Wednesday, May 4, 2016

Governor signs Decatur homestead exemption bills

Governor Deal signed legislation yesterday that will put five separate questions on November ballots to expand homestead exemptions in Decatur. Deal signed Senate Bill 339, which authorizes a referendum on increasing the basic homestead exemption (known as the GH1) from $20,000 to $25,000. SB 340 allows a vote on increasing the exemption for homeowners over 65 (GH2) from $1,000 to $10,000. SB 342 makes another ballot question that would create a new $15,000 exemption (GH3) for homeowners over 62 with household income under $50,000. SB 341 repeals an old cap on exemption amounts. SB 343 authorizes a vote to create an exemption from school taxes (excluding school bond taxes) for homeowners over 65. Voter approval of these measures would reduce property taxes for eligible homeowners by decreasing the taxable value of their homes. If approved on Nov. 8, 2016, homeowners would become eligible for the homestead exemptions in 2017. The new school exemption would expire in 2021 unless it is renewed.

Tuesday, May 3, 2016

Lowndes County tax assessors challenge state law

The Supreme Court of Georgia has heard arguments in a case that could affect property valuations of low-income housing units statewide.

The Lowndes County board of tax assessors want to be able to factor in income tax credits when assessing the value of low-income housing properties. In other words, the assessor wants to increase the property assessment because the income tax credits that are tied to the property which increases the potential resale value of such housing units. 

An apartment complex owner that rents to low-income tenants in Valdosta says that the benefits of these tax credits should not be factored under the appraiser's methodology. Attorneys for the owner say that income tax credits are intangible benefits and should not be co-mingled with the assessment of tangible property.

Existing state law prohibits assessors from considering income tax credits in their assessments. The Lowndes County assessors are challenging that law arguing that it violates the state constitutional requirement for uniformity in assessments.  They assert that, similar to rent, income tax breaks make the property more desirable, resulting in a higher fair market value. Assessors are required to consider factors that affect the fair market value. The assessors' attorneys further note that voters rejected a constitutional amendment on the same subject in 2002.

This is a complex case. It will be interesting to see how the Georgia Supreme Court rules.

Monday, May 2, 2016

Court of Appeals: Property taxpayer failed to prove it could sue DeKalb

Raw Properties Inc (RPI) owns commercial property on Snapfinger Road in DeKalb County. In 2010, RPI failed to pay property taxes on one of its properties. DeKalb County sent several delinquent notices to an old Decatur address for RPI, but the property owner had moved to Sparta. RPI notified DeKalb of its new address, but most of the late notices went to the Decatur address. The DeKalb County tax commissioner’s office says it also notified RPI of the delinquency by phone several times over the course of one month in 2011.  The taxes remained unpaid; the property was subsequently auctioned at a county tax sale. RPI was able to redeem the property later but had to pay the 20 percent premium for redemption. RPI sued tax commissioner Claudia Lawson’s office in Raw Properties v. Lawson.

The trial court ruled in favor of DeKalb. During appeal, DeKalb County argued that they shouldn’t have been sued in the first place, because tax commissioners serve as ex officio sheriffs, and different standards apply for sovereign immunity for sheriffs in cases of improper paperwork. The Georgia Court of Appeals sent the case back to the trial level for consideration of the sovereign immunity claim. The trial court found that DeKalb was immune in this case. In February, the Court of Appeals affirmed the trial court’s decisions, writing that RPI failed to prove that the DeKalb County tax commissioner’s sovereign immunity was waived in this case.

While the original tax sale stands, the court left open the possibility that Raw Properties could still sue for damages through separate methods.

Although the decision isn't friendly to taxpayers, it serves as another reminder that, generally speaking, failure to receive a tax bill does not relieve you of your obligation to pay. Property ownership and its ensuing tax liability are not responsibilities to be taken lightly under Georgia law.

Thursday, April 14, 2016

Official IRS app lets you track your refund

The Internal Revenue Service app IRS2GO allows taxpayers to check on the status of their tax refund and access other features.  IRS2GO also allows payments through an ACH debit from your checking or savings account (which is known as IRS Direct Pay), by debit card with a flat rate service fee ranging from $2.50 to $3.95, or by credit card with percentage based fees.  Government Technology has some more details about the app:
Where's My Tax Refund?
IRS Mobile App Simplifies Federal Tax Refund Tracking IRS2Go proves useful to taxpayers looking for refund answers and assistance in tax filing.
The IRS is trying to take some of the sting out of tax time with a mobile app that allows for simplified payment and refund tracking services.
The official application, called IRS2Go, allows users to check the status of their refunds, make payments and access free tax preparation services from a compatible smartphone.
Mobile users are also tied into a host of other resources, like instructional videos and tax tips through the agency’s social media pages and direct contact functions.
Refund status is reportedly available to taxpayers as soon as 24 hours after filing electronically and roughly four weeks after filing a return by mail...
The app, which was originally announced in January 2011, is available through the Apple App Store, Google Play and Amazon.

Tuesday, April 12, 2016

IRS warns about identity theft

The IRS announced that there was a 400 percent increase in phishing and malware activity earlier this tax season.  Be reminded that the IRS doesn't call, threaten, or email taxpayers about their taxes.  Normally they send letters.  Here are two of the scams the IRS says to watch out for:
Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation and license revocation, among other things.
Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will never send taxpayers an email about a bill or refund out of the blue. Don’t click on one claiming to be from the IRS.  Be wary of strange emails and websites that may be nothing more than scams to steal personal information.

Friday, April 8, 2016

General Assembly OKs military waivers

The Georgia General Assembly approved two tax or administrative measures that are favorable to members of the military and their spouses during the final days of the legislative session.

HB 821, the “Military Spouses and Veterans Licensure Act” allows military spouses and servicemembers who have recently left the military to practice a state-licensed profession before a permanent license is issued. The professional licensing board for each profession is supposed to adopt rules before July 2017 to grant temporary or expedited licenses to these individuals. This should help military families earn income while their permanent license is pending. This affects such professions as psychologists, architects, and accountants.  The City of Decatur, like other local governments in Georgia, normally requires a state-licensed professional to provide proof of their state license before a local business license is issued.  Decatur would honor any temporary or expedited license issued to individuals in these circumstances.

HB 991, the “Returning Heroes Act,” is intended to forgive tax penalties on troops who are deployed while the taxes become past due.  Both bills must be signed by Governor Deal in order to become law.

Wednesday, April 6, 2016

Time running out for $29 million in refunds

Over 30,000 Georgians may be due a refund on their 2012 federal income taxes. Taxpayers have until April 18 to file a 2012 return to obtain the refund that they are due. The Newnan Times Herald reports:

IRS has $29 million for Georgia taxpayers 

Refunds totaling $950 million may be waiting for an estimated one million taxpayers in the nation who did not file a federal income tax return for 2012. In Georgia, over $29 million in unclaimed refunds awaits 34,300 individuals. However, to collect the money, a return for 2012 must be filed with the IRS no later than Monday, April 18. 
“Time is running out if you want to get your refund,” said IRS Spokesman Mark Green. “Taxpayers should review their 2012 statements for refundable credits and withholdings. We want all taxpayers to get the refund they’re due. We estimate that the median unclaimed refund for tax-year 2012 in Georgia is $642”, added Green. 
“In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund,” said Green. “If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury.” 
There is no penalty for filing a late return qualifying for a refund. 
Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or make quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury. 
For 2012 tax returns, the window closes on April 18 (or April 19 for taxpayers in Maine and Massachusetts). The law requires the tax return to be properly addressed, mailed and postmarked by that date…

Monday, April 4, 2016

General Assembly adopts tax changes

On the final day of its legislative session, the Georgia General Assembly approved several bills involving taxes.

The most significant was Senate Bill 369, which authorizes up to a ½ percent sales tax increase in Atlanta for MARTA expansion, a ¾ percent sales tax increase in Fulton County for transportation, and up to a ½ percent sales tax increase in Atlanta for transportation improvements and congestion reduction. State Senator Brandon Beach said on the final night of the legislative session that Fulton County and cities outside of Atlanta could authorize an additional ¼ percent sales tax for transit. In other words, both Atlanta and Fulton County could each increase their sales tax rate by 1 percent with differing ratios going toward mass transit and roads.

Narrower bills dealing with ad valorem tax breaks for specific industries also passed. House Bill 769 provides a personal property tax exemption to boat dealers and all-terrain vehicle dealers. HB 769 was sent to the governor on April 1. HB 935 authorizes a freeport property tax exemption to fulfilment centers such as Amazon or Walmart that ship merchandise ordered by consumers online or by phone. HB 937 gives a sales tax break for the new Falcons stadium and other projects of "competitive regional significance."

HB 960 makes several changes to taxes administered by the state. Section 1 of the bill clarifies matters of taxpayer confidentiality. Section 2 changes the interest rate calculation for state-issued tax refunds. Section 3 changes the interest charged on past due state taxes from 1 percent to the annual prime loan bank rate. Section 4 changes the penalties for failing to file a return for taxes held in trust for the state. Section 5 amends procedures for tax tribunals. HB 960 is the result of a study committee that found the interest rates were too high.  Neither SB 369 nor HB 960 have been sent to the governor yet.

The House of Representatives did not approve income tax rate reductions (SB 280 and SR 756) or property tax assessment caps (SB 298 and SB 259) proposed by the Senate.

Thursday, March 31, 2016

Lawyer taxes in Decatur become delinquent

Attorney Bill Payment Final Deadline

Lawyers practicing in Decatur must pay a $425 occupation tax annually. The 2015 tax was due by Dec. 31, 2015. A three-month grace period expires today. Lawyers who have not paid by today become delinquent and subject to escalated collection activities and will be reported to the State Bar of Georgia. Revenues from the tax are used to provide quality services to the public. For further information please call 404-370-4100.

Wednesday, March 23, 2016

Bill protects deployed troops from tax penalties

The Georgia General Assembly has passed a bill requiring property tax collectors to waive penalties and interest for military servicemembers if they pay the principal owed within 60 days of returning from a combat zone. House Bill 991 started out as a bill modifying the definition of the value of conservation-use property but was replaced by the House Ways & Means Committee with the waiver for deployed taxpayers. Known as the “Returning Heroes Act,” the bill heads to the governor’s desk next.

The bill would be financially beneficial to military personnel, effectively allowing an interest-free deferral of property taxes due while deployed. That being said, the bill could also lead to unintended consequences in some cases. For example, if a tax commissioner does not know that the reason for delinquency is military service, the tax commissioner could lien and levy the property before the taxpayer’s return. Although the penalties and interest could subsequently be waived, getting the lien cancelled would be annoying for the taxpayer and the tax commissioner. It would be in the deployed taxpayer’s best interest to communicate proactively either prior to deploying or from overseas to ensure that the tax commissioner is aware of his or her deployed status to prevent escalated collection action.

A second wrinkle is that the bill does not distinguish between deployed taxpayers’ homes of record versus investment properties. I am not sure that it is the intent of the General Assembly to grant a senior officer who may own or co-own a dozen investment properties to defer taxes during what could be a 400 day deployment. While the Returning Heroes Act is a great idea that should be approved, in hindsight it may have been better to specify that this waiver shall apply to homesteaded properties.

Monday, March 21, 2016

City Commission levies school bond millage rate

The City Commission has adopted a new school bond property tax rate of 1.57 mills. The motion to approve the new rate, which will apply to 1st installment property tax bills for 2016, carried 5-0 during a public meeting tonight. The rate enables the first debt service payment toward the $75 million school bond issuance which was approved by voters on November 3 last year. The City of Decatur Schools will use the bond for capital improvements.

As Mayor Patti Garrett noted during the meeting, the 1.57 rate is lower than the average bond millage rate of 2.69 mills that was projected by the City of Decatur Schools when the bond was being debated last year.  The new millage rate results in a combined Decatur millage rate of 32.23 mills compared to 30.66 mills in 2015 and 33.5 mills in 2014.  City Manager Peggy Merriss said that the rates are subject to change in future tax installments.

Tax implications

The impact of the new tax rate will vary according to property value. Taxes for a resident with a $500,000 home will go up by about $400 for 2016.  Decatur bills in two installments; charges would the same each installment unless the school bond millage rate is increased or the property owner's value changes in 2016.  Prospective tax charges according to value are shown in the chart below:

According to 2015 digest data, the median home value in Decatur is $380,000. Homeowners with that value would experience a $300 tax increase for 2016 compared to 2015. (Zillow shows a higher median home value at $435,000 based on sales data, but local taxes are based on assessments made by DeKalb County in accordance with factors mandated by state law.) 

Exemption considerations

Seniors will not be exempt from the new school bond charges. School exemptions known as the GS-1 (age 62), S-1 (age 62), S-2 (age 80), and S-3 (age 70) do not apply toward the school bond charge. Property owners with the disabled veterans homestead exemption or a year’s support exemption will be partially exempt from school bond charges. Year’s support provides an exemption of taxes for one year upon the death of a spouse if approved by the DeKalb County probate court. About a dozen homeowners in Decatur meet these criteria.

New exemptions still pending

The City Commission and Board of Education have proposed expanded tax relief including an exemption from school taxes for homeowners over 65. These proposals have been approved by the Georgia General Assembly. If approved by voters in November, these expanded exemptions would go into effect in 2017. School bond charges will continue to apply regardless of any new exemptions.