YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-30

May 2005

The following problems were discovered as a result of an audit conducted by our office of the Missouri State Tax Commission.

Because state law requires the State Tax Commission (STC) to focus on certification of the maximum equivalent sales ratios (ESR) for the school foundation formula, fewer resources are available to ensure equitable and uniform assessments are performed statewide.  Little emphasis is placed on analyzing each subclass (residential, commercial, agricultural) of property, even though ratio values varied significantly from the statutorily required percentage of market values in residential and/or commercial subclasses for some jurisdictions.  Failure to ensure equalized assessments results in inequitable taxation among taxpayers. 

The STC does not have access to adequate market data statewide.  Because Missouri lacks a sales disclosure law, the STC performs appraisal based ratio studies on real property.  Market data is used in conjunction with appraisals when available; however, because there is no Certificates of Value (COV) law there is no assurance that the market data available in most jurisdictions is complete.  Disclosure of detailed sales information would provide another tool which assessors could use to more equitably assess property and the STC could use to perform ratio studies.  Local ordinances for COV have been enacted in St. Louis County, St. Louis City, St. Charles County, and Jackson County; however  the STC has not developed and tested procedures in these jurisdictions to determine the most effective use of market data.

A standardized schedule of depreciation for business personal property has not been developed for use by all assessors.  Without a standardized schedule of depreciation for business personal property, there is no assurance that assessments of business personal property will be equitable and uniform statewide.  In addition, a standardized statewide depreciation schedule may result in a reduction of business personal property appeals and related costs for taxpayers, local governments, and the state.

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