IAAO 402 ACTUAL EXAM 2026 QUESTIONS
WITH ANSWERS GRADED A+
◉ Administratively, the functions of a property tax system are: Answer:
To identify and link taxable subjects (taxpayers) and taxable objects
(property)
Produce tax assessments
Collect taxes
◉ All else being equal, when taxes rise, capitalization means that:
Answer: property values fall
◉ All of the following are common examples of shared responsibilities
between governments EXCEPT: Answer: Property tax levy limits
Property tax valuation programs which require states to assess railroads
and counties to assess other business property.
State provided collection assistance for local sales taxes
The International Fuels Tax Agreement (IFTA)
◉ All of the following are possible advantages of a tax increment
financing EXCEPT: Answer: New businesses may become more
competitive than previously existing businesses.
,Start up costs may be lessened
Development of depressed areas may be facilitated
Bonding or financial leverage may be provided
◉ Analytical studies that provide information in a neutral, non-
judgmental way are __________________________. Answer: positive
◉ The _____________________ approach is purely factual without
judgments. Answer: positive
◉ The ________________ approach starting point includes value
judgments. Answer: normative
◉ As a percentage of general revenue, which local governments rely
most heavily on charges? Answer: Special Districts (sewer, fire,
cemetery)
◉ Assessed value increases are more closely tied to tax and revenue
increases in a _____________________ driven system. Answer: rate
◉ An assessment system in which fractional ratios are applied to
appraised values is _________________. Answer: classification
, ◉ Assessment systems in which taxable value reverts to market value at
time of sale are known as
_________________________________________________________.
Answer: acquisition value systems
◉ An assessment system that underassesses residential property even
though such undersassessment is not permitted by law is providing a
_____________________________. Answer: de facto exemption
◉ Assume that a taxpayer has appealed her or his assessment and has
assembled evidence that the assessment is relatively higher than the
assessments of comparable properties, which of the following is the
most professionally responsible way to deal with the appeal? Answer:
None of the above
Assure the appellant that the assessment in question is well below the
legal standard.
Assure the appellant that her or his property is valued consistently with
all other properties in its class and than granting the appeal would reduce
overall valuation uniformity.
Assure the appellant that the district's mass appraisal procedures meet or
exceed all legal and professional standards.
◉ Because some school districts have more property wealth per pupil
than others, states have developed _______________________ systems
to level this playing field. Answer: equalization
WITH ANSWERS GRADED A+
◉ Administratively, the functions of a property tax system are: Answer:
To identify and link taxable subjects (taxpayers) and taxable objects
(property)
Produce tax assessments
Collect taxes
◉ All else being equal, when taxes rise, capitalization means that:
Answer: property values fall
◉ All of the following are common examples of shared responsibilities
between governments EXCEPT: Answer: Property tax levy limits
Property tax valuation programs which require states to assess railroads
and counties to assess other business property.
State provided collection assistance for local sales taxes
The International Fuels Tax Agreement (IFTA)
◉ All of the following are possible advantages of a tax increment
financing EXCEPT: Answer: New businesses may become more
competitive than previously existing businesses.
,Start up costs may be lessened
Development of depressed areas may be facilitated
Bonding or financial leverage may be provided
◉ Analytical studies that provide information in a neutral, non-
judgmental way are __________________________. Answer: positive
◉ The _____________________ approach is purely factual without
judgments. Answer: positive
◉ The ________________ approach starting point includes value
judgments. Answer: normative
◉ As a percentage of general revenue, which local governments rely
most heavily on charges? Answer: Special Districts (sewer, fire,
cemetery)
◉ Assessed value increases are more closely tied to tax and revenue
increases in a _____________________ driven system. Answer: rate
◉ An assessment system in which fractional ratios are applied to
appraised values is _________________. Answer: classification
, ◉ Assessment systems in which taxable value reverts to market value at
time of sale are known as
_________________________________________________________.
Answer: acquisition value systems
◉ An assessment system that underassesses residential property even
though such undersassessment is not permitted by law is providing a
_____________________________. Answer: de facto exemption
◉ Assume that a taxpayer has appealed her or his assessment and has
assembled evidence that the assessment is relatively higher than the
assessments of comparable properties, which of the following is the
most professionally responsible way to deal with the appeal? Answer:
None of the above
Assure the appellant that the assessment in question is well below the
legal standard.
Assure the appellant that her or his property is valued consistently with
all other properties in its class and than granting the appeal would reduce
overall valuation uniformity.
Assure the appellant that the district's mass appraisal procedures meet or
exceed all legal and professional standards.
◉ Because some school districts have more property wealth per pupil
than others, states have developed _______________________ systems
to level this playing field. Answer: equalization
