Thursday, March 5, 2015

HB 202 would modify assessment and appeal provisions


Georgia House Bill 202 would make several changes to existing property tax law especially regarding assessments and appeals, along with some routine housekeeping edits to the state revenue code. The House passed the bill on Feb. 20 with only one dissenting vote. The 37-page bill is divided into nine sections summarized as follows:
  • Section 1 gives taxpayers the option of requesting bills and delinquent notices by email. 
  • Section 2 shortens the public notice period before school millage rate adoption from two weeks to one week. 
  • Section 3 allows notices of interest due to be sent by email upon taxpayer request. 
  • Section 4 extends the deadline for counties to submit their tax digests to the state until September 1 rather than the current August 1 due date. 
  • Section 5 would relax current parameters for two or more counties that wish to consolidate their property appraisal departments through intergovernmental agreements. 
  • Section 6 would strike the penalties involved for not filing a return for real property. Penalties for unreturned personal property would remain in effect. 
  • Section 7 extends the deadline for county boards of assessors to review property returns by two weeks. 
  • Section 8 and 9 provide several changes to the appeals process including additional authorities vested in the clerk of superior court over appeals, changes to serving on a board of equalization, changes to the accrual of interest on appeals, new nonbinding arbitration procedures, and other tweaks to existing appeals procedures.  Section 9 is the largest and most complicated section of the bill. 
The bill is currently under review by the state senate. The Georgia Municipal Association’s position on this bill is “neutral.”  The Atlanta Journal-Constitution's legislative tracker gives HB 202 a 77 percent chance of passing this session.

Historically there tends to be one “big” legislative proposal every year at the General Assembly involving property assessments or appeals. As of now, HB 202 appears to be the only bill fitting that description this session. The changes proposed in the bill do not appear to be as sweeping as those presented by SB 293 which died in the House last year.

Tuesday, March 3, 2015

State considers banning $5 tax bills


Georgia House Bill 68 would prohibit the mailing of tax bills to property owners owing $5 or less. At first, the bill may sound like a reasonable, pro-taxpayer measure that would cut down on printing, postage, and compliance costs for small-dollar tax bills. However, as a tax official, I would say the text of this bill needs a solid mark-up by the House Ways & Means Committee before adoption.

First, state law already prohibits enforcement of executions (liens) against properties owing less than $5 after one year has elapsed since the execution (OCGA 48-3-21.1).

Second, as a practical matter, we have many small land lots in Decatur appraised by DeKalb County as being worth a couple hundred dollars. (Which is true in most other counties and cities in Georgia, too.)  Those result in tax bills in the $1 to $10 range. Some of these lots abut a larger parcel owned by the same person. Most of these owners pay the small-dollar taxes once they receive a bill. If we stop billing them, and if they know they can’t be held responsible for bills less than $5, they won’t pay it. Eventually, penalties and interest will automatically accrue on these accounts. Properties with bills in the $4+ range will eventually accrue enough interest to exceed $5. Once it exceeds $5, we would send them a bill and the taxpayer would ask us why there are penalties and interest on the bill when we never sent them a bill before. It wouldn’t be fair to send them their first bill after it had already become delinquent.

In other words, the HB 68 should clarify whether the $5 is strictly principal tax or whether it includes penalties and interest. The bill should also accommodate jurisdictions such as Decatur that do genuine split-billing in two installments. For example, if the state prohibits sending any bill under $5, that would mean that Decatur couldn’t send a $5 first installment bill in April and a $5 second installment bill in October on a single property that owes $10 for the year.

Any way you slice it, we aren’t talking about any real money. But as long as the bill is being considered it should be crafted clearly and cleanly.

Monday, March 2, 2015

HB 215 approved by committee


Georgia House Bill 215, which would change sales tax rates and distributions in DeKalb County, has been approved by the House Ways & Means Committee. Next it will be considered by the House Rules committee which will probably schedule the bill for a floor vote. The bill would:
  • Provide for a vote on whether to replace the existing HOST with a new “equalized HOST.” 
  • In addition to the equalized HOST, an additional 1 percent county special purpose local option sales tax (SPLOST) would be put before voters countywide. 
  • Both ballot questions would have to be approved in order for either to go into effect. 
The existing HOST credit saves homeowners a several hundred dollars a year depending on their property value and tax district. For example, a resident with a $200,000 home in unincorporated DeKalb saved about $790 on their county property taxes in 2014 because of HOST. A resident with a $200,000 home within Decatur’s city limits would have saved about $390 on their county property tax bill in 2014 because of HOST. The HOST tax credit does not alter municipal tax bills.

HB 215 stipulates that proceeds from the equalized HOST would continue benefiting all DeKalb County property taxpayers, whether their property is in unincorporated DeKalb or in DeKalb’s cities. The amount of HOST credit should increase somewhat under this proposal because all of the equalized HOST would go toward property tax relief rather than a portion of it going toward infrastructure improvements as the current formula dictates. Revenues from the new SPLOST would be disbursed per existing state law in accordance with intergovernmental agreements between DeKalb and cities.

From a high-level tax standpoint, what the proposal would do is essentially to take some of the local tax burden off of residential property taxpayers and shift it slightly toward sales taxpayers. However, DeKalb cities would still have the discretion to adjust their own millage rates to offset foregone HOST revenue under the old formula.

Friday, February 27, 2015

GSU beefs up tax clinic


Georgia State’s law school is looking to hire a new, full-time professor for their low-income taxpayer clinic.  (Hat tip to TaxProf Blog.)  The Philip C. Cook Low-Income Taxpayer Clinic has been providing legal representation to low-income taxpayers throughout Georgia for over 20 years.  The job announcement is available here.

Thursday, February 26, 2015

Lawmakers push to expand historic property rehab tax credit


While federal officials are considering cuts to income tax credits for rehabilitation work on historic properties, state lawmakers are considering an expansion of the state credit. Legislators are recommending that the existing cap on state tax credits for historic properties be increased dramatically. House Bill 308 would raise the cap on credits from $300,000 to $60 million. 

However, the measure could face an uphill climb in the state senate. During a legislative roundtable discussion I attended in Atlanta on Nov. 12, the chairman of the state Senate finance committee, Judson Hill, expressed frustration over the existing 115 tax credits in Georgia. Hill said that he’s generally supportive of tax credits if they’re fiscally responsible, sustainable, and “as long as we can quantify results” in terms of economic development, but in the long run he would like to reduce the number of credits and broaden the tax base. Whether the cap and sunset provisions of HB 308 would satisfy Hill’s concerns is unclear at this point.

The Savannah Morning News editorialized earlier this month that it’s an idea worth considering for economic development as long as it’s researched carefully and the state budget can afford it:
Editorial: Historic tax credit bill needs work
HOW FAR should Georgia’s state government go in using the tax code to pick winners and losers?
That question is at the heart of a debate that’s emerging in Atlanta. State lawmakers from Savannah are apparently pushing statewide legislation, expected to be introduced this week, that would eliminate Georgia’s existing cap on state income tax credit for developers who rehabilitate historic property. 
It’s a debate worth having.
Savannah is known far and wide for its success in historic preservation, a main driver of Savannah’s robust tourism economy. And while tax policies may sound dry and boring. they affect the lifeblood of the economy. 
It’s noteworthy that State Rep. Ron Stephens, R-Savannah, is behind this measure. He chairs the committee in the House where bills that affect economic development generally spring from. 
The specific property prompting this bill is the decommissioned power plant on West River Street. Hotelier Richard Kessler sees this distinctive, century-old, brick structure as the centerpiece of a five-building, $235 million hotel project, which would go on a relatively undeveloped part of the riverfront and create an estimated 700-800 jobs. 
Current state law on historic tax credits allows developers to recover 25 percent of the cost of rehabbing historic property, up to $300,000. Twenty other states have similar provisions. Some cap the maximum tax break, ranging from a skimpy $50,000 to a generous $5 million. Fifteen have no caps at all. 
A $9.7 million increase
If lawmakers vote to remove the cap, Mr. Kessler would reap an estimated $10 million tax break from his investment— a net $9,700,000 increase over $300,000, a 5,233-percent jump. 
Coincidentally, Mr. Kessler paid $9 million for the riverfront property when he bought it on Jan. 1, 2013. Two months later, he laid out impressive plans to redevelop the site.
Given his sterling reputation as the developer of The Mansion and Bohemian hotels, he quickly gained public support, convincing City Council to grant a variance on the new buildings’ heights and to build a $14 million extension of the river walk. 
But nothing was mentioned publicly two years about the need to change the rules of the game to help complete Mr. Kessler’s project. Why now? 
“Those tax credits are crucial,” said Mark Kessler, president and COO of the development company behind this project. “Three-hundred thousand is not an incentive to do anything.” 
It’s true that 300k isn’t much of a carrot to someone spending $235 million. But if scrapping the tax credit is crucial to the success of the Kessler project, why is the bill just going before the Georgia Legislature now, two years after hotel plans were first proposed? That seems backward. 
Tax breaks work
That said, there’s much to like about incentivizing projects that create good-paying jobs. Tax breaks work. Those who insist that government must always take a hands-off approach to tax breaks should consider one example: Savannah-based Gulfstream. 
Two years ago, state lawmakers approved an extension of the sales-tax exemption on parts used to repair airplanes. It’s a powerful incentive for owners of corporate aircraft, who can afford to fly anywhere, to do their preventive maintenance in the city and state where their planes are manufactured. This tax break helps keep thousands of well-paid, skilled blue-collar jobs here at home. 
Preservation groups, including the Historic Savannah Foundation, are right to see tax credits as a way to save buildings with historic value from the wrecking ball. But at this point, this bill needs more work. Supporters suggest that Georgia may be losing by capping these credits. How? What about raising the existing cap instead of scrapping it? 
One early version of the proposed bill is a non-starter: Tying elimination of the cap to freezing property values for tax purposes. Such a move unfairly robs local governments of revenue they count on. There’s no legitimate reason to hamstring them. 
The bigger question for the Georgia Legislature is whether the benefits from eliminating the $300,000 cap outweigh the hit to the state’s treasury. It could be particularly hard sell this year, given the need to plug a $1 billion hole in Georgia’s road-building budget...

Wednesday, February 25, 2015

Inclement weather announcement


The Decatur Revenue Division (tax office) is open today during regular hours 8:00 a.m. to 5:00 p.m., although we may have limited staffing from 2:00 p.m. through 5:00 p.m. depending on weather conditions.  Tentatively we plan to open late tomorrow at 10:00 a.m., although conditions may change.  If you need immediate tax or business license information after hours, please use our website at www.decaturgatax.com.

The DeKalb County tax commissioner's office and tax assessors office are closed today, but their tax records are available online at www.dekalbcountyga.gov/taxcommissioner or by calling 404-298-4000.

Friday, February 20, 2015

Deducting property taxes paid from your income taxes


If you are itemizing deductions on your 2014 federal income tax return, you can deduct property taxes paid during 2014 on real property (land and structures) that you own.

Local fees are a different matter. IRS Publication 530 says that “itemized charges specific to property or people,” cannot be deducted because they are fees not taxes, even if they are paid to a taxing authority. The publication lays out specific examples of nondeductible fees, stating that “a periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection)” is nondeductible. Payments for Decatur’s residential sanitation and stormwater utility may fall into this category of nondeductible charges. For a single-family home in Decatur in 2014, the residential sanitation charge was $237, and the stormwater charge was $75. Other nondeductible payments include penalties and interest on delinquent taxes paid if applicable. Tax payments toward the five funds listed on Decatur tax bills (capital, DDA, bond, the general fund, and school taxes) are deductible.

If you are deducting real estate taxes paid from your income taxes, you’ll want to keep a copy of your second installment Decatur property tax bill, which is a restatement of your total taxes owed and paid for the year (and a copy of your DeKalb tax bill) in your income tax file. You can access a bill reflecting your payments or a receipt at www.decaturgatax.com.

This blog post is intended solely to bring awareness of the distinction that the IRS draws in its publications on the property tax deduction, and is not intended as instructions on how you should file or how much you should deduct. Since individual circumstances vary, please contact an income tax professional for verification and further guidance.

Wednesday, January 21, 2015

10 days until business license renewal deadline


The deadline for businesses in Decatur to renew their business license for 2015 is January 31. Renewal invoices were mailed in November. You can renew in person at 509 North McDonough Street; by mail to P.O. Box 220, Decatur, GA 30031; or online through www.decaturgatax.com after clicking on Occupation Tax on the left side of the screen.

In addition to payment of the occupational tax, we may need some additional paperwork in order to renew a license. If the business owner is a U.S. citizen and has already filed a SAVE affidavit with Decatur, you are not required to re-file a SAVE affidavit during renewal. If the business has 10 or less employees and has already filed an E-Verify affidavit with Decatur, you are not required to re-file an E-Verify affidavit. Non-citizens need to file SAVE affidavits annually and businesses with over 10 employees need to file E-Verify numbers annually in order to renew their license.

If you received a renewal invoice but your business has moved or closed, please let us know so we can settle and close your account with our office.

Monday, January 12, 2015

Bills to watch in 2015


The Georgia General Assembly convenes today. Here’s a look at some of the proposals at the Gold Dome that could affect taxes locally or statewide if enacted:
  • Expansion of homestead exemptions in Decatur. The Decatur City Commission approved a proposal late last year to expand two existing homestead exemptions and add a new one. The next step would be for the General Assembly to pass it before a referendum that would take place later this year. 
  • DeKalb property tax freeze. Both Rep. Mike Jacobs (R-Brookhaven) and state Sen. Fran Millar (R-North DeKalb) said during their 2014 reelection campaigns that they intend to renew the real property tax freeze in DeKalb. The freeze reduces county tax bills for all DeKalb's homeowners by offsetting increases in their assessed value (even for homeowners in Decatur), but does not affect your city taxes. 
  • Decatur's proposed annexation. The Decatur City Commission has approved an annexation proposal in December and is looking for a legislative sponsor.  This would affect the property taxes of currently unincorporated residents if approved by the legislature and then by voters in a referendum later this year.
  • Property assessment reform.  During his reelection campaign, Sen. Millar promised "to enact true property tax assessment reform" during the 2015 session that would affect assessments statewide.  We may see a reintroduction of a bill along the lines of SB 293 that Millar proposed last year. 
  • Tax lien changes.  Newly elected state Rep. Beth Beskin (R-Buckhead) has proposed requiring certified notice before selling a property tax lien. Neither Decatur nor DeKalb sells liens, but the proposal would affect Fulton County which routinely transfers liens.
  • PILOT assessment reform.  A special study committee met during the legislative break to review payments-in-lieu-of-tax agreements and their affect on school funding. While they focused on administrative changes rather than new legislation, there could be some proposals stemming from the committee's hearings to provide for greater involvement and notification by tax assessors of PILOT values to school boards for budgeting purposes.
  • Tax credit changes.  There has been some discussion during the legislative break about changes to state tax credits (possibly including a reduction in the number of credits available but a continuation or even an expansion of the state entertainment/film tax credit).  There have also been two pre-filed bills that would affect state income taxes. HB 20 would extend the state income tax credit for low-income housing to any owner who owned it even for part of the tax year, and HB 35 would increase the amount of qualified education tax credits available.

Monday, January 5, 2015

Tax and payment news to watch in 2015


From a property tax standpoint in and around Decatur in 2015, I expect a lot of debate about the proposed annexation, the north DeKalb cityhood movements, and the impact that those changes will have on property tax bills of county residents who are currently unincorporated. If Decatur’s proposed annexation advances through the upcoming state legislative session, we would see a November 2015 referendum (plus a possible vote on expanding homestead exemptions in Decatur). Also, 2015 should be the last year that anybody sees a property tax charge from the State of Georgia on their tax bills—that small portion of your bill has been gradually phased out over the past four years, and this is the fifth and final year.

From a payment technology standpoint, I expect many more Decatur residents will take advantage of our relatively new online feature to pay taxes with an e-check with no convenience fee. Previously our only online option was making credit card payments with a convenience charge. Nationally, innovations and updated credit card security standards will change how payments are made and accepted in the U.S. including chip-and-PIN (EMV) and ApplePay technologies. Consumers will no longer swipe the magnetic strip of their credit cards at retail terminals, but rather insert their cards and key in a PIN number at locations where merchants have upgraded their hardware. IPhone 6 users will be able to make contactless payments at an increasing number of retailers. Consumers will see the most immediate impact of these changes at private sector locations, but these trends will eventually affect how citizens pay taxes and fees to local and state government agencies as well.


Thursday, January 1, 2015

What January 1 means for local taxes


With many local taxes—especially property taxes—everything significant hinges on January 1.  Here are a few things about this key date that homeowners and business owners should consider in order to understand tax liability for the new year.

Property taxpayers
Property assessments for 2015 conducted by DeKalb County will be based on the status of the property as of January 1. For example, new developments and improvements made prior to January 1 will be factored into 2015 assessments by DeKalb, but improvements made after January 1 would not. Properties annexed into Decatur in 2014 will be taxed by Decatur in 2015, but properties annexed in 2015 wouldn’t be taxed in Decatur until 2016.

If the status of your property has changed since last year, you should file a return with the DeKalb County assessors office between now and April 1. If you own or owned a business that closed in 2014 or moved out of Decatur or DeKalb, you should also notify the DeKalb County assessors office to ensure that you do not receive an assessment notice and tax bills from DeKalb and Decatur in 2015. If your business is open for the beginning of 2015 you will receive an assessment and tax bill for 2015 even if your business closes or moves later this year.

Property owners should also note what tax officials mean by “the first-of-the-year owner,” or the “January 1 owner.” DeKalb County records and their website show both the owner as of January 1 and the current owner if ownership changes later in the year. Many times, we are questioned about why a bill or a delinquent notice was sent to the January 1 owner rather than the current owner. Generally speaking, Decatur attempts to notify the current owner of bills that are owed. But there can be delays in reflecting current ownership information, and technically, the January 1 owner may be considered to be responsible for the taxes that year depending on the terms at closing, or at least be responsible for notifying the current owner of any bills that the January 1 owner received for the property.

Lastly, when you file your 2014 federal income taxes, if you will be itemizing deductions including local property taxes paid, you can claim payments actually made during calendar year 2014.  If you're paying your 2014 property taxes late (for example, if you pay your 2nd installment 2014 Decatur tax bill on Jan. 8, 2015), you can't deduct that on your 2014 income taxes.  But please consult a tax professional for further guidance on that.

Homestead exemption applicants
Qualifying for age-based homestead exemptions for your property taxes depends on the age of the homeowner as of January 1. If you turned 62, 65, 70, or 80 prior to today, you may have become eligible for one or more homestead exemptions offered by Decatur. Homestead exemptions can be applied for with the city between now and April 1, but preferably no later than March 16, 2015 to ensure that any new exemptions on your account appear on your 1st installment tax bill which will be mailed out by April 1. You should also check with DeKalb to determine whether you have become eligible for any additional exemptions with their office.

Occupation taxpayers
If your business has more than 10 employees as of today, you will need to file an E-Verify form with our office prior to the next renewal of your business license, because state law references the number of employees as of January 1, not as of the time you are renewing your license.

Also, Decatur’s occupation tax ordinance says that occupation taxes are payable by January 2 of each year but that the taxes are not considered delinquent until January 31, which is why the Revenue Division puts a January 31 deadline on business license renewal invoices.