Summary of a Recent
Judicial Development in
Estate Planning and Taxation

Court Upholds Quicker Transition to Use-Value
Assessment of Agricultural Land

Joshua T. Crain
National AgLaw Center Graduate Assistant

In Mallo v. Wisconsin Dept. of Revenue, 645 N.W.2d 853 (Wis. 2002), the Wisconsin Supreme Court held that the Wisconsin Department of Revenue (DOR) "had authority under [Wis. Stat.] § 70.32(2r) to promulgate Wis. Admin. Code § Tax 18.08, and that § Tax 18.08 is consistent with § 70.32(2r)." Id. at 864. In 1995, the Wisconsin legislature enacted § 70.32(2r), which altered the method of valuation for agricultural land from a market-value assessment to a use-value assessment. See id. Under the use-value assessment, "agricultural land is valued 'according to the income that could be generated from its rental for agricultural use.'" Id. at 855. In October of 1999, the Farmland Advisory Council recommended to the DOR that rules be promulgated to assess agricultural land at full use-value as of January 1, 2000. See id. The DOR promulgated such a rule first as an emergency rule, and then as a permanent rule replacing the emergency rule. See id. Ray and Wanda Mallo sued the DOR claiming that the promulgation of the rule was in direct violation of § 70.32(2r) because that section provided for a ten-year phase-in of the use-value method. See id. The court explained that § 70.32(2r) was unambiguous and granted the DOR the authority to promulgate the emergency rule and the permanent rule. See id. The court explained that "the legislature intended to grant the DOR authority to implement full use-value assessment, upon advice from the Council, including the authority to implement full use-value assessment before January 1, 2009." Id. at 863. The court held that the DOR had the authority to promulgate the permanent rule and that the rule was consistent with § 70.32(2r). See id.

The case was decided on June 25, 2002; this summary was posted Apr. 8, 2005.