23 Nov Do you want to reduce your property taxes? Join our FREE virtual meeting on Dec. 9 to learn how.
Kansas Grain and Feed Association is pleased to co-host a FREE virtual meeting with the Kansas Cooperative Council featuring Jarrod Kieffer of Stinson LLP on Friday, Dec. 9, 2022.
Kieffer is scheduled to discuss the Kansas Supreme Court’s decision in late-October which led to clear guidance to county appraisers that, under Kansas law, grain elevator commercial and industrial machinery and equipment should be appropriately classified as personal property and not a fixture to the realty. And, if installed after 2006, that machinery and equipment is exempt from ad valorem property taxation.
This timely discussion will also review strategies for minimizing property tax expenses after the court decision concerning the classification of grain handling equipment, including determining whether your tax assessment is too high and how and when to file an appeal. The next opportunity to challenge tax assessments is Dec. 20, 2022.
Use the button to the right, or the link below to register for this FREE meeting.
Meeting Title: Strategies to Minimize Property Taxes in the Kansas Grain Industry
When: Dec 9, 2022 09:00 AM Central Time (US and Canada)
Register in advance for this meeting:
After registering, you will receive a confirmation email containing information about joining the meeting.
LEARN MORE ABOUT JARROD KIEFFER
Representing both taxpayers and taxing jurisdictions, Jarrod guides his clients through every step of the property tax process. He focuses on issues relating to real and personal property valuation and classification, value equalization, property tax exemptions and property tax compliance.
Jarrod collaborates with local assessors and private experts to obtain property tax results for his clients. When necessary, Jarrod is also an effective courtroom litigator with a strong track record of success. He has experience with all types of properties, from restaurants and retail buildings to regional malls, refineries, ethanol plants, grain storage and processing facilities, casinos, oil and gas properties and other special-use properties.
He has advised clients on various classification, valuation and exemption matters.
He has pursued property tax appeals on behalf of owners of various types of commercial and retail properties, including restaurants, big-box properties, office buildings, malls, personal property and special-use or special-purpose properties.
He represented the Unified Government of Wyandotte County/Kansas City, Kansas. in tax appeals matters arising out of the Village West development.He has participated in a broad variety of cases with various oil and gas property tax and valuation issues.
In late-October, the Kansas Supreme Court denied Gray County’s petition for review of the late-July Kansas Court of Appeals decision in the Dodge City Cooperative Exchange v Board of County Commissioners of Gray County, Kansas case.
This decision represents a considerable win for the Kansas grain industry. It stands as clear guidance to county appraisers that, under Kansas law, grain elevator commercial and industrial machinery and equipment should be appropriately classified as personal property and not a fixture to the realty. And, if installed after 2006, that machinery and equipment is exempt from ad valorem property taxation.
For at least the last decade, county appraisers across the state have classified grain elevator machinery and equipment as taxable fixtures to the real property. This classification, which was inconsistent with Kansas law, greatly increased the tax burden on our industry.
This has been a long and arduous battle for Dodge City Co-op and our industry. Kansas Grain and Feed Association wishes to recognize, and congratulate, Jerald Kemmerer and his team at Dodge City Cooperative Exchange, Pride Ag Resources, as well as Marc Kliewer and Klint Spiller, legal counsel on the appeals.
In 2005, to promote and stimulate new investments in commercial and industrial machinery and equipment in the state, and to encourage economic expansion and job growth, the Kansas legislature passed legislation exempting all new commercial and industrial machinery and equipment from property taxation. This exemption can be found at K.S.A. 79-223.
While the legislature’s clear intent at exempting new machinery and equipment was expressed in the law, counties soon found a way to retain those tax proceeds by reclassifying all machinery and equipment at grain facilities as fixtures to the realty. In doing so, counties were able to tax otherwise exempt machinery and equipment. Other industries, such as ethanol processing plants, were treated in a similar fashion.
Seven years ago, in 2015, Jerald Kemmerer, CEO/GM, Pride Ag Resources, challenged Gray County’s 2013/2014 property valuation and classification of Dodge City Co-op property. The appeal went to the Kansas Board of Tax Appeals (BOTA) in Topeka. When BOTA released its decision, siding with the county, Dodge City Co-op requested a new hearing before a Kansas District Court. In 2018, the district court released its decision, reversing the BOTA decision and siding with the Co-op. Gray County then appealed the District Court decision to the Kansas Court of Appeals.
On Friday, July 22, 2022, the Kansas Court of Appeals released its opinion finding that “(t)he district court correctly concluded that the various pieces of equipment are not fixtures.”
Using Kansas’ three-part test (adaptation, annexation, and intent of the property owner), the appellate court agreed with the Co-op in finding that the elevator’s machinery and equipment was “not sufficiently annexed” to the realty to be classified as fixtures.
In reaching its decision, the Court considered the “degree of permanency” of the machinery and equipment and other “details surrounding an item’s physical attachment and removability.” In fact, the Court found for the Co-op even though much of the machinery and equipment was “large and bolted to the storage bins.”
In making its determination, the Court stated that “the undisputed evidence also showed that the equipment could be easily removed, and removal would not damage the bins. No evidence indicates that removal would be unduly complicated or costly.” The Court also stated the evidence showed that “similar pieces of equipment had been removed and placed on different bins, indicating that doing so is feasible.”
The Court also reflected on the “intent of the property owner” prong of the fixtures test. In its opinion, the Court discussed that “the district court found the same removability aspects of the equipment that we find dispositive in our review of the annexation element also demonstrated that the Co-op did not intend the items to be permanently affixed to the storage bins.” The Court “(found) this analysis persuasive” that the Co-op did not intend for the machinery and equipment to be a permanent fixture to the realty.
This decision represents a solid win for the Kansas grain industry. It stands as clear guidance to county appraisers that, under Kansas law, grain elevator commercial and industrial machinery and equipment should be appropriately classified as personal property and not a fixture to the realty. And, if installed after 2006, that machinery and equipment is exempt from ad valorem property taxation. This has been a long and arduous battle for Dodge City Co-op and our industry. Kansas Grain and Feed Association wishes to recognize, and congratulate, Jerald Kemmerer and his team at Dodge City Cooperative Exchange, Pride Ag Resources, and Marc Kliewer, legal counsel on the appeals.