Did a taxpayer's misclassification of personal property and use of the wrong percent-good factor create an erroneous or illegal assessment under Utah Code § 59-2-1321?

Plain-English summary

Utah Private Letter Ruling 91-008 addressed a taxpayer that misclassified commercial or industrial tangible personal property on a self-assessment affidavit and therefore used the wrong percent-good factor.

Utah Code section 59-2-1321 allowed a county governing body, upon sufficient evidence, to direct the county treasurer to deduct taxes on property that had been erroneously or illegally assessed before payment.

The Commission concluded that the taxpayer's classification mistake did not create an erroneous or illegal assessment within that statute.

Assessment process

The request described a cost-based model for valuing commercial and industrial personal property.

A taxpayer reported property cost on an affidavit, selected the relevant property classification, and applied the percent-good factor for the year the property was acquired.

Using the wrong classification produced the wrong factor and therefore affected the assessment.

Meaning of erroneous or illegal assessment

The Property Tax Division interpreted “erroneously or illegally assessed” as an assessment that deviated from law and was invalid because of a jurisdictional defect.

It distinguished that kind of defect from judgment used to fix the property's value.

The Commission agreed with the Division.

Classification mistake

The Commission directly addressed a taxpayer's misclassification of tangible personal property and use of the wrong percent-good factor.

It said that mistake was not an erroneous or illegal assessment under section 59-2-1321.

Holding

Under the stated facts:

• Section 59-2-1321 addressed erroneous or illegal assessments.
• The relevant defect had to be jurisdictional in nature and make the assessment legally invalid.
• The statute did not cover judgment in fixing property value.
• A taxpayer's misclassification and wrong percent-good factor did not meet that standard.
• Deviations from the presented facts could negate the opinion.

What this means for you

Business property owners

Classification and depreciation-factor errors may not qualify for a correction route limited to legally invalid assessments. Complete affidavits carefully and preserve timely appeal rights.

County assessors and local officials

The ruling distinguished a jurisdictional legal defect from a taxpayer's valuation-related classification mistake.

Accountants and tax professionals

Verify current correction, protest, and refund procedures. This opinion did not decide every remedy that might apply to a valuation mistake.

Common questions

Q: Did using the wrong percent-good factor create an erroneous or illegal assessment?

A: No.

Q: What kind of defect did section 59-2-1321 cover?

A: The Commission described a jurisdictional defect that made the assessment deviate from law and become invalid.

Q: Did the statute cover judgment in fixing the property's value?

A: No.

Q: Did the ruling decide every possible correction or refund procedure?

A: No. It answered the narrow section 59-2-1321 question presented.

Key source language

• Legal-defect standard: “an assessment that deviates from the law and is, therefore, invalid, and a defect that is jurisdictional in its nature.”
• Valuation distinction: the provision “does not refer to the judgement in fixing the amount of the valuation of the property.”
• Result: misclassifying property and using the wrong percent-good factor “is not an erroneous or illegal assessment within the meaning of” section 59-2-1321.

Citations and references

• Utah Code Ann. § 59-2-1321

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 91-008
• Scope note: the ruling addressed a taxpayer's own misclassification on a personal-property affidavit.
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

May 8, 1991 Response from Tax Commission

March 21, 1991 Letter from XXXXX of XXXXX

May 8, 1991

XXXXX

Dear XXXXX:

This letter is in response to your March 21, 1991 request for a tax commission opinion regarding the distinction between over and under assessments and erroneous assessments for commercial and industrial personal property.

The Tax Commission policy is to refer such requests to the division most qualified to analyze the request and make recommendations concerning it. As such, your request was referred to the Tax Commission's Property Tax Division for their analysis and recommendation. The Division's recommendation is as follows:

- Pursuant to Utah Code annotated, Section 59-2-1321, the county governing body, upon sufficient evidence being produced that property has been either erroneously or illegally assessed, may order the county treasurer to allow the taxes on that part of the property erroneously or illegally assessed to be deducted before the payment of taxes.

- Erroneously or illegally assessed as stated in Section 59-2-1321 refers to an assessment that deviates from the law and is, therefore, invalid, and a defect that is jurisdictional in its nature, and does not refer to the judgement in fixing the amount of the valuation of the property. Therefore, a taxpayer misclassifying tangible personal property on a personal property affidavit and thereby using the wrong percentage good factor, is not an erroneous or illegal assessment within the meaning of the Utah Code Annotated, Section 59-2-1321.

Based on the facts presented in your letter, we are in agreement with the Property Tax Division's recommendations. Obviously, if there are deviations from these facts, this opinion may be negated.

If you do not agree with this determination, you may appeal to the Tax Commission for a formal hearing. The results of that hearing would constitute a declaratory judgement and be appealable to the Utah State Supreme Court. A Notice of Appeal Rights is attached.

For the Commission,

Joe B. Pacheco, Commissioner

March 21, 1991

Joe Pacheco, Commissioner

Utah State Tax Commission

160 East 300 South

Salt Lake City, Utah 84134

Dear Commissioner Pacheco:

Request for Advisory Opinion

It is my understanding, according to Utah law, that overvaluations or undervaluations of property for property tax purposes may not be remedied after the taxes have been paid without protest.

With the exception of motor vehicles, vessels, and aircraft, locally-assessed personal property is generally assessed through a self assessment affidavit. The cost of property is reported on an affidavit and classified according to the nature and characteristics of the tangible property.

I am writing to request an advisory opinion regarding commercial and industrial personal property assessments and the distinction between an over or underassessment and an erroneous assessment.

Statement of Relevant Facts

The personal property assessment model for commercial and industrial property is a cost approach model. The model attempts to estimate fair market value of tangible personal property through the use of percent good factors. The factors are derived from the XXXXX's equipment cost indices and are prepared by the Property Tax Division. The percent good factors are published annually by the Property Tax Division, and the county assessors generally adopt the factors for local assessment without modification.

County assessors mail personal property affidavits with instructions and percent good tables to all accounts.

The taxpayer completes the affidavit (ideally, according to instruction) and returns it with payment of tax to the county assessor.

Completing the affidavit requires applying the correct percent good factor from the table of factors provided by the county. Selection of the correct factor is accomplished by using the correct classification on the table and the factor that applies to the year the property was acquired.

The personal property tax assessment is a direct result of the cost reported and the percent good factor used.

Request

If a taxpayer misclassifies tangible personal property on the personal property affidavit using the wrong percent good factor, is an erroneous assessment within the meaning of UCA 59-2-1321 effected?

Thank you.

Sincerely,

XXXXX