Florida Property Tax Litigation: Procedural Traps for the Unwary

A recent appellate court decision illustrates a common procedural trap befalling taxpayers in the minefield of Florida property tax litigation. Among the jurisdictional requirements to judicially challenge a property tax assessment is the taxpayer’s continuing obligation to either timely challenge or pay the amount of taxes assessed for subsequent years during which the first suit remains pending. In Sowell v. Faith Christian Family Church of Panama City Beach, Inc.,^[1] the taxpayer timely challenged the denial of an exemption for one year, but failed to timely pay or challenge the following year’s assessment before it became delinquent. As a result, the trial court lost jurisdiction over the taxpayer’s challenges to both tax years’ assessments and its case was dismissed.

The taxpayer in Faith Christian owned property on which the Property Appraiser denied an exemption for tax year 2015. The taxpayer timely challenged the assessment in court. While that suit was pending, the Property Appraiser later assessed the property for tax year 2016. But the taxpayer did not timely pay the amount which it admitted in good faith to be due for 2016 (which, presumably, would have been $0 since the taxpayer claimed the property was exempt), nor did the taxpayer timely challenge the 2016 assessment in court before the assessed taxes became delinquent. Rather, the taxpayer filed an amended complaint in the 2015 lawsuit seeking to add claims challenging the 2016 and (prematurely) 2017 taxes – some 134 days after the deadline to challenge the 2016 assessment.

The procedural requirements to judicially challenge a Florida property tax assessment are set forth in Section 194.171, Florida Statutes. In addition to the obligation to pay (prior to filing suit) the portion of a challenged assessment that the taxpayer admits in good faith to be due,^[2] the law also imposes a continuing payment obligation on the taxpayer while the lawsuit is pending: Subsection (5) requires the taxpayer to thereafter timely pay the amount of taxes assessed in each subsequent tax year that the taxpayer admits in good faith are due, prior to such taxes becoming delinquent.^[3] The statute identifies these requirements (among others) as being “jurisdictional” and states that “[a] court shall lose jurisdiction of a case when the taxpayer has failed to comply with the requirements of subsection (5)”.^[4]

In Faith Church, the appellate court held that, because the taxpayer did not timely pay the 2016 assessment before it became delinquent and did not timely challenge the 2016 assessment in court, the trial court lost jurisdiction over both the 2015 and 2016 assessment challenges.^[5] Because the amount of the good faith payment for 2016 presumably would have been $0, the fundamental defect in the taxpayer’s case was its failure to timely challenge the 2016 assessment before those taxes became delinquent.

The appellate court rejected the taxpayer’s argument that its amended complaint should relate back to the date of filing its initial lawsuit in 2015. While the court acknowledged that it is “possible” for an amended complaint to relate back for purposes of the 60-day jurisdictional time limit for filing suit,^[6] that application of the “relation back” doctrine is limited to situations where the taxpayer timely paid the taxes before they become delinquent and files an amended complaint to reflect that fact. In short, the relation back doctrine cannot be used to cure a jurisdictional defect under Section 194.171.

As the Faith Church court observed, the jurisdictional requirements of subsections 194.171(5) and (6) may “appear to be somewhat harsh,” but “their meaning is clear.”^[7] In order to avoid the same pitfall, perhaps a better strategy for challenging subsequent years’ assessments – rather than attempting to do so by amended complaint in the first lawsuit – would be to timely file a separate lawsuit for each tax year and seek to have the court consolidate them.

Conclusion

Taxpayers who choose to judicially challenge a Florida property tax assessment must be mindful that the state imposes strict jurisdictional requirements for these lawsuits. A challenge to one year’s assessment does not relieve the taxpayer of its obligation to either timely pay or timely challenge each subsequent year’s assessment while the first lawsuit is pending (including payment of the amount admitted in good faith to be due). Taxpayers can expect courts to strictly enforce these requirements, and allow no margin for error.

For assistance in evaluating Faith Christian or other state and local tax matters, please contact a member of our State and Local Tax Team.

About the Authors:
H. French Brown, IV focuses on state and local taxation, governmental relations and lobbying, and administrative law. Prior to joining Dean Mead, Mr. Brown was in private practice at another Tallahassee law firm. He began his legal career at the Florida Department of Revenue, where he quickly rose to the position of Deputy Director of Technical Assistance and Dispute Resolution. Mr. Brown also assists businesses with Florida tax planning and controversies. He may be reached at fbrown@www.deanmead.com.

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.

Mark E. Holcomb has more than 32 years of experience practicing in state and local taxation. He
represents clients before the Florida Department of Revenue and local taxing authorities, and in litigation at the trial and appellate levels. Mr. Holcomb advises clients on a broad range of state and local taxes, including corporate income and franchise tax, sales and use tax, documentary stamp tax, communication services tax, insurance premium tax, ad valorem tax and motor fuels tax, in tax controversy work and in planning opportunities. He may be reached at mholcomb@www.deanmead.com.

^[1]Case No. 1D17-3365 (Fla. 1st DCA July 25, 2018).
^[2]A receipt for the payment must be obtained from the Tax Collector and attached to the Complaint. Id.
^[3]Id. at (5). Implicitly, the taxpayer must also timely challenge the balance under subsection (2).
^[4]Id. at (6).
^[5]Slip Op. at 5.
^[6]Slip Op. at 4; see Section 194.171(2).
^[7]Slip op. at 3 (quoting Bystrom v. Diaz, 514 So. 2d 1072, 1074 (Fla. 1987)).