Judiciary panel hears pros and cons of changing laws on private data in property tax assessments

To accurately determine the taxes due on income-generating properties, such as commercial office buildings, government assessors must determine their fair market value, primarily focusing on income generation, expenses and occupancy.

This is sensitive information that the government must lawfully keep private for many reasons, including protecting an owner’s rights when selling a property.

But state law currently allows this information to be released under some circumstances, such as when an owner appeals the tax assessment or in certain types of litigation.

Rep. Peggy Scott

Rep. Peggy Scott (R-Andover) sponsors HF2959, which she said would “foster trust in the property tax appeals process” by expanding the conditions under which income property assessment data must be kept private.

“House File 2959 makes Minnesota’s property tax system fairer and more transparent by protecting taxpayers’ confidential business data while ensuring the courts and assessors have access to the information needed to determine accurate property values,” said Scott, co-chair of the House Judiciary Finance and Civil Law Committee.

Held over Thursday by the committee, the bill would require the Tax Court to issue protective orders to protect private or nonpublic income property assessment data from public disclosure in appeal cases the court is hearing, but the bill would allow the court to review data at issue in a judge’s private chamber.

A common situation where current law allows income property assessment data to be shared is when an owner appeals a tax assessment and the appeal is heard by the Tax Court.

In this situation, a property owner making the appeal typically asks for an understanding of the assessor’s rationale, which would mean divulging the underlying income property assessment data the assessor relied on, such as private income property data submitted by other nearby and/or similar properties.

Lane Thor is a principal in real property tax at the tax firm Ryan. He said the changes would respect taxpayer privacy and introduce fairness into the appeal process.

Thor likened the current disclosures allowed in the Tax Court to a taxpayer challenging an IRS determination being required to complete an income tax return — including every deduction, business expense, and source of income — and have it placed in a public file for neighbors or competitors to review.

But government assessors testified against the bill, with Rebecca Holschuh, senior assistant Hennepin County attorney, calling it “a solution in search of a problem.”

“What this bill really does is make it easier for litigants to gain access to sensitive information without showing a need for that information. It increases the cost of property tax litigation, and it makes it harder for the government to defend the value of an assessed property,” she said.

She said existing laws that place the decision in the hands of a judge on whether to make private property assessment data public in the courtroom is the best way to protect the rights of all parties involved.