Nebraska Supreme Court: Landowners Can Reduce Tax Burden by Showing Systematic Under-Valuation of Comparable Property
Lancaster Cnty. Bd. of Equalization v. Moser, 312 Neb. 757 (2022).
The Nebraska Constitution requires property-tax rates and valuations to be “uniform” and “proportionate.” Neb. Const. art. VIII, § 1. What this means in practice is that a landowner can reduce his or her tax burden, but only to the extent the county assessor intentionally undervalued comparable property.
Mary and Brad Moser (the “Mosers”) own 88.09 acres the Lancaster County Assessor (the “Assessor”) classified as irrigated cropland. Irrigated cropland receives a higher tax valuation than other agricultural land. The Mosers claimed the Assessor should have valued their land as non-irrigated cropland. As evidence, they pointed to a neighbor who irrigated his land with a center pivot but received a dryland designation.
The Mosers first protested their 2018 and 2019 valuations to the Lancaster County Board of Equalization (the “Board”). The Board rejected their claim.
The Mosers next appealed to the Tax Equalization and Review Commission (“TERC”). TERC reversed the Board, finding that the Mosers should have received the same dryland designation as their neighbor. The Board appealed, and the Nebraska Supreme Court moved the case to its docket.
The Nebraska Supreme Court reversed TERC’s decision. It viewed the Board’s decision with a presumption of validity. The Mosers could only rebut that presumption by showing clear and convincing evidence that their valuation was grossly excessive and the result of a systematic exercise of intentional will or the failure of a plain legal duty.
The neighbor’s dryland designation, by contrast, was a mistake by the Assessor. That valuation, the court held, thus could not form the basis for a constitutional challenge. The Assessor’s unintentional error imposed no duty on the Board to compound that mistake at the Mosers’ property. The court upheld the Mosers’ valuation.
Three judges dissented. They contended that the constitution makes no exception for mistakes by the Assessor. Rather, it requires uniformity and proportionality among all properties within the same class. Thus, the dissenting opinion argued, if another agricultural property receives a more favorable classification, the taxpayer has a right to that same benefit.
The majority opinion emphasizes the demanding burden of proof for a taxpayer protesting a board of equalization’s decision. To lower its tax burden, the taxpayer must show comparable property systematically or intentionally received more favorable tax treatment. It is not enough if such treatment was isolated or a mistake.