The Law Court recently cleaned up a tangle of legal precedent regarding the appropriate means for challenging a property tax assessment, explaining and harmonizing two hundred years of case law.  Oakes v. Town of Richmond establishes clear guidelines for tax appeals.

The issue in Oakes was the proper procedural vehicle for contesting a property tax that a taxpayer claims should not have been assessed at all.  In that case, a taxpayer had challenged a tax assessment based on an argument that she did not own the subject property.  The Superior Court dismissed the claim, concluding that it could not be brought via a declaratory judgment action.  The Law Court reversed.

In a lengthy, and scholarly, recitation, the Court traced the two-hundred-year history of its precedent addressing the question whether particular property tax claims must be brought in an administrative abatement proceeding or in a declaratory judgment action.  As that recitation shows, the relevant precedent struck some discordant notes given the incremental statutory, procedural, and jurisprudential developments that had occurred over the decades.  As a result, it was less than crystal clear when the abatement process is the exclusive vehicle for property tax claims and when a declaratory judgment action is appropriate.

To clear up the confusion, the Court provided a comprehensive outline to guide practitioners:

• The abatement process is the exclusive means for pursuing (1) “a claim that a tax is discriminatorily excessive,” (2) “a challenge to an assessment practice or methodology,” and (3) “a true overvaluation claim”;
• Exemption claims “may be pursued through either the abatement process or a declaratory judgment action”; and
• “Other challenges to a tax assessment may be pursued through either the abatement process or a declaratory judgment action.”

Applying these standards, the Court held that a taxpayer who claims that she has been taxed on property she does not own may challenge the assessment via either the abatement process or a declaratory judgment action.

Oakes brings welcome clarity to an important area of jurisprudence.  It is now clear that taxpayers are required to exhaust administrative remedies only in a limited set of cases; in all other property tax disputes, taxpayers have a choice to go through the abatement process or go straight to court.