Tax Appeals for Railroad Property


The Best-Kept Secret Assessors Don’t Want You To Know

With a properly managed appeal, property owners may qualify for savings in hundreds of thousands, and in some cases, millions of dollars in annual savings. For others, minimal adaptation and investment could also result in significant tax reductions.

The Transload Statute: A Foundation for Fair Tax Appeals for Railroads

Transloading is the process of transferring shipments from one mode of transportation to another. Using multiple transportation modes not only increases cost and efficiency but also reduces the costs of carrying goods from one endpoint to another. Aside from rail, other modes of transportation include land-based methods such as automobiles and trucks, water-based methods such as ships and barges, and air-based methods.

While transporting goods using various modes of transportation remains complicated, many transloading site facilities build specialized storage facilities for the goods to mediate transportation efficiency. These structures help mitigate lad time while the other modes of transportation are prepared for loading and transfer.

What Is the Transload Statute?

The Federal Transload Statutes and the Revenue Act of the individual states bring transload sites under the State Department of Revenue jurisdiction instead of the Local Assessor for taxation purposes. Since the 1970s, the State Department of Revenue has historically imposed on railroads tax burdens which are a mere fraction of the burden imposed by local assessors. State departments of revenue, based on the federal statutes, determine fair cash values of all property for any railroad company, including capital stock, actual market value, bonds, net earnings of the company, railway-owned transloading properties, building structures, and railways. Since railroads have been assessed at a substantially lower rate based on the federal statutes, extracting property from the local assessors’ jurisdiction can result in dramatic tax advantages for qualifying railroad properties.

The Benefit of the Transload Statute

The railway and transload properties will fall under the Federal Transload Statute and court decisions which allow for a more precise property assessment. In doing so, property taxes commonly fall substantially below the level of taxation for the property that is assessed locally as commercial or industrial property. Special-type properties in state jurisdiction, such as railways and farmland, are commonly assessed lower and favored by the state to protect the unique properties from discriminatory taxation by local jurisdictions, especially in situations where the property is involved in interstate commerce.

Legislation from the 1970s Railroad Revitalization and Regulatory Reform Act and caselaw including the 2002 decision regarding CSX Transportation vs. Ga. Bd. of Equalization, the Supreme Court, and the federal government have consistently sided with railroads to ensure protection from double taxation or discriminatory taxes and have emphasized the importance of correctly assessing railroads to prevent them from being taxed either doubly or at a higher level than commercial and industrial properties.