Ala. Admin. Code r. 810-4-1-.17

Current through Register Vol. 42, No. 12, September 30, 2024

Section 810-4-1-.17 - Assessment Procedures For The Valuation Of Public Utility And Railroad Property In The State Of Alabama

(1)PURPOSE - This rule is issued pursuant to authority contained in § 40-21-1 through 40-21-34, Code of Ala. 1975, for the purpose of establishing guidelines and procedures for assessing and allocating public utility and railroad property for ad valorem tax purposes in Alabama.

(2)DEFINITIONS - For purposes of this rule the meaning of the following terms shall be:

(a)Fair market value. The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, and knowledgeably, and assuming the price is not affected by undue stimulus.

(b)Gross investment. The total un-depreciated capitalized expense incurred to invest in tangible and intangible assets.

(c)Public utility and railroad companies. All companies described under § 40-21-1.

(d)Unitary appraisal. An appraisal of the total operating company's capitalized tangible and intangible assets.

(3)PROCEDURES - To ensure the equitable taxation and allocation of public utility and railroad property in Alabama, the department shall determine the fair and reasonable market value of the tangible and intangible property of public utility and railroad companies (§ 40-21-21) using generally accepted appraisal and unitary appraisal methodologies embraced by nationally and internationally recognized appraisal groups. These appraisal groups include but are not limited to:

(a) The National Conference on Unit Valuation States

(b) The International Association of Assessing Officials

(c) The American Institute of Real Estate Appraisers

(d) The Appraisal Foundation

(e) The Society of Real Estate Appraisers

1. On or before March 1 of each year all utility and railroad companies are required to file a return of financial information to the department. (§ 40-21-3).

2. After receiving the return, the department will determine the unitary market value of the company (§ 40-21-6).

3. After determining the unitary market value of the company, the allocated Alabama value will be determined by computing the percentage of the gross investment the company has in Alabama divided by the total gross investment everywhere. This percentage of investment in Alabama is multiplied by the total unitary market value of the company to calculate the Alabama taxable value. Intangible properties of a public utility with undeterminable physical locations may be allocated to Alabama based on, but not limited to, the level of business as measured by the gross revenue generated in Alabama divided by the gross revenue generated everywhere by the company (§ 40-21-22). Intangible property of this nature generally arises from acquisitions or mergers of other companies with purchase prices paid in excess of the book value of the acquired companies. The sum of the allocated Alabama tangible and intangible property will compose the Alabama taxable value.

4. The Alabama taxable value will then be multiplied by the constitutionally required property class assessment ratio to determine the tentative assessed value (§ 40-8-1(a), Code of Ala. 1975). Once the tentative assessed value of each company has been calculated, the taxpayer will be sent notice of this assessment and given the opportunity for an informal hearing (§ 40-2A-7(b)(1)(a), Code of Ala. 1975). After the informal hearing, or if no hearing is requested after 30 days has passed, the taxpayer will be sent a final equalized assessment adjusted by the state determined equalization ratio. The taxpayer will also be sent information on how to appeal the final assessment.

5. After the yearly assessment process has been finalized, the tangible and intangible equalized assessed values of the company's property in Alabama will be apportioned to each county and taxing jurisdiction in Alabama based on the percentage of the tangible gross investment in each Alabama taxing jurisdiction to the total tangible gross investment in the whole state (§ 40-21-22).

6. On July 1st of each year, or as soon thereafter as practical, the department will distribute to each Alabama county a certified copy of the equalized assessed value of each utility company located in its respective county along with a summary sheet of the total utility property in the county. Copies of these distributions will also be forwarded to each respective utility. This distribution will include:

1. A description of property.

2. The company's total equalized assessed value of the county.

3. The total value of the company located in each respective taxing jurisdiction within the county (including school districts and cities).

The county tax assessing official will use these assessments as a basis to compute the ad valorem taxes owed to the city, county, and state by each company (§ 40-21-17).

Ala. Admin. Code r. 810-4-1-.17

New Rule: Filed January 6, 1999; effective February 10, 1999. Amended: Filed November 2, 2004; effective December 7, 2004.

Amended by Alabama Administrative Monthly Volume XXXIX, Issue No. 11, August 31, 2021, eff. 10/15/2021.

Authors: James R. Moores, Will Martin, Amanda Wolfe

Statutory Authority:Code of Ala. 1975, §§ 40-2A-7(a)(5), 40-7-15, 40-21-1 through 40-21-34. Alabama Const. amend. 373 Ratified Section 217.