Originally published on Forbes.com Apr 22nd, 2013
Robert Klinge thought that he did not have to pay property taxes. The reason was that the title to his property traced back to a land patent issued by President Martin Van Buren on September 10, 1864. That kind of threw me a bit, since I thought somebody else was President then
The State of Michigan Court of Appeals decision in Mr .Klinge’s suit with the Barry County Treasurer also noted that it might have been hard for Martin Van Buren to have issued a patent on September 10, 1864, him being dead and all at that point in time. (Martin Van Buren died on July 24, 1862. He finished presiding in 1841.) They actually did not think that was relevant, since
We need not decide whether defendant actually possessed a federal land patent on the property, because even if we accept defendant’s contention, the property, upon transfer to defendant, a private party, would have become “part of the general mass of property in the state” and would be subject to property taxation.
Is There Anything To This ?
If you google “land patents” “property tax” you will find sites like this one that explain the whole concept. Here is the gist of it, as best I can understand it. Title to much of the land in the United States will trace back to a “federal land patent”, where someone bought land from the United States Government. (We don’t want to think too hard about how the United States Government got title to the land.) That patent was a contract between somebody and the United States, which is superior to any other claim on the property. If you get the paperwork straight, you will be the beneficiary of that superiority, thereby making you not have to pay property taxes and having it so no bank could foreclose on you. This guy apparently will take care of it for you for $580.
Does It Work ?
You will find quite a few people on the Internet who will tell you that it works, I’ll let you look for them on your own. What I did was look for cases where people tried to get out of paying property taxes by claiming they had federal land patents. My state sources are not quite as good as my federal sources, so I’m sure I’m missing something, but here is what I found.
Florida – Attorney General Opinion 2011-09
Florida law does not provide an exemption from ad valorem taxation for privately-owned property which is the subject of a recorded Declaration of Land Patent.
Arkansas- Opinion Number 2002-296
In my opinion, the state can clearly impose property tax on government property that has been conveyed to a private party by land patent.
Ohio – Callison v Huelsman
There is no exemption from real estate taxes simply because the property sought to be taxed is located in an area which was once subject to a land grant from the United States to the state of Connecticut as part of its western reserve lands.
Minnesota – County of Steele v Phillip Brase
He declares he is a “holder of … legal titles, or Land Patents, of the above mentioned parcels” and “does not recognize any superior government to whom any ‘duty’ or ‘tax’ is due.”
Mr. Brase’s arguments before this Court are baseless and without merit. Mr. Brase’s arguments are not warranted by existing law and are frivolous.
Wyoming – In the Matter of the Appeal of Taylor form a Decision of the Natrona County Board of Equalization
….. the Petitioner’s property is subject to taxation without Petitioner’s consent, and without the spurious proofs sought by Petitioner. Neither Natrona County nor the State of Wyoming is obliged to have a contract with Petitioner by which he assents to the assessment and collection of ad valorem taxes. We also doubt whether Petitioner’s understanding of contracts in his sovereign capacity is sound in any respect
Still Think It Works ?
I’ve only covered a few states here and a couple of the items are merely attorney general opinions. You have to trust me that it is all I could find. I often learn things from my commenters so I am happy to have anyone explain why federal land patents defeat property taxes, but what would really impress me is a link to a decided case that proves the point.
Update
After I posted this Alan Kreglow responded to me. He pointed me to several cases about land patents, which show their importance, but do not directly address local property taxes. There is a lot to his reply and I am sorry I cannot get thoroughly into it, but here was what I thought was most on point
The real point is NOT that courts are deciding en masse in favor of people seeking to have their property taken off the tax rolls, but that our courts are deeply corrupt and are ignoring the lawful principle of stare decisis by IGNORING U.S. Supreme Court decisions consistently upholding the power of the land patent in decisions that ruled in favor of those claiming the “forever” benefit of the land patent.
I have seen opinion letters from state attorneys general stating flatly that when land was transferred into private ownership it became subject to property tax, but this point is always asserted with no Supreme Court authority to back up the bald assertion. There is no logic to this, aside from the fact that the state WANTS to tax the land and has passed statutes that assert they can. But this violates the Constitution of the United States of America and such statutes are generally unconstitutionally vague.
One of my fundamental tax planning principles is – “It is what it is. Deal with it.” Mr. Kreglow passionately argues that land patents should trump property taxes, but seems to be implicitly acknowledging that that the taxing authorities, misguided as they may be, may have the edge in court. I have invited him to comment and hope to hear further from him.
You can follow me on twitter @peterreillycpa.
Afternote
Usually my stuff is fresher than the Klinge case, which came out in January. I’m going back over items of interest that I did not get to in tax season, so you may see a few more items that are a little less timely in the next couple of weeks.