Appealing Your Property Taxes - How To Request Binding Arbitration

Thousands of Texas homeowners will go through the property tax appeal process this year because the appraisal district incorrectly assessed their home's value. Sometimes getting a satisfactory reduction takes some time, but it is important to utilize the options available until you are offered a fair reduction.

Effective September 1, 2005, the Texas Legislature amended the Texas Property Tax Code to allow property owners the option of appealing an Appraisal Review Board's (ARB) decision for a property with a value of $1 million or less using binding arbitration . The arbitrator can only consider market value at a binding arbitration hearing.

To request binding arbitration, the property owner must complete Comptroller form AP-219, Request for Binding Arbitration. The form and a money order or a check issued and guaranteed by a banking institution, such as a cashier's or teller's check, in the amount of $500 made payable to the Comptroller of Public Accounts, must be delivered to the county appraisal district within 45 days of the receipt of the ARB order.

After the property owner submits the request, the appraisal district has 10 calendar days to certify the application and forward the request and the money order/cashier's check, along with a copy of the ARB order, to the Comptroller.

When compared to a judicial appeal, advantages of binding arbitration include a lower cost, informal process, speedier resolution and the loser pays provision. Also, the property owner does not have the burden of proof at a binding arbitration hearing. So, if the property owner wins the dispute he/she will be refunded $450, and the appraisal district is required to pay the arbitrator's fees. However, if the arbitrator's assigned value is closer to the ARB's value than the property owner's opinion of value, the arbitrator is paid from the property owner's $450 deposit. Once the arbitrator makes a decision, it is final and cannot be disputed.

Minimizing taxes includes regularly appealing property taxes and considering options for income tax reduction. In some cases, tax planning needs to occur years in advance. For estate tax planning, it may be prudent to start decades in advance. Some tax reduction options can be performed after the fiscal year has ended, including a fixed asset audit, cost segregation study and abandonment study.