Tuesday, September 29, 2009

Minnesota Tax Court decision due October 21, 2009

A long-awaited decision of the Minnesota Tax Court in the case of Sommerdorf v. County of Sherburne is due to be released on or before October 21, 2009.

County assessors and equine property owners stand to be affected by the decision in this case. The main issue is whether horse pasture is an agricultural product that may be raised in conjunction with the commercial boarding of horses to qualify a property for agricultural classification. Although "pasture" is listed as an agricultural product in the statute, assessors -- backed by the Minnesota Department of Revenue -- argue that the pasture must be harvested as hay, baled, and sold to third parties rather than used to feed horses by grazing.

A second issue in the case is whether a horse boarding property that otherwise qualifies as agricultural is somehow transformed into a "commercial-industrial" operation if horse training, riding instruction, or other services are offered for hire rather than merely raising livestock, crops, or other agricultural products for sale.

Conflict over this issue, as well as significant changes in the tax treatment of equine property, has spread to Washington County and resulted in unprecedented attention at the State Capitol in the last legislative session. While some property owners have appealed to the Commissioner of Revenue or consider court challenges to their property tax classification, the Legislature will take up the issue again starting in early February 2010.