Aug. 14, 2003 – The brief general moratorium on property tax collections is over. District Judge Thomas K. Moore ruled Wednesday that a recently enacted law is sufficient to provide protection to taxpayers against erroneous large tax assessments until the system is completely overhauled.
In a separate but related ruling issued the same day, he slashed the tax liability of one V.I. commercial property owner, suggesting that the government had grossly exaggerated the property value.
Over the last three years, Moore has heard a succession of property tax cases against the government and has consistently sided with the taxpayer. He found that the government had inflated values in a number of ways, including basing the assessment on replacement cost rather than market price.
In May he ruled that the government could not collect property taxes from 1999 onward until an independent "Special Master" appointed by the court certified that the territory's tax assessment system was equitable and reliable in determining the actual value of property. (See "Court bars property tax billing and collecting".)
Coming two and a half weeks after the administration admitted that the government was facing a financial crisis, the injunction against tax collections got a mixed reception.
But Moore had provided a way for the government to continue collections: It could issue the 1999 through 2004 tax bills based on the illegal 1998 assessment values, provided that it established a mechanism to adjust the assessments and bills retroactively — giving credits for overpayment and issuing supplemental bills for underpayments — once the system was corrected.
A bill passed by the Legislature in June and signed into law on July 14 sets up that safeguard, Moore said in his Wednesday ruling.
So the general public can expect to receive, and will be legally required to pay, property tax bills once again. However, the government still may not issue bills to those property owners who have sued the government over the assessment issue, until their cases are determined.
In Moore's related ruling Wednesday, he found that the government had placed an overly heavy tax burden on Equivest, the corporate owner of Bluebeard's Castle, Bluebeard's Beach Club and Elysian Beach Resort.
The company argued that the government erred in several ways, including:
– Taxing structures that were not located on the parcel being taxed.
– Taxing phantom structures that did not exist.
– Using a more recent year of construction than the actual year of construction, which lessened depreciation.
– Taxing some improvements twice.
– Using unrealistic replacement costs — for instance, assessing two tennis courts at $1.6 million when they were insured for a total of $110,000.
Accepting figures from the expert witnesses that Equivest presented the court, Moore ruled that the company should pay a mere $51,074.94 and $51,126.42, respectively, for tax years 2000 and 2001, on the four properties whose assessments it has challenged. The government's assessments of those same properties would have led to taxes of $433,397.52 in 2000 and $430,541.15 in 2001.
Moore took the opportunity in this week's rulings to express his annoyance with the V.I. government for bringing what he called "hackneyed" and "stale arguments" into court and for either not reading his rulings and the rulings of the 3rd Circuit Court of Appeals, or of ignoring those rulings. The issue of jurisdiction, for instance, has been decided previously, and upheld on appeal, and yet the government continues to challenge it.
If the attorneys aren't reading the rulings, they are "simply inept," Moore, said. If they are ignoring the rulings, he added, then they "have come dangerously close to breaching their professional and ethical responsibilities" and "arguably breached their good faith duty to assert meritorious claims" as required by the American Bar Association's Rules of Professional Conduct.
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