ATA sues Alabama over property tax assessment
Wednesday, July 02, 2014
Posted by: Ford Boswell
The Alabama Trucking Association has filed a lawsuit in the 15th Judicial Circuit Court of Alabama challenging the way the State of Alabama Dept. of Revenue assesses property tax on new trucks.
The suit was filed June 19 and presented to the Court on June 24 in Montgomery.
The Association argues Alabama incorrectly assesses taxes due on new truck and other rolling stock purchases at 89 percent of the manufacturer’s suggested retail price (MSRP) rather than the vehicle’s actual sale price. If ATA wins, it would mean savings of more than $500 per new truck purchase.
According to the Association’s attorney James Sizemore, Alabama’s current regulation states that “market value shall be a certain figure precluding evidence of any other value other than the one the state places on it.”
He explains that in essence the Dept. of Revenue mandates a market value for a purchase using the MSRP as a guideline and disregards all other indications of value.
“So far as I can determine, I have been unable to find anyone who pays the manufacturer’s suggested retail price for a new truck,” Sizemore says, “but the regulation ties this taxable value to a factor that is really not an indicium of value. Most of the evidence of rules provides that an offer to sell (which is really all the MSRP is) is not evidence of value.”
ATA’s suit claims there other ways than MSRP to determine property value. “A true value of a truck you just bought actually is available -- it’s the price that you paid for it,” he argues. “(The State) ignores that and imposes a market value of 89 percent of the MSRP. They arrive at that 89 percent because of a provision in the Alabama code that exempts from property tax for pollution control devices.”
The Alabama Constitution of 1901 states that “all taxes levied on property shall be assessed in exact proportion to its value.” The Constitution elsewhere states that property shall be assessed for ad valorem purposes in the following ratio of assessed value to the “fair and reasonable market value.”
“Both of those provisions are violated by the regulation that (Dept. of Revenue) has promulgated,” Sizemore says.
Sizemore adds that the statutes adopted by the Legislature for the purposes of assessment require that “property shall be appraised for its fair and reasonable market value by taking into consideration all elements and factors bearing such value.”
“(The Dept. of Revenue) also excludes that,” he says.
He compares how the State currently taxes new truck purchases with how the Alabama Trucking Association believes they should be taxed based on state law.
“I examined an actual recent new truck sale,” he says. “The truck was purchased for $111,100 with an additional $12,848 for Federal Excise Tax for a total sale of $123,584. The MSRP for that truck was $164,300. The State tax collected was $1,659. We believe that the correct tax, according the actual sale of the new truck, should be $1,122. That’s a savings of $537 per truck.”
The State has until July 24 to answer or otherwise defend. A trial is scheduled for October 14, 2014.
ATA prevailed over the state in a separate lawsuit earlier this year, with the result that interstate carriers with equipment based in Alabama may henceforth apportion their property tax instead of paying 100 percent to Alabama.