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IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax ROGER M. CLARK and GLORIA R. CLARK, Plaintiffs, v. LANE COUNTY ASSESSOR, Defendant. ) ) ) ) ) ) ) ) ) )

No. 011319F

DECISION

Plaintiffs appeal Defendant's disqualification of their property from farm use special assessment. The court held hearings on April 22, 2002, and May 22, 2002. STATEMENT OF FACTS The subject property is listed as Account Nos. 0827186 and 0827194 by the Lane County Assessor's office.1 It is located at 35760 Spring Hill Road in Creswell, Oregon. It includes a total of 22.25 acres. Account No. 0827186 consists of 20 acres. Account No. 0827194 consists of 2.25 acres, including a one acre homesite. When Plaintiffs purchased the property in 1989, they were told by their title company that the property is "classified as forest lands." (Ptf's Ltr from Western Pioneer Title dated Oct 6, 1989.) None of the property is farmed; it is all actively managed as forest land. Plaintiffs were thus unaware that only 14 of the 20 acres of Account No. 0827186 was specially assessed as forest land; the remaining six acres were in farm use special assessment. Plaintiffs were also unaware that 1.25 acres of Account No. 0827194 was in farm use special assessment rather than specially

The property has two account numbers because it straddles two taxing districts. This is commonly referred to as a code split.

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assessed as forest land. A total of 7.25 acres was in farm use special assessment, contrary to the information Plaintiffs received from the title company. Consistent with the non-exclusive farm use zoning of the property, Defendant sent Plaintiffs a farm use and income questionnaire for the 7.25 acres. Plaintiffs did not respond. On June 28, 2001, Defendant sent Plaintiffs a second letter notifying Plaintiffs that Defendant had disqualified the land from farm use special assessment. It stated that "[y]our land described above has been removed from Farm Deferral and returned to market value[.] * * * This means your November 2001 tax statement will be based on the market value rather than the farm value of the land." (Def's Ans at 3.) The letter gave Plaintiffs an opportunity to provide Defendant with the earlier requested information. The letter also gave information about applying for special assessment for forest land. Finally, the following information was on a separate page:

"ANY SALES OR INCOME VERIFICATION FORTHCOMING MUST BE RECEIVED NO LATER THAN

JULY 20, 2001
In order for us to have the time to reinstate your deferral

Any appeals after this date will have to be made through the Oregon Tax Court, Magistrate Division in Salem, Oregon 97310." (Id. at 4.) Plaintiffs only responded when they received their tax statements in November 2001. Those tax statements showed significantly increased maximum assessed values from the prior year due to the removal of some of the property from special

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assessment. The statements also showed potential additional tax liabilities relating to the disqualification. Plaintiffs filed this appeal on December 28, 2001. Plaintiffs live at 37056 Tree Farm Road, Springfield, Oregon. That property consists of six acres. It does not qualify for any special assessment. When Plaintiffs received the letter from Defendant about the subject property at 35760 Spring Hill Road, they believed that Defendant erred on the address of the property and intended to disqualify the Tree Farm Road property. Because the Tree Farm Road property does not qualify for any special assessment, they believed there was no need to respond to Defendant. Only when they received their tax statements for the subject property did Plaintiffs realize their mistake. Defendant asks the court to sustain the disqualification from farm use special assessment because Plaintiffs' appeal was not timely filed. COURT'S ANALYSIS The issue before the court is whether the notice received by Plaintiffs was a valid notice under ORS 308A.7182 and OAR 150-308A.718. Taxpayers have the right to appeal to this court when they are aggrieved by an assessor's act in disqualifying property from special assessment. See ORS 305.275(1). An appeal "shall be filed within 90 days after the act * * * becomes actually known to the person, but in no event later than one year after the act * * * has occurred * * *." ORS 305.280(1). In the present case, Plaintiffs filed their appeal six months after receiving Defendant's disqualification letter. Generally, the above statement would be fatal to Plaintiffs' case.

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All references to the Oregon Revised Statutes (ORS) are to 1999.

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ORS 308A.718(3) requires that the assessor notify a taxpayer in writing within 30 days of the date of disqualification when property is disqualified from special assessment. The administrative rule associated with the statute sets forth the requirements of the notice with some specificity. See OAR 150-308A.718. For example, "(2) The notice to the person claiming special assessment must state: "(a) That the subject property has been disqualified from special assessment; "(b) The property will be assessed under ORS 308.149; "(c) The additional tax liability that will be imposed, or if the land is not used for another use, the amount of the potential additional tax liability (ORS 308A.706(1)); "(d) Provisions for special assessment change under ORS 308A.724; and "(e) Appeal rights." OAR 150-308A.718(2) (emphasis added). The word "must" in the administrative rule denotes an obligation. In this context, it is analogous to "shall." "Must" is defined as "is obliged or compelled." Webster's Third New Int'l Dictionary, 1492 (1993). Therefore, the phrase "must state" means that an assessor is required to include the above listed items in the notice. In a similar case, the Department of Revenue issued a notice of deficiency without a certification that the adjustments were made in good faith as required by ORS 305.265(2)(c). Preble v. Dept. of Rev., 331 Or 320, 14 P3d 613 (2000). The Oregon Supreme Court held that the use of the word "shall" in ORS 305.265(2), made the certification mandatory. Id. at 324. Because the certification was not included in the notice, the notice was invalid. Id. at 326.

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Similarly, if the notice issued by Defendant in the present case did not contain all of the items cited in the administrative rule, its notice was also invalid. The court has two potential issues with the notice sent by Defendant. First, did the notice state appeal rights as required by OAR 150-308A.718(2)(e). Second, did the notice state "[t]he property will be assessed under ORS 308.149" as required by OAR 150308A.718(2)(b). Each will be discussed in turn. Appeal Rights In a case involving the disqualification from farm use special assessment, the Regular Division of this court stated that: "The 90-day appeal period begins running when an owner learns of the disqualification. If the owner is distracted or lulled into inaction in the hope that discussions with the assessor's office will change the outcome, the appeal period may expire before the owner realizes that disqualification is an accomplished fact. If the appeal period expires, the owner is time barred from obtaining any relief." Eby v. Dept of Rev., 15 OTR 247, 251 (2000). In the present case, Plaintiffs were lulled into inaction by the lack of a deadline in the notice. Two essential elements must be included in order to state appeal rights. Any notice of appeal rights must include to whom an appeal is made. The notice must also include the deadline for making an appeal. One without the other is not a statement of appeal rights. While the notice of disqualification sent by Defendant did state to whom the appeal should be sent, it failed to include the deadline for appeals. Taxpayers unfamiliar with the deadline are more likely to challenge the disqualification after the 90 day deadline, when the appeal period has passed. Absence of either of these two elements that constitute appeal rights leaves taxpayers without adequate information that could result in a disqualification becoming final that otherwise would have been appealed. DECISION CASE NO. 011319F 5

Property Assessed Under ORS 308.149 OAR 150-308A.718(2)(b) requires that the notice of disqualification state that "[t]he property will be assessed under ORS 308.149." The notice received by Plaintiffs stated that "your November 2001 tax statement will be based on the market value rather than the farm value of the land." (Def's Ans at 3.) No mention was made of ORS 308.149. However, because the court has already found that the notice did not contain a statement of appeal rights, the court need not decide whether the language quoted above complied with OAR 150-308A.718(2)(b). CONCLUSION The notice of disqualification did not contain a statement of appeal rights as required by OAR 308A.718(2)(e). Without such a statement, the notice was invalid. Until a notice is issued that complies with the administrative rule, the property shall remain in farm use special assessment. Now, therefore, IT IS THE DECISION OF THIS COURT that six acres of Account No. 0827186 and 1.25 acres of Account No. 0827194 shall remain in farm use special assessment. /// /// /// /// IT IS FURTHER DECIDED that Defendant shall correct the assessment and tax rolls to reflect the above values. Any refund due following this correction shall be promptly paid with statutory interest pursuant to ORS 311.806 and 311.812. Dated this _____ day of December, 2002.

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SALLY L. KIMSEY MAGISTRATE IF YOU WANT TO APPEAL THIS DECISION, FILE A COMPLAINT IN THE REGULAR DIVISION OF THE OREGON TAX COURT, FOURTH FLOOR, 1241 STATE ST., SALEM, OR 97301-2563. YOUR COMPLAINT MUST BE SUBMITTED WITHIN 60 DAYS AFTER THE DATE OF THE DECISION OR THIS DECISION BECOMES FINAL AND CANNOT BE CHANGED.

THIS DOCUMENT WAS SIGNED BY MAGISTRATE SALLY L. KIMSEY ON DECEMBER 6, 2002. THE COURT FILED THIS DOCUMENT ON DECEMBER 6, 2002.

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