Sweet v. Washington Co.
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IN THE MAGISTRATE DIVISION OF THE OREGON TAX COURT Property Tax JUNE ANN AND GERALD SWEET (trustee), Plaintiffs, v. WASHINGTON COUNTY ASSESSOR, Defendant. ) ) ) ) ) ) ) ) ) ) No. 991390B DECISION Plaintiffs appeal the county s disqualification of their land from farm use special assessment for the 1999-2000 tax year. The property is identified as Washington County Assessor's Account Nos. R686635 and R686608. Trial in the matter was held May 4, 2000, in Hillsboro. James Hilborn represented the plaintiffs. Richard Gilmore appeared for defendant. Gerald Sweet, June Sweet, Carol Ann Childers and Douglas Turnbull appeared as witnesses for plaintiffs. Mark Hertel appeared as a witness for defendant. STATEMENT OF FACTS The subject property is two parcels of land located in a non-exclusive farm use (non-EFU) zone. The parcels total 6.82 acres. The property contains plaintiffs home, a barn, fruit trees, a koi pond and pasture. Plaintiffs have owned and lived on the property for thirty years. A number of years ago, the fruit trees were operated as an orchard and the pasture was used for cattle. At the present time and for a number of years, plaintiffs use DECISION 1 any fruit from the trees for their own use. They make no commercial use of the trees. The koi pond is a relatively new venture. A year ago their first group of koi was ready for market. However, a blue heron moved in and ate the koi. Currently, plaintiffs have approximately 110, ten-inch koi ready for market. Mr. Sweet estimates that he will be able to sell the koi for anywhere from five to twenty dollars per koi. Plaintiffs introduced into evidence an undated statement from their grandson, Logan Sweet, that he boarded his horse on plaintiffs pasture from January 1997 until August 1999 for a monthly rent of $75. Logan Sweet s statement included that [i]n April of 2000, I became a United States Marine. Upon completion of my Basic Training I paid the amount of $500 on this debt. 1 (Ptfs Ex 13.) The statement did not include any statement as to how Logan Sweet used his horse, i.e., was the horse used for pleasure or for a purpose that generated income. Plaintiffs also introduced into evidence a statement from their daughter, Cyndia Sweet, that she had boarded her horse and goat on the pasture from July 1996 until August 1999 for a monthly rent of $75 per animal. Cyndia Sweet stated that she has made two payments. She made the first payment of $1,800 in October 1999. She made a second payment of $1,700 in February 2000.2 Her statement did not include any statement as to how she used her horse and goat. Several neighbors either /// 1 The court questions whether Logan Sweet would have completed his basic training by the trial date of May 4, 2000, much less had an opportunity to pay his grandparents after completing basic training. 2 Plaintiffs bank statements show a deposit of $1,800 posted on September 30, 1999. (Ptfs Ex 1) A second deposit of $1,700 was posted on February 17, 2000. (Ptf s Ex 2) DECISION 2 testified or wrote in statements that they had observed up to three horses and a goat on the property for a number of years. Plaintiffs submitted their Farm Income Summary (Ptfs Ex 15) which purported to show plaintiffs income from farming activities. It included a tax year summary from 1995-96 through 1999-00. It also included a calender year summary from 1996 through 1999. Plaintiffs also submitted their 1999 Schedule F. (Ptfs Ex 10) The only income on the Schedule was $750 reported on line 6a. Line 6a is for [a]gricultural program payments. Id. Plaintiffs reported no expenses on their Schedule F. Someone from defendant s staff visited the property several times over a two year period. They saw no animals on the property except for one pony. They observed high grass and weeds. On August 13, 1999, defendant sent plaintiffs a letter disqualifying their property for the 1999-00 tax year. The disqualification was based on the [l]and not [being] farmed in previous years. (Ptfs Ex 8) COURT'S ANALYSIS The Oregon Legislature created a special assessment program for property used for farm purposes. Property located within an exclusive farm use (EFU) zone is entitled to special assessment if the property is being used exclusively for farm use. ORS 308.370(1).3 Farm use is defined at ORS 215.203(2). Land that is in a non-EFU zone must meet additional requirements. ORS 308.372(1). That statute provides: /// (1) * * * farmland or a farm parcel that is not within an area 3 Unless specifically noted otherwise, all citations to the Oregon Revised Statutes are to the 1997 Replacement Part. DECISION 3 zoned for exclusive farm use under ORS chapter 215 is not used exclusively for farm use unless all of the following prerequisites are met: (a) * * * in three out of the five full calendar years immediately preceding the assessment date, the farmland or farm parcel was operated as a part of a farm unit that has produced a gross income from farm uses in the amount provided in ORS 308.407(2)[.] (b) * * * income tax returns are filed with the Department of Revenue * * * that include a Schedule F[.] (c) Upon request, a copy of the returns or the schedules of the returns showing the gross income received from farm use is furnished by the taxpayer to the county assessor. (Emphasis added.) Defendant disqualified the subject property from special farm use assessment for the 1999-2000 tax year. The five previous calendar years that must be analyzed are 1994 through 1998. Defendant in its Answer asked for copies of plaintiffs Schedule F s. Mr. Gilmore again asked for plaintiffs Schedule F s at the February 28, 2000, case management conference. The only Schedule F that has ever been provided is for 1999. As mentioned above, the only income on the Schedule was $750 reported on line 6a. Line 6a is for [a]gricultural program payments. Agricultural program payments are payments from the government. They are for such things as price support payments or cost-share payments. 1999 Instructions for Schedule F at 2. Plaintiffs Schedule F did not show any income from actual farm use.4 Plaintiffs have not provided any Schedule F s for 4 Plaintiffs are cash basis taxpayers. See Ptf s Ex 10 at Line C. The court is perplexed as to why plaintiffs 1999 Schedule F did not reflect the $1,800 payment received from Cyndia Sweet on September 30, 1999. DECISION 4 the relevant years, 1994 through 1998. The court concludes that none were provided because none exist. Plaintiffs attorney argues that the court is limited in its review to the basis of the disqualification, in this case that the land was not being farmed.5 The court disagrees. ORS 308.372(1) requires that all of the prerequisites be met or the land is not used exclusively for farm use. Unless the prerequisites are met, the land, by definition, is not being farmed. Even if the court agreed with plaintiffs attorney that the court should limit its review to what was stated in the disqualification letter, plaintiffs would still lose. The facts in Ameral v. Dept. of Rev., 14 OTR 56 (1996), are very similar to the case at bar. Mr. Ameral leased his pasture to his neighbor. The neighbor testified that he used the property to pasture his four horses. The neighbor used the horses for packing and in his cattle business. The court doubted that four horses were needed to run six cows and stated that packing was a personal use, not a farm use. Id. at 60. The court found that [i]n determining whether property qualifies for special assessment, the statutes focus on the use of the property, rather than the ownership. 6 Id. The court went on to hold that [t]he pasturing of pleasure horses is not a farm use. 7 Id. There is nothing before the court to 5 Plaintiffs had notice as early as the fall of 1999 that plaintiffs farm income was also an issue. Mr. Hertel testified that he spoke to Mr. Sweet in the fall of 1999 and expressed concern about the lack of income relating to the property. 6 The statutes referred to were ORS 215.203(2)(a) (1995) and ORS 308.370(1) (1995). 7 The court was interpreting ORS 215.203(2)(a) (1995). That statute defines farm use as it relates to horses. It states that, [f]arm use also includes the current employment of land for the primary purpose of obtaining a profit in money by stabling or training equines including but not limited to providing riding lessons, training clinics and DECISION 5 indicate that the horses and the goat were anything other than pleasure animals. CONCLUSION Based on the evidence presented and the statutory requirements for special assessment of land located within a non-EFU zone, the court finds defendant s disqualification of the property was proper. IT IS THE DECISION OF THE COURT that plaintiffs appeal is denied. Dated this _____ day of May, 2000. _________________________________ SALLY L. KIMSEY MAGISTRATE IF YOU WANT TO APPEAL THIS DECISION, FILE A COMPLAINT IN THE REGULAR DIVISION OF THE OREGON TAX COURT, FOURTH FLOOR, 1241 STATE ST., SALEM, OR 97310. YOUR COMPLAINT MUST BE SUBMITTED WITHIN 60 DAYS AFTER THE DATE OF THE DECISION OR THIS DECISION BECOMES FINAL AND CANNOT BE CHANGED. THIS DOCUMENT WAS SIGNED BY MAGISTRATE SALLY L. KIMSEY ON MAY 30, 2000. THE COURT FILED THIS DOCUMENT ON MAY 30, 2000. schooling shows. The changes to ORS 215.203(2) (1997) are additions only and do not relate to the dispute before the court. DECISION 6
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