What, Exactly, Is the “Three-Year Average Rule” in Massachusetts?
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In most cases, in order to bring a tax appeal to the Appellate Tax Board in Massachusetts, taxpayers must have paid each tax installment for the relevant Fiscal Year in full, by the due date, and without incurring interest. There is, however, an exception that may be made pursuant to the “Three-Year Average Rule” under Massachusetts General Law Chapter 59, Sections 64 and 65.

A recent decision of the Appellate Tax Board, Song v. Board of Assessors of the Town of Scituate, 2022 WL 3146901, explains succinctly how the exception works to the rule of full payment of taxes without incurring interest in order to sustain an appeal at the Appellate Tax Board.

Simply stated, if a taxpayer has timely paid at least the average of the tax assessed for the prior three fiscal years, or the average tax for the prior three years is $5,000 or less, incurring interest during the Fiscal Year at issue does not deprive the Appellate Tax Board of jurisdiction.

Under the facts of the Song matter, the annual tax due exceeded $5,000 and therefore the Three-Year Average Rule was invoked.  The average of the tax amounts due on the subject property for the three fiscal years prior was $5,351.16.  The taxpayer failed to pay a total of at least $5,351.16 on or before the final tax installment due date at issue, so she failed to satisfy the three-year average provision under General Law Chapter 59, Sections 64 and 65 and her appeal was dismissed.

Although the requirement of full payment of taxes without incurring interest to sustain an Appellate Tax Board appeal is rather strict, always keep in mind the Three-Year Average Rule if interest has accrued on any of the Fiscal Year’s tax installment at issue as a possible way to salvage an appeal that may be vulnerable to dismissal.

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