Assessment challengers have tax choice to make

Several thousand Charleston County property owners who challenged their new assessments this year but haven't received a decision have an interesting choice to make about paying their property tax bill. Would they rather have the government owe them money with interest, or the other way around? As the Charleston County Assessor's Office explained in recent letters to roughly 2,375 individuals and businesses with pending appeals, the choice is to pay their full property tax bill, or just 80 percent of the bill. When the appeal is resolved, they will either owe more money or get a refund, plus interest at an annual rate of 7 percent. Interest charges start Jan. 16, the due date for the bills. The assessor's office expects that many of the outstanding appeals will be resolved before that date, but others won't, and assessment challenges can be appealed further by the property owners, with interest accruing until the cases are resolved. For the average homeowner, the amount of money involved would be small, and the amount of potential interest payments smaller. For businesses with valuable property, or the owners of very expensive homes, it could be significant. Several protracted assessment appeal cases in Charleston County illustrate the point. Last year, the company that owns the Dillard's stores at Citadel Mall and Northwoods Mall received a $131,849 property tax refund, plus $9,331 in interest, after winning an appeal of the 2001 reassessment. The refunds were for both stores, for a portion of taxes paid during the prior three years. Assessments are based on the taxable value of a property, established by county assessors and revised during reassessments. In the Dillard's case, an administrative law judge found that the county had overvalued the two stores by more than $4.8 million. On the opposite end of what can happen is a case resolved last March involving the Hampton Inn and Embassy Suites hotels in downtown Charleston. A judge found that the county had correctly valued them in 2001 at $15 million and $16.7 million, respectively. The owners of the hotels had paid 80 percent of their tax bills in 2001 and 2002 while the joint appeal was pending, and when the county won, they owed $186,282 in back taxes, plus $16,486 in interest. "We don't have very many that go back too many years," said Charleston County Deputy Assessor Bobby Cale. Wayne Cassaday, a Mount Pleasant financial planner who owns Battery Investment Co., said it makes sense that companies with multimillion-dollar appeals pending would take the option of paying 80 percent of their taxes until there's a resolution. "They wouldn't be appealing if they didn't think they could win," he said. "These companies don't want to tie up their money for three years." Cale said the county routinely estimates possible revenue losses from assessment appeals. The interest rate tacked onto refunds, or back taxes, changes yearly and is set by the state. Those who received a county letter saying their appeal is pending will later get an 80 percent property tax bill if they do nothing. Those who planned to pay the full bill were asked to return a form saying so. Berkeley County, which got an earlier start on reassessment, has only one appeal pending. Information was unavailable from Dorchester County, but it had far fewer appeals to contend with this year than Charleston County. Cale said about 6,350 property owners pursued appeals in Charleston County.

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