Colorado Property Taxation: Exemption, Abatement and Relief Provisions
| Publication year | 1979 |
| Pages | 1860 |
1979, October, Pg. 1860. Colorado Property Taxation: Exemption, Abatement and Relief Provisions
©The Colorado Lawyer 1979
The levy of ad valorem tax upon the ownership of property predates virtually all other forms of taxation prevalent in Colorado today. As originally adopted, the Constitution of the State of Colorado, in Article X, § 3, established the authority for levying taxes upon real and personal property located in the state and its political subdivisions, but did not specifically authorize other forms of taxation. It was not until 1936 that the Colorado Constitution was amended to permit the imposition of an income tax, leading to substantial changes in the state property tax structure.
Although property taxes have been the perennial subject of heated public discussion and debate, recent events, including the adoption of Proposition 13 by California voters, have brought additional public attention to proposals for property tax reform. As a tax imposed upon an imprecise concept of value, rather than upon more readily measurable concepts of income or consumption, property taxes are subject to greater variation in application than income or sales and use taxes. Furthermore, property taxes, particularly residential taxes, may be imposed without regard to the ability of the taxpayer to bear the tax. The fundamental differences between the property tax and other forms of taxation have generated substantial public pressure for reform or abolition of property taxes.
The focus of this article, however, is not upon the political reform process, but upon the mechanisms provided in the property tax structure for relief, abatement and exemption.(fn1) The differences among the concepts of relief, abatement and exemption must be clearly understood.
Exemptions from the imposition of the property tax arise under specific provisions of the tax statute, which are ultimately derived from the provisions of the Colorado Constitution. A taxpayer or the property of a taxpayer is not exempt from taxation unless the provisions of a particular exemption clearly apply.
Abatement is the process by which a taxpayer subject to property tax seeks review of the assessed valuation of the property and, thus, the amount of the tax itself. Since the amount of tax imposed is determined by applying fixed mill levies to assessed property values, abatement generally involves only issues of value.
Relief generally takes the form of reduced or controlled mill levies, reduced assessments, credits against income tax, or deferral of tax liability.
Property taxes generally fall into one of two patterns. The pattern which prevails in Colorado treats all property, real and personal, as taxable unless specifically exempt. Some states tax only specifically enumerated classes of property.
The power to tax is expressly reserved to the legislature by the Colorado Constitution.(fn2) That power is essentially unlimited, except as it may be limited or curtailed by the Constitution of the United States or the Colorado Constitution.(fn3) Specific limitations upon that power, as it relates to the taxation of property, appear in Article X of the Colorado Constitution. Perhaps the most significant restriction appears in § 6, Article X, as follows:
All laws exempting from taxation property other than that specified in this article shall be void.
Section 6 also authorizes the General Assembly to enact laws classifying various kinds of property for purposes of assessing graduated specific ownership taxes in lieu of ad valorem property taxes.(fn4) Furthermore, § 7 of Article X prohibits the General Assembly from directly imposing taxes for the purposes of any county, city, town or other municipal corporation, but permits such power to be vested by the General Assembly in such subdivisions for their purposes. In the following discussion, the primary provisions of Article X, particularly as they relate to relief, exemption and abatement, are examined.
Although the Colorado Constitution authorizes the General Assembly to levy taxes, that authority must be implemented by specific legislation and does not arise as to a particular tax solely from the constitutional provision.(fn5) The organic statute which implements the property tax authority granted by the Constitution is codified in Articles 1-13 of Title 39 of the Colorado Revised Statutes, 1973.
The statute has established several levels of administrative authority. In each county, provision is made for a county assessor and a county treasurer(fn6) who have the respective responsibilities of determining the valuations for assessment of property within the county and of collection.(fn7) The board of county commissioners of each county comprises the board of equalization for that county(fn8) and has the responsibility to review the valuations for assessment made by the county assessor and to make adjustments to equalize valuations of property within the county.(fn9) The county board of equalization also has responsibilities to hear appeals from the valuations assigned by the county assessor, as discussed below.
At the state level, the statute provides for the creation of the Division of Property Taxation in the Department of Revenue and establishes the position of Property Tax Administrator as its director.(fn10) Two other special boards are also created by the statute: the State Board of Equalization(fn11) and the Board of Assessment Appeals.(fn12) The primary role of the former generally is to review the valuations for assessment of property in the various counties and to make or compel to be made appropriate equalizing adjustments.(fn13) The duties of the latter are discussed below in connection with the appeal process.
The Colorado Constitution requires that all property, real and personal, located within the territorial limits of the authority levying the tax must be taxed, unless exempted.(fn14) The Colorado Constitution provides for a number of specific exemptions from the imposition of property tax. The most important of these exemptions are (1) an exemption for household furnishings and personal effects which are not used for the production of income at any time;(fn15) (2) a limited
exemption from separate taxation of ditches, canals and flumes used exclusively for irrigation; (3) an exemption for real and personal property of the state, its political subdivisions, and public libraries;(fn17) and (4) an exemption for property "that is used solely and exclusively for religious worship, for schools or for strictly charitable purposes."(fn18) In addition, the income tax amendment permits the General Assembly to provide for special classifications of exemptions of intangible and tangible personal property in the administration of an income tax law.(fn19) All other laws providing for exemptions from property tax other than those specifically provided in Article X of the Constitution are void.(fn20)
The Colorado Supreme Court, in Young Life Campaign v. Board of County Commissioners,(fn21) emphasized that there are no implied exemptions. The court stated, "Tax exemptions must arise directly from constitutional authorization, and until such authorization is granted, the legislative branch of the government is impotent."(fn22) Furthermore, exemptions have generally been strictly construed,(fn23) with limited exceptions for property used for educational purposes.(fn24)
Section 39-3-101 sets forth in detail greater than that provided by the Constitution the specific exemptions from the property tax provisions. If property clearly falls within the reach of an exemption, then none of the provisions of Articles 1-13 apply. It must be noted, however, that the existence of an exemption from the provisions of the income tax statute or other state or federal tax provisions does not assure the existence of an exemption under the property tax sections.
The exemption which has generated the most significant recent litigation is the exemption for property "used solely and exclusively for religious worship, for schools or for strictly charitable purposes."(fn25) The language of the Constitution which establishes this exemption
grants the legislature the power to limit the scope of the exemption, but not to expand it.(fn26) The General Assembly has translated the constitutional provision into three separate sections which generally repeat the...
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