exhibits, appraisal report and supporting documentation may result in an objection to the introduction of the evidence being sustained.

The OTC pays particular attention to consistent and proper applications of appraisal theory.

§ 38-542. Expert Witnesses. Pursuant to ORS 308.231, real property appraisals must be performed by appraisers registered under ORS 308.010.

§ 38-543. Forms & Pleadings. A complaint filed in OTC reads and looks substantially like complaints in civil litigation more generally. The same is true for other forms of pleading such as motions. See TCR 16.

§ 38-544. Method of Filing/Delivery. As a general proposition, service by certified or registered mail is sufficient. ORS 305.415, 305.418, and TCR 9.

§ 38-545. Who May Appear for Taxpayer. Only duly licensed attorneys or attorneys admitted in Oregon and attorneys from other states admitted pro hac vice may represent parties in the regular division of the OTC. TCR 11, 17(A), and ORS 9.241.

§ 38-550. Payment of Property Taxes & Protest Procedures.

§ 38-551. Payment and Interest. At least the first third of the taxes for each year is due by November 15. ORS 311.505(1). Property tax appeal petitions for noncentrally assessed properties must be filed with the clerk of the county BPTA in the period after the mailing date of the statements and on or before December 31 during the year being appealed. See § 38-511. No provision exists for “payment under protest.” If the taxpayer prevails on appeal, the taxes refunded are paid with interest at the statutory rate of one percent per month. See ORS 311.812. If the county or state prevails on appeal, any additional property tax must be paid with interest at the statutory rate of one and one third percent per month. ORS 311.505(2).

§ 38-552. Time for Payment. Property taxes are due and payable in one-third installments on November 15, February 15 and May 15, with a maximum of 3 percent early payment discount. ORS 311.505.

§ 38-560. Jurisdictional Requirements.

§ 38-561. General. The OTC has exclusive jurisdiction of all issues arising under the tax laws of the State of Oregon. ORS 305.410. Taxpayers appealing from a written decision of a tax court magistrate or seeking a remedy in the tax court provided by statute, other than as provided in ORS 305.275(1), have standing to appeal to the regular division of the Oregon Tax Court under ORS 305.570. Taxpayers appealing from an act, omission, order or determination of the DOR, a county assessor, or a tax collector, as well as certain BPTA orders have standing to appeal to the magistrate division of the Oregon Tax Court under ORS 305.275. See also ORS 309.110(7) (appeals from BPTA orders are to magistrate division).

§ 38-562. Exhaustion of Administrative Remedies. 1995 legislative changes that became operative September 1, 1997 moved the initial appeal function from the DOR to the OTC magistrate division and repealed Oregon’s statutory requirement of exhaustion of administrative remedies. See ORS 305.275(4) (1995). Although its contours are unclear, case law indicates that a judicial exhaustion requirement exists. See e.g., Fifth Avenue Corp. v. Washington Co., 282 Or 591, 581 P.2d 50 (1978).

§ 38-562. Other Requirements. See generally ORS 309.020, et seq., 309.100, et seq., and ORS 305.405 et seq., regarding the general jurisdictional requirements with respect to the BPTA and OTC. Regarding the DOR’s rulemaking authority, duty to construe and enforce the tax laws, and other powers, see generally ORS 305.100, et seq., and ORS 306.113, et seq.

§ 38-570. Adjudicated Value Five Year Freeze.

§ 38-571. ORS 309.115. If the DOR, a county BPTA, the OTC, or another court enters an order correcting the real market value of a separate assessment of property and there is no further appeal, the value so entered shall be the real market value entered on the assessment and tax rolls for the five assessment years next following the year for which the order is entered. The above rule does not apply to adjustments of real market value during the five year period due to, among other things, annual trending, additions, retirements, and property damage or destruction. Legislative changes in 1999 no longer permit adjustments to the adjudicated value based on a regularly scheduled six-year reappraisal. If, during the five year period in which assessed property is subject to an order, the DOR, a county BPTA, the OTC, or another court issues an order correcting the real market value of the property subject to the order, the later order supplants the old order and applies for five years subsequent to the year the later order is entered.

§ 38-600. EXEMPTION FROM TAXATION.

§ 38-610. Exempt Property. Certain types of property are partially or wholly exempt from ad valorem property taxation. Others, such as farmland (ORS 308A.050-308A.128) and historic property (ORS 358.475-358.565) are specially assessed at frozen values. Partially or wholly exempt property includes but is not limited to the following: Livestock, poultry, fur-bearing animals, bees, inventory (defined as certain types of tangible personal property among which are: 1) Farm machinery and equipment used primarily in the preparation and cultivation of land, or for the purposes of raising and selling livestock, poultry, fur-bearing animals or bees, for dairying, or in any other agricultural or horticultural use; 2) Any items, owned by or in the possession or under the control of the taxpayer, used primarily to maintain such farm machinery and equipment; and 3) Materials, supplies, containers, goods in process, finished goods and other personal property owned by or in possession of the taxpayer that are or will become part of the stock in trade of the taxpayer held for sale in the ordinary course of business. ORS 307.400 (Note that not all machinery and equipment engaged in bringing forth produce from the ground will satisfy the definition of inventory. The Supreme Court of Oregon recently held that machinery and equipment utilized in a winery to process and sell wine did not constitute inventory under ORS 307.400 and thus did not qualify for a property tax exemption. King Estate Winery, Inc. v. Department of Revenue, 329 Or 414, 988 P2d 369 (1999). In another recent case interpreting ORS 307.400, a magistrate of the tax court ruled that equipment used to remove timber from property in order to convert that property into pastureland is not farm machinery and equipment within the meaning of the statute and thus is not exempt from property tax as inventory. Peterson v. Lincoln County Assessor (Oregon Tax Court, February 17, 2000).)

Also, certain beach lands (ORS 307.450), pollution control facilities (ORS 307.405), boats held for sale or exchange (ORS 830.790), tangible personal property held by the owner for personal use (ORS 307.190), aircraft (ORS 308.558, 837.040, 837.045 and 837.060), alternative energy systems (ORS 307.175), burial grounds and lots, cemetery lands, personal property of a cemetery or crematory association used or held exclusively for burial purposes (ORS 65.855 and 307.150), commercial facilities under construction (ORS 307.330), child care facilities owned by incorporated eleemosynary corporations or religious organizations and used for educational purposes (ORS 307.145), deciduous trees, shrubs, plants or crops, cultured Christmas trees, growing on agricultural land devoted to agricultural purposes (ORS 307.320), enterprise zone property (ORS 285B.650 to 285B.728), farm labor camps (ORS 307.480 to 307.510), ethanol production facilities (ORS 307.701), homesteads of war veterans (ORS 23.240, 307.250, and 307.270), household furnishings owned and used by non-profit organizations (including sororities, fraternities, and student living organizations) furnishing living quarters for students attending institutions of higher education (ORS 307.195), intangible personal property (ORS 307.030(2)), public property leased or rented by taxable owner (ORS 307.110), motor vehicles (ORS 803.585), open space lands (subject to special assessment under ORS 308A.300 to 308A.330), timber (ORS 321.420, 321.272, and 321.720), and environmentally sensitive logging equipment (ORS 307.824 to 307.831). Some of these properties are subject to taxes in lieu of ad valorem property tax, e.g., a tax is imposed upon the privilege of harvesting timber.

§ 38-620. Exempt Taxpayers. ORS chapter 307 contains numerous exemptions from ad valorem property taxation depending upon the nature of the taxpayer-owner. These generally seem to parallel those of other states. They include but are not limited to exemptions for most public property (ORS 307.040, et seq.), charitable organization exemptions (ORS 307.130, et seq.), war veterans and widows (ORS 307.250), and others.

§ 38-630. Constitutional Issues. The Uniformity Clauses of the Oregon Constitution prohibit nonuniform taxation and by implication require that all property within the same class be equally assessed or exempted. “No tax or duty shall be imposed without the consent of the people or their representatives in the Legislative Assembly; and all taxation shall be uniform on the same class of subjects within the territorial limits of the authority levying the tax.” Or Const, Art I, ‘ 32. See also Or Const, Art IX, § 1. The provisions of Article XI, Section 11, including the “cut and cap” provisions enacted in 1997 as Measure 50, expressly supersede the Uniformity Clauses. Or Const, Art XI, Section 11(18).

§ 38-640. Practice & Procedure in Exemption Cases. Generally an application for exemption for a tax year must be filed on or before April 1 of the corresponding assessment year, on a form prescribed by the Department of Revenue, with the county assessor in the county in which the property is located. ORS 307.162. Special application rules apply to exempt property of a taxable owner that is exempt in the hands of a lessee. ORS 307.112. Upon payment of a late fee, an application for exemption may be filed up to December 31 of the assessment year for which exemption is first desired. In addition, ORS 307.475 allows a late application under certain circumstances based on “hardship”.

ORS 311.410 provides that real property or personal property which is subject to taxation on July 1 shall remain taxable and taxes levied thereon for the ensuing tax year shall become due and payable, notwithstanding any subsequent transfer of the property to an exempt ownership or use. Conversely, property that is exempt on July 1 remains exempt for the ensuing tax year, despite transfer of ownership.

§ 38-700. MISCELLANEOUS ITEMS.

§ 38-710. Current Issues & Topics. Many low income housing property appeals are currently pending in the magistrate and regular divisions of the Oregon Tax Court, as well as at the Department of Revenue. Trial was held in February 1998 on the lead consolidated cases. A recent 28-page decision of the Oregon Tax Court Judge in those cases, finding that such properties should appropriately be valued using a “just compensation to the owner” valuation, may be appealed by the taxpayers. See Piedmont Plaza Investors and Spencer House Assocs. v. Department of Revenue, 4 OTR 440 (1998) (on appeal). It recently was decided that a taxpayer may not challenge 1995 and 1996 valuations under the guise of an appeal of the 1997 maximum assessed value determination under Measure 50 (Robert Ellis and Dept. of Revenue v. Laroti et al., 14 OTR 525 (1999)), (upheld/challenge denied (see Irwin v. Dept. of Revenue, 14 OTR ___ (1999))).

§ 38-720. Jurisdiction of State & Local Agencies [names, phone & fax, & addresses]. Oregon Department of Revenue information and taxpayer assistance: Phone (503) 378-4988. The DOR maintains a very helpful web site (with links to some county assessor pages) at www.dor.state.or.us.

Each of the 36 Oregon counties has an elected county Assessor and Tax Collector. County information may be obtained from the Oregon Department of Revenue. See the DOR’s website for links to county Web sites. See also the Tax Court’s Web site, the address for which is at § 38-123.

§ 38-730. List of Forms [and where to get them]. Under ORS 305.840, a county assessor must make available to a taxpayer at the office of the city assessor any form required by a provision of law to be supplied by a city assessor. If an assessor voluntarily mails forms to a taxpayer, the assessor does not undertake any responsibility for actual receipt of the form by the taxpayer, and no estoppel applies against the assessor if the taxpayer does not receive the form. See also the DOR’s web site (with links to some county assessor pages) at www.dor.state.or.us.

§ 38-800 Other [reserved].