May 17, 1979
Mr. Clyde E. Saukerson
Deputy State's Attorney
Davison County
Mitchell, South Dakota 57301
Official Opinion No. 79-14
Adjustment of Valuation
Dear Mr. Saukerson:
You have requested an official opinion from this office based upon the following factual situation:
FACTS:
Taxpayer A has appeared before the County Commissioners requesting an adjustment of his taxes pursuant to SDCL 10-11-32. Taxpayer A recently purchased his home, and his 1978 real estate taxes, payable in 1979, are $1,036.44. Taxpayer B, who lives adjacent to taxpayer A in a home which everyone agrees is of comparable value, was assessed 1978 real estate taxes of $560.41.
Also appearing at the meeting was an attorney representing a taxpayer group who reported to the Commissioners that he had a list of 52 taxpayers in a similar situation. The Commissioners believe that the number may be even larger.
Based upon the above factual situation, you have asked the following questions:
QUESTIONS:
1. Do the County Commissioners have authority to make adjustments under § 10-11-32 where the taxpayer has failed to appear before the board of equalization or is the exclusive remedy under § 10-27-2?
2. May the County Commissioners grant relief under § 10‑18‑1(1) to taxpayer A and other taxpayers similarly situated?
3. If SDCL 10-11-32 is available as a remedy for taxpayer A and other taxpayers similarly situated what is the proper procedure to follow?
There is basic constitutional right so far as assessment and taxation of property are concerned. This is found in article XI, § 2:
Taxes shall be uniform on all property of the same class and shall be levied and collected for public purposes only.
In the same sense article VIII, § 15 provides for the classification of properties within school districts for the purposes of school taxation and grants the Legislature the right to constitute agricultural property a separate class. The section then concludes:
Taxes shall be uniform on all property in the same class.
In order to arrive at this uniformity of taxation of property, the Legislature has seen fit to create a system of local assessment balanced with local appeal boards (boards of equalization) and followed by certain rights of appeal to the courts, or in the alternative, a process of either abatement for certain specified and limited reasons, § 10-18, or payment under protest and suit to recover in the case of illegal taxes, § 10-27. The process, however, commences with the assessor, and he is required to assess for taxation all property subject to taxation, § 10-3-15. In so doing, he takes an oath that he will assess all property assessed by him at its true cash value according to his best knowledge and judgment, § 10-3-12. The basis for his assessment is contained in § 10-6-33 which reads in part:
All property shall be assessed at its true and full value in money but not more than sixty per cent of such assessed value shall be taken and considered as the taxable value of such property upon which the levy shall be made and applied and the taxes computed . . .
Having completed his assessment of real property, according to the statute, the assessor again subscribes an oath that the return of the property values and the value of each parcel is the full and true cash value thereof, § 10-6-40. That statute has been held to be mandatory and the oath taken must be subscribed in substantially the form therein stated. Richardson v. Howard, 23 S.D. 86, 120 N.W. 768 (1903).
Following the completion of the tax roll, the books may be amended by the county auditor for the addition of omitted property, § 10-11-1, or the property may also be added at the direction of the Department of Revenue, § 10-11-8. If there is an error in the name of the person assessed or taxed, it may be changed by the assessor or county treasurer; if there is an error in the description or quantity of real estate assessed or taxed, the error may likewise be corrected, § 10-11-9. As will be seen hereafter, errors in computation or extension contemplated by these sections are not the same situation that exists in Davison County.
Local boards of equalization are given authority to make certain adjustments in individual assessments where a person is aggrieved by anything in the assessment roll, § 10-11-17. The local board of equalization thereupon delivers the assessment rolls to the county auditor for presentation to the county board of equalization, § 10-11-21. An individual aggrieved by the action of a local board relative to the assessment of his property has the right of appeal to the county board of equalization, § 10-11-22. Persons aggrieved may apply to the county board for the correction of errors in the listing or valuation of the property and “the board may correct the same as shall be just,” § 10-11-26. From the county board of equalization a person who continues to be unsatisfied with the assessment of his property may appeal to the State Board of Equalization or the circuit court, § 10-11-42. Upon a decision from the State Board of Equalization the person may still appeal to circuit court, § 10-11-44. The procedures thus far relate to the appellate procedure commencing with the director of equalization. These procedures must be followed through and administrative remedies fully exhausted before judicial appeal. This requirement applies also to payment under protest and suit to recover, § 10-27.
In a principle case, Holbrook v. Gallagher, 56 S.D. 54, 227 N.W. 461 (1929) our Supreme Court laid down the rule that in the absence of sufficient proof of fraud on the part of the assessor or a clear showing of intentional discrimination, it is a requirement that individuals who claim that their property was excessively and unequally assessed make due application to a board of equalization for relief. Also the property owner is not entitled to recovery of taxes paid, even though under protest, unless this is done. The court points out, “It cannot be held that it was intended to permit the taxpayer to ignore the tribunal especially established for the very purpose of enabling him and others similarly situated to have a correction of inequities.”
The holding with respect to SDCL 10-27 are generally that the tax must be an illegal tax and not merely excessive or disproportionate. The appellate procedure then, and as later established in 1953, was for a board of equalization to consider the matter of valuations which were alleged to be disproportionate. In that year the Legislature adopted Chapter 475, which permitted the board of county commissioners to make individual adjustments and reassessments in the case of gross inequality. This is over and above the power of a board of equalization to correct mere inequalities as that term is defined in § 10-11-30. At that point in the legislative history “gross inequalities” had a definite meaning, as was pointed out in the case of Food Supply Company v. Pennington County, 58 S.D. 321, 236 N.W. 284 (1931).
In an official opinion, 1953-54 A.G.R. 370, 372, the Attorney General directed his attention to this particular chapter. He held that granting the county commissioners power to correct gross inequalities provided an additional appeal procedure for a taxpayer whereby he could secure a review of his individual assessment by the board of county commissioners. He also held that the appeal must relate to the assessments of the property of the complainant and may be made to said board without an appearance before the local board of equalization.
In 1957-58 A.G.R. 46, this opinion was further sustained; it was held that the chapter which is now § 10-11-32 authorizes the county commissioners to make adjustments upon proper applications being presented. In 1965 SDCL § 57.0406-1 was amended by Chapter 283 to strike the word gross from the phrase “gross inequality,” thereby giving county commissioners, as opposed to the board of equalization the authority to make basically the same adjustments and reassessments between individuals as boards of review do.
It is my opinion, therefore, that the provisions of § 10-18 relating to abatement or refund cover only the situations therein listed in the six subsections of 10-18-1. The board of county commissioners must make a determination on application of the parties of the form of the error, and it is my opinion that property which is merely overassessed is not subject to abatement under these provisions. See 1955-56 A.G.R. 201. See also 1947-48 A.G.R. 39 which holds, “overassessment is not a ground for abatement or refund of taxes nor is an assessment for taxes invalid on account of the fact the valuation placed upon the property by the assessor is excessive.” I concur with these prior opinions.
As noted in the case of Casey v. Butte County, 52 S.D. 334 (1927), the purpose served by either § 10-18 or § 10-27 (payment under protest and suit to recover) is to provide for the refund of unauthorized tax. However, § 10-18 is applicable only to the express situation described, and it includes the situation where the invalidity of the tax can be ascertained from a few county records or easily obtained facts. In the situation you have presented to me, I do not find this to be applicable. By the same token our court has held in Security National Bank v. Twindle, 52 S.D. 352 that where the illegality of the tax involves determinations of questions of law and the exercise of strictly judicial functions, § 10-27 is the exclusive remedy.
It is my opinion, therefore, that § 10-11-32 is only applicable to situations in which a finding is made by the board of county commissioners that the inequalities complained of constitute more than a mere over assessment of property or an excessive valuation but rather an intentional discrimination on the part of the assessor or a board of equalization.
I do not feel that this opinion in any way contradicts the court's decision in Yusten v. Morrison, 78 S.D. 426, 103 N.W.2d 653 (1960), which held that in any matter of overvaluation or an error in valuation the taxpayer must exhaust his remedies before a board of equalization which has the power to correct the error. That case was decided in 1960, five years before the amendment of Chapter 475, Laws of 1953 striking the requirement that gross inequality exist. I continue to concur with the holding of my predecessor that this statute, § 10-11-32, provides an additional method for appeal under limited circumstances.
In these situations where the board of county commissioners, because of the appropriateness of their findings redress taxpayers grievances, they do so without the concurrence or action of local boards of equalization as in the case of appeals under § 10-11. I would certainly feel that the commissioners would exercise this authority with the utmost precaution in order that the orderly processes of assessment and equalization may not be disturbed.
IN RE QUESTION NO. 1:
Under appropriate conditions county commissioners may correct inequalities even though the taxpayer has not appeared before a local board of equalization. Obviously, if there was payment under protest and suit to recover, the circuit court would have jurisdiction of the matter and the commissioners would have no reason or authority to act.
IN RE QUESTION NO. 2:
The relief provided by § 10-18-1 is strictly limited to the situations thereunder enumerated. In my opinion they are not applicable to your fact situation.
IN RE QUESTION NO. 3:
As to the procedure to be followed under § 10-11-32, it is my opinion that claimants have the burden of establishing there was intentional discrimination or fraud on the part of the assessing officials or local board. Once the commissioners make that finding, they may make appropriate adjustments or reassessments.
Respectfully submitted,
Mark V. Meierhenry
Attorney General\
MVM/JD/np
