The Colorado Court of Appeals issued its opinion in Marisco Capital Management, LLC v. Denver Board of County Commissioners on Thursday, June 6, 2013.
Special Notices of Valuation—Omitted Property Versus Omitted Value.
Marsico Capital Management, LLC (MCM) challenged the Board of Assessment Appeals’ (BAA) order upholding the Denver Board of Equalization’s (BOE) order denying several of its petitions. The order was affirmed.
MCM is an investment advisory firm that leases office space in a downtown Denver commercial building. In 2004 and 2005, MCM expanded and remodeled its leased office space and made tenant improvements. Following MCM’s filing of its first personal property declaration schedule in February 2006 for the 2005 tax year, the City Assessor issued a special notice of valuation (SNOV) assessing the value of MCM’s personal property.
In 2009 and 2010, the City Assessor audited MCM for tax years 2005 through 2009. The audit revealed that although MCM had timely reported its tenant improvements in its personal property declaration schedules, its tenant improvements were not valued or assessed personal property taxes for tax years 2005 through 2009, because the City Assessor’s computer system had not included them.
MCM filed protests challenging the five SNOVs for the missing assessments. The City Assessor granted the protests for tax years 2005 through 2007 because the statute of limitations had run, but denied the protests for tax years 2008 and 2009. MCM challenged the SNOVs before the BOE. The BOE reduced the overall value on the two SNOVs but denied the petitions. MCM appealed to the BAA, which denied the appeal.
The issue before the Court of Appeals was whether tenant improvements later discovered by a taxing authority are “omitted property” or “omitted value.” If tenant improvements constitute “omitted property,” they are subject to retroactive revaluation; if they are “omitted value,” additional taxes may not be imposed.
Tenant improvements are “personal property” under CRS § 39-1-102(11) and are subject to personal property tax. However, taxing authorities are prevented from imposing additional taxes based on revaluations of property that has already been valued and taxed. The parties disagreed on whether personal property taxes were previously assessed on the tenant improvements.
MCM argued that by retroactively adding the 2004 and 2005 tenant improvements to the assessment rolls for the 2008 and 2009 tax years, the City Assessor included an omitted value of previously taxed property that, once taxed, could not be reassessed.
The BAA and City Assessor countered that the tenant improvements were never included in the computer system due to an error by the City Assessor. Thus, they were not included in the assessment rolls for tax years 2005 through 2009 and could be retroactively assessed because they are “omitted property.” The Court agreed with the Board and City Assessor.
CRS § 39-5-125(1) allows the assessor to add omitted property to the tax rolls “whenever it is discovered that any taxable property has been omitted from the assessment roll of any year or series of years.” Here, the tenant improvements had never been assessed and therefore were “omitted property” that could be retroactively assessed. The BAA’s order was affirmed.
Summary and full case available here.