Ad Valorem Taxpayers Who Settle at VAB Are Entitled to Interest

In 2011 the Florida Legislature enacted section 194.014, Florida Statutes, requiring taxpayers who petition the Value Adjustment Board for reductions in their ad valorem tax valuations to pay at least 75% of the related taxes (less any statutory early payment discount) as a condition to invoking the VAB process (petitioning taxpayers with classification or exemption issues must pay the taxes they in good faith admit are due). The law further provided that taxpayers would owe interest at a 12% annual rate on any unpaid tax amounts found to be due, but would be entitled to interest at the same rate on any refunds due to VAB “determinations” reducing their assessments. Section 1, Chapter 2011-181, Laws of Florida.

The primary issue in Williams Island Ventures, LLC v. de la Mora, Case No. 3D15-2037 (Fla. 3rd DCA April 25, 2018) was whether petitioning taxpayers, who obtained reductions in their assessments by agreement with the Property Appraiser and without a VAB hearing , were entitled to interest on their refunds. Reversing the position of his predecessor, a new Miami-Dade County Tax Collector denied interest on such refunds and demanded that taxpayers who had previously received interest return it. In his view, interest was payable to a taxpayer only after a VAB hearing and a written VAB decision reducing the assessment. Taxpayers brought a class action to contest his actions, and the trial court dismissed their case.

The appeals court reversed, finding nothing in the law requiring a VAB hearing as a condition to interest on a taxpayer’s refund. Rather, the critical VAB “determination” occurs when it certifies the final tax roll, which would reflect any reductions agreed to by the Property Appraiser. Dismissal of the case was improper, and the court remanded it for consideration on the merits. In an unusual step the court also remanded for an award of attorneys fees to the taxpayers. A motion to clarify the scope of the opinion has been filed but such motions rarely result in a change to the holding on the merits.

In 2016 the Legislature amended the statute. In addition to replacing the 12% annual rate with a market rate, the amended law provides that a taxpayer’s right to interest follows from a refund determination of the VAB or the property appraiser. Section 9, Chapter 2016-128, Laws of Florida. Although the phrasing is odd since property appraisers (like the VAB) are ordinarily charged with decisions on valuation, classification, and exemption rather than collection or refund of taxes, the right to refund flows directly from reductions in assessed value. It therefore seems obvious that the Legislature intended for interest to accrue on refunds resulting from determinations of the VAB or property appraiser that reduce assessments. The problem presented in Williams Island Ventures thus seems resolved, judicially and legislatively.

The VAB process is far from perfect, but successful taxpayers have a clear right to interest on tax refunds resulting from value reductions.

About the Author:
Robert S. Goldman offers clients over 30 years of experience practicing in state and local taxation. He represents clients in audits, protests, litigation, rulemaking, tax planning, and legislation. His experience includes all the major state and local taxes (sales taxes, property taxes, corporate income taxes, communications service taxes, gross receipts taxes, insurance premium taxes, documentary stamp taxes). Mr. Goldman’s range of experience spans diverse industries including retail, manufacturing, energy, leasing, hospitality, telecommunications, government contracting, health care, transportation, and the service sector. He may be reached at rgoldman@www.deanmead.com.