Most property is valued or assessed at its true and fair value for purposes of imposing property taxes. However, the state constitution allows the Legislature to enact legislation assessing certain types of real property at its present or current use for purposes of imposing property taxes. Two programs of current use valuation have been established: one program for forest lands and a second program that includes open space lands, farm and agricultural lands, and timber lands. 

Property must meet certain conditions to have property taxes determined on current use values rather than market values.  The land remains in current use classification if it continues to be used for the purpose it was placed in the current use program.  Land is removed from the program for the following reasons:

• written notice from the owner to remove all or a portion of the classified land;
• sale or transfer to an owner making all or a portion of the land exempt from property taxes, such as a sale to a governmental entity that is exempt from property taxes;
• sale or transfer to a new owner unless the owner signed a notice of continuance;
• an owner who fails to respond to a request from the assessor for information regarding use of the land;
• the granting authority denies an owner's request for reclassification;
• the assessor determines land no longer meets criteria; or 
• the assessor discovers the land was classified in error. 

When property is removed from current use classification, back taxes, plus interest, must be paid by the landowner.  For open space categories, back taxes, also called additional tax, represent the tax benefit received over the most recent seven years plus interest and penalties.  For designated forestland, back taxes, also called compensating tax, are equal to the tax benefit in the most recent year multiplied by the number of years in the program?but not more than nine?plus compensating taxes on the land at forestland value up to the date of removal.  Prorated taxes on the land at true and fair value from the date of removal to the end of the current tax year and any interest is also owed.  Additional and compensating tax become a lien on the property if not paid within 30 days after notification of it being due.  There are some exceptions to the requirement for payment of back taxes.
 
When land classified under either category is sold to a buyer subject to property tax who intends to manage the land under its existing classification, the buyer is required to submit a notice of continuance and other paperwork, sometimes including a land management plan to the county assessor.  Once approved, additional tax and compensating tax are not collected from the seller.  If a seller sells or transfers land to a governmental entity that is not subject to property tax, the seller is required to pay additional or compensating tax on the property due to the exclusion of governmental entities from the payment of property tax.

An exception to additional and compensating tax is created for certain sales or transfers of designated forestland or timberland to a governmental entity. To qualify for the exception, the governmental entity must manage the land consistent with the designated forestland or timberland program it was previously classified in, and the governmental entity must provide the county assessor with a timber management plan or a notice of intent to manage the land as designated forestland or open space as required by law.  If the government entity sells or transfers the land, back taxes are due by the government owner unless the change in the use of the land, sale, or transfer falls under an exception in law.