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Tax Law

Louisiana Supreme Court Finds Tax Commission Properly Rejected Over-Valuation of Property

The Louisiana Supreme Court unanimously held that the Louisiana Tax Commission did not act in an arbitrary and capricious manner when it rejected a property tax assessor’s valuation for ad valorem taxes.  In 2012, D90 Energy, LLC purchased several wells.  For tax years 2013 through 2016, D90 Energy appealed assessments by a Jefferson Davis Parish assessor who refused to consider the purchase price of the wells when determining the fair market value – instead exclusively using valuation tables which account for the age, depth, type, and production of the wells.  Based on evidence and testimony presented to the Tax Commission by the taxpayer and applying a regulation which states that “[s]ales, properly documented, should be, considered by the assessor as fair market value,” the Tax Commission reduced the valuations.  On appeal to the state supreme court, the assessor argued he had “the exclusive right to determine fair market value” and that the Tax Commission may only review evidence already submitted to the assessor.  However, the Court determined that the Tax Commission is permitted to review new evidence submitted by taxpayers to the Tax Commission and that recent sales should be considered by the assessor when determining fair market value.  Accordingly, the Court found that “relying upon that express directive as a valuation standard cannot be arbitrary and capricious.”

D90 Energy LLC v. Jefferson Davis Parish Bd. of Review, No. 2020-C-00200 (La. Oct. 20, 2020).