Split COA Reverses Durham's Tax Valuation Of IBM Property

Today the Court of Appeals (COA) handed IBM a victory by holding that Durham's Property Tax Commission (Durham) misapplied the burden of proof when IBM challenged Durham's valuation of 49,000 pieces of leased computer equipment. The COA held that Durham erroneously placed the burden of persuasion on IBM. The case is In the Matter of Appeal of IBM Credit Corp.

Ad valorem tax assessments are presumed correct, but NC Supreme Court case law holds that a taxpayer may rebut this presumption by producing competent evidence tending to show that the taxing authority's appraisal is based on arbitrary (or illegal) valuation methods. Once a taxpayer produces that evidence, the burden of proof and persuasion then shifts to the taxing authority to prove that its valuation methods in fact produce true values. The burden-shifting rule was announced in In re Appeal of Southern Railway Co., 328 S.E.2d 235 (N.C. 1985).

In today's case the COA held that Durham put the burden of persuasion (not just production) on IBM, and that was error. The COA remanded so Durham can apply the proper burden of proof framework. Judge Geer wrote the majority decision, joined by Judge Elmore.

Judge Tyson dissented.