Changes in the Revenue Division

Please join me in congratulating Shaun Shabazz who will serve as Revenue Manager while I’m away from the office on an extended basis. Shaun has been working for the City of Decatur since 1991, and for the tax office since 1996. Shaun has been the Senior Revenue Officer here for four years, and the person who I always relied on the most.

Shaun Shabazz

Shaun has a great smile & laugh, which is why I'm a little embarrassed that the only recent photo I had of her when I prepared this post was from the day of our tax sale in August when nobody was happy!

Anyway, Shaun and I have been working for several weeks to ensure as smooth a changeover as possible, and I am grateful to city management for supporting this transition. Nobody could do a better job than Shaun will do in her new role. Congratulations, Shaun!

Also, after a very competitive hiring process, Holly Jackson is joining the Revenue Division as our new, temporary full-time revenue clerk. Holly is a Decatur resident, a former teller with Wachovia locally, and she is the mother of one Decatur High School graduate and of another child who is still in the City of Decatur school system. We are fortunate to gain somebody with Holly’s financial and customer service background—welcome, Holly!

Holly Jackson

Good explanation of HOST

Even for a tax collector like me, the Homestead Option Sales Tax (HOST) can be tricky to understand, much less explain to the public. That’s why I was impressed by this straightforward, recent explanation of the SPLOST, LOST, ELOST and HOST by state Sen. Bill Heath, with a little of my own commentary in italics mixed in:

In addition to Georgia's state sales tax rate of 4%, there are four different types of local-option sales and use taxes that may be levied by local governments. They are most commonly known by their acronyms-SPLOST, LOST, ELOST and HOST. In addition to showing up on your sales receipts, you've likely also seen one of them show up on your ballot as a voter referendum.

Note: DeKalb County has the ELOST, HOST, and MARTA sales taxes. Last year the DeKalb County Board of Commissioners considered replacing the MARTA tax with a SPLOST.

A Special Purpose Local Option Sales Tax (SPLOST) is normally a one percent county sales and use tax that is enacted by the direct vote of the constituents. Used to fund specific capital outlay projects, a SPLOST is first initiated by a county government for approval by the voters. To increase accountability, this voter referendum must state the purpose of the tax, the length of time it will be imposed and the amount of revenue it will raise. This method of enacting a SPLOST is a sure way for constituents to have a direct voice over projects and the money they give to the local or state government...

Another type of local sales and use tax is the Local Option Sales Tax (LOST). A LOST also requires voter approval, but rather than being devoted to a specific project like a SPLOST, a LOST is intended to be used as replacement revenue for the local property tax. Revenues from this tax must go to reducing the millage rate and that reduction must be reflected in local property tax bills. 154 of Georgia's 159 counties utilize a LOST. The total revenue from this type of local sales and use tax topped $1.3 billion in 2009.

An Education Local Options Sales Tax (ELOST) allows county schools to propose their own capital improvement programs to voters. Unlike the SPLOST, the revenues from this optional 1% sales tax are not distributed to the county government but are instead levied by boards of education and must used for capital projects for educational purposes or may contribute to the retirement of the system's existing general obligation debt. Excess proceeds from an ELOST must be used to retire school-system debt, or if there is none, to roll back the millage rate. The total revenue from this type of local sales and use tax topped $1.3 billion in 2009.

The majority of Georgia counties have a 7 percent sales tax, that is, the 4 percent state sales tax plus a LOST, SPLOST, and ELOST. DeKalb is somewhat unusual in this regard by neither having a LOST (like Fulton County) nor a SPLOST (like Cobb or Gwinnett County). And DeKalb is distinctive in another way…

The final type of local sales and use tax is the lesser-known Homestead Option Sales Tax (HOST) which may be collected by counties that do not levy a LOST. A HOST is a sales and use tax option that must devote at least 80 percent of its proceeds to provide for an increased homestead exemption from county ad valorem taxes. The remaining 20 percent may be used for capital outlay projects and excess revenues must be used to adjust the millage rate. Only DeKalb and Rockdale counties currently utilize a HOST.

There’s a little more to read from Sen. Heath at this link, but it’s mostly about his home district which is on the other side of Atlanta.

Home scam warning

Alabama officials are warning home owners about an Atlanta-headquartered shingle company.  This is reminscent of roofing scams that Attorney General Thurbert Baker warned DeKalb seniors about during this year's Scam Jam at the Decatur Active Living Center.  Baker said that somebody claiming to be a roofer will drop by an older person's home, tell them they have loose shingles, get up on the roof for a while without doing actual work, then come back down and demand payment. 

From WAFF News on Aug. 19:

HUNTSVILLE, AL (WAFF) - During the past month, the Better Business Bureau of North Alabama has been issuing statements concerning calls to their office regarding American Shingle, a company that was headquartered in Atlanta, GA with a local office in Huntsville (American Shingle & Siding of Alabama) and more than 20 other cities.

The company's employees had been going door-to-door in several parts of North Alabama, offering to provide free roof inspections and working with the resident's insurance company to approve roofing jobs. In each call to the BBB, the homeowners who had roof damage reported that they had been asked to provide part or all of their insurance money to the company before the roof replacement job would be placed on the company's schedule.

After payment was made and the consumer waited 4-6 weeks for their new roof, as indicated by salespeople, they would receive a notice stating that the company needed to delay the roofing job by an additional 4-6 weeks, pushing some jobs into late August or even late September. Consumers began to question if the company intended to repair/replace their roof, or just keep the insurance money that had been provided.

The rest of the story is available here.  The company does not appear to have offered services to Atlanta-area residents.  However, Georgia is often ranked as one of the top 10 states for mortgage schemes and other property related fraud.

City and County taxes

Suppose you own a property—we’ll call it “Property A”—in Decatur worth $275,000 and you have no exemptions. Your City of Decatur taxes (plus fees) on Property A would be $4,831.56 for the year. Our millage rate is 32.935 mills (which includes taxes for Decatur schools) and we use a 50 percent assessment.

You would also owe DeKalb County $1,200.10 in taxes for Property A for the year. The County millage rate for Decatur residents is 10.91 mills. Georgia counties assess at 40 percent.

Now suppose you own a second $275,000 property, Property B, in unincorporated DeKalb—also without exemptions. You would owe $4,409.90 in DeKalb County property taxes for Property B. Your county taxes would not be $1,200.10 under this scenario. The millage rate for unincorporated DeKalb is 40.09 mills, not just the 10.91 mills that are imposed by the County on City residents:

The reason that an unincorporated property of equal value to a City of Decatur property would have a higher county tax liability than if it were inside the City is because the County is providing all the services (for example, school & fire services). Properties inside the City of Decatur pay a lower County tax because the City is providing the majority of services.

Surprise liens

Chad R. Pomeroy (h/t TaxProf Blog) has written a scholarly article on the concept of “surprise liens” where a property buyer is unaware of a pre-existing lien because the lien, such as a federal estate tax lien, was never recorded at the courthouse. Here’s his eye-popping introduction:

Imagine you want to buy a house. You find the perfect place, exactly where you want to live, exactly the style you want. Like almost everybody, you do not have enough money to buy the house outright, so you need a mortgage. Getting a mortgage makes you nervous – you are taking on a principal obligation that is more money than you will make in the next five to ten years combined. But, everyone assures you, this is a safe financial decision – so long as you do not buy for speculation at the peak of a bubble, your newly purchased asset will adequately secure your obligation and ensure that you are not left responsible for an enormous debt if you suddenly lose your job or get sick. You are still nervous, though, about such a complicated and significant transaction, so you take the relatively extraordinary step of talking to a real estate lawyer. He says the same thing as your friends: your loan will be secured by your new house, and no bank will make a home loan to you unless you buy title insurance, which literally ensures that you will have clear title and that the bank will have a first-place protected interest in your new home.

That does it. Feeling confident, you take out the loan and buy the house. You move in and start to settle down. Then you get a letter from the Internal Revenue Service (“IRS”). Your house is subject to an estate tax lien and will be seized unless you pay the full amount of estate tax that is currently owed by the estate of the fellow who sold the house to the woman from whom you bought it. Frantically, you call your lawyer. This cannot be right, can it? The IRS cannot have a superior lien based on the taxes owed by the estate of somebody you never met and who owned the home more than five years ago, can it? The lawyer reviews the IRS notice and does some research. Red-faced, he tells you the IRS can, indeed, seize your new home, even though you bought title insurance and the title insurer examined the public records. He had never heard of the estate tax lien until now, but it gives the IRS an interest that does not have to be filed anywhere and that still takes precedence over your rights. You have been victimized by a “surprise lien.”

Pomeroy goes on to describe other circumstances where liens can come to light after buying a property, and the reasons why current law allows for this.  He concludes that although surprise liens have a long history and even have some advantages, such practices should be ended.

When Decatur sets a lien for unpaid property taxes, we are required to file that record with the DeKalb County Clerk of Superior Court.  Those records are available to anybody doing title research.

Are all retirement homes tax exempt?

In Georgia, a “nonprofit home for the aged” is exempt from property tax if the institution has no stockholders, income, or profit distributed to a private person, and is classified as a 501(c)(3).

But the exemption does not apply to “property of a home for the aged held primarily for investment purposes or used for purposes unrelated to the providing of residential or health care to the aged” (O.C.G.A. § 48-5-41(a)(12)(B)).

Which is why Columbus says it's going after the Spring Harbor continuing care community for taxes owed. WRBL offers this interesting report, at least interesting to fellow tax geeks.  (Note:  for some reason it'll take about 10 seconds after clicking play before this video starts.)

Assessment techniques under scrutiny

The AJC had an interesting article on Monday about the use of credit-bid sales to determine property values in 2010 for Fulton County.  Read the article here (hat tip to Georgia Zoning Blog).  The practice, which Fulton says it is discontinuing, may result in inflated values for tax purposes.

DeKalb assessor Eugene James is also quoted in the article.

Decatur's Financial Discipline Pays Off in Recession

On June 21st the Decatur City Commission adopted the City's budget for the fiscal year which started on July 1st. This was the most challenging budget year I've experienced in my twelve year with the City. The City's property tax digest decreased for the first time since 1995. While the drop was slight, just over 1%, it translated into $300,000 less in property tax revenue for this fiscal year. Considering that we were already estimating to spend $702,000 in fund balance for the fiscal year ending June 30, 2010 and the state of the economy was still looking grim, there was some serious concern about the ability to continue to provide a high level of City services.

Just to clarify, in simple terms, fund balance is the difference between revenues and expenditures and it is cumulative. For example, in some years the City brings in more revenue than it spends and that amount goes into the fund balance. In other years, the City may spend more than it collects and will use some of the fund balance to balance the budget.

The City is quite conservative in its approach to public finance. As it turns out, during a recession, you can finally appreciate the conservative financial approach that city staff have employed for the past two decades or more. The City's fund balance policy requires a fund balance between twenty and thirty percent of the operating budget. At June 30, 2008, the fund balance was about $7,200,000 or forty percent of the operating budget. If there was ever a time to have a healthy fund balance, June 2008 was that time. By June 30, 2009, the fund balance was down to $6,700,000 or thirty six percent of the operating budget. We thought we were going to spend $392,000 of fund balance to get through June 30, 2010 but it looks like that may not be necessary because of lower than anticipated expenditures and higher than budgeted revenues.

So, what does all of this mean to Decatur residents?

Savannah to execute tax collector

Okay, they won't really kill one--it'll just be a performance.  Next week when Savannah commemorates the anniversary of its first public reading of the Declaration of Independence in 1776, they will reenact the hanging of a tax collector!  From the Savannah Morning News yesterday:

“Georgia’s First Fourth” will portray the arrival of the Declaration of Independence in Savannah on Aug. 10, 1776, said Jacob Grotheer, an interpretative ranger at Wormsloe [State Historice Site].

Archibald Bulloch, the president of the council on safety, read the declaration aloud in public that day, said Grotheer.

That proclamation will be restaged this weekend, along with a debate on the issue of loyalty, a portrayal of the raising of a militia force and the hanging of a tax collector.

The residents of Wormsloe, and the rest of Georgia, were split on the issues of the time, said Grotheer. Noble Wimberly Jones was so heavily involved in the patriot cause that he earned the nickname the “Morning Star of Liberty.” His father, Noble Jones, who settled Wormsloe in the mid-1730s, remained loyal to the crown.

The Habersham and Telfair families, along with many others in Savannah, were likewise rended by the revolution. The colony, after all, had been named for King George II, and its ties to the mother country proved difficult to break, said Grotheer.

The carefully researched and staged debate at Wormsloe will chart the colony’s path to the Declaration of Independence, and it will be followed by the public punishment of an ever-popular villain, a tax collector.

“They’ve been hated since biblical times,” Grotheer said.

Fallout from the housing bubble

We seem to be hearing more lately on the enforcement side of the housing market.

Although the defendants have denied any wrongdoing, Countrywide has agreed to settle lawsuits with its shareholders for $600 million for misrepresenting the risks associated with its loose lending standards, according to the Los Angeles Times last night.

This follows last week’s announcement that Citigroup will settle with investors for $75 million over similar allegations.

California recently announced that it has revoked a record number of real estate licenses over the past year, because “The down turn in the real estate market has uncovered abusive practices which has caused the number of disciplinary actions to rise.” Mortgage loan modification fraud is being outpaced by short sale abuses according to the California Real Estate Commission.

In June, the U.S. Department of Justice announced an anti-fraud initiative called Operation Stolen Dreams to investigate and prosecute mortgage fraud.

According to the DOJ, the U.S. Attorney for the Northern District of Georgia is among the leaders of mortgage fraud prosecution.  More on DOJ’s efforts in North Georgia, including brief summaries of recent mortgage fraud cases in Atlanta, Lithonia, and Dunwoody, can be found here.

10+ years of service!

Two Revenue Division employees were honored earlier this summer for over ten years of service to the City of Decatur. Kate Hall and Gina Amos began working for the City over a decade ago in what was then called the “Tax Department” (now officially referred to as the Revenue Division).  City Manager Peggy Merriss presented both employees with 10-year service pins and a certificate of recognition.

Kate Hall (above right) started working for the City in September 1999. Kate has an accounting degree from Bethune-Cookman College. She is our occupation tax expert, and is certified by GABTO and NBBLO, the state and national associations of business licensing officials. What Kate enjoys most about her job is working with seniors.

Gina Amos (above right), a Georgia native and a proud mother of three wonderful children, began as a temporary hire in September 1999 and became a permanent employee three months later. Gina has personal experience in real estate investment and foreclosed properties, and has received collections law training—both of which make her an asset to the office for property tax collections. Gina is co-chair of the entrepreneur club at Kingdom Building Ministries. What Gina likes the most about working for the City of Decatur is helping customers solve problems.

Although I’ve worked with them for only a portion of their careers with the City, I can say that Kate and Gina are both great to work with. Collecting taxes is challenging work, and it’s to Kate and Gina’s credit that they have persevered for over a decade. I may be their direct supervisor, but I have much to learn from them. To echo what Peggy said, thank you, Gina & Kate, for your service!

Potential tax credits for businesses

In addition to collecting taxes, our office licenses local businesses and interacts with a lot of small business owners. This item in yesterday's Atlanta Business Chronicle may be of interest to several of them:

More than 84 percent of Georgia small businesses with fewer than 25 employees are eligible for tax credits to help pay the cost of employee health coverage, according to a report by Families USA and the small business advocacy group Small Business Majority.

In Georgia, 120,300 small businesses qualify for tax credits and 37,500 of them qualify for the maximum credit of 35 percent...

Read it all here.

Metro Atlanta foreclosures down

Henry Unger at the AJC says foreclosures may be declining.  From his "Biz Beat" this morning:

The foreclosure picture in metro Atlanta appears to be improving.

Foreclosure notices declined 25 percent in July when compared with June and 5.6 percent from a year ago, according to figures released Monday by Equity Depot.

Over the past two months, notices fell 6.8 percent compared with the same two months a year ago, Equity Depot data reveal...

Property tax collections drop nationwide

Census data show that total property taxes collected across the country has declined for the first time since 2003.  Even with the housing slump it takes valuations time to catch up with falling market values...  The Tax Policy Blog has this take:

Tax revenues for state and local governments grew in the first quarter, according to newly released Census data for the first quarter of 2010 (historical table included). That's two quarters in a row of growth, possibly relieving a bit of the pressure that state and local governments have felt to raise taxes or lower spending. Among tax sources, individual income tax and general sales tax revenues were the gainers; corporate income tax revenue declined significantly, and property tax revenues declined slightly.

Even though the housing bubble popped in early 2008, starting a wave of foreclosures and rapid declines in housing values, local governments have mostly succeeded at keeping property tax revenue coming in by raising the rates. But the new Census data reveals that although the drop was slight, the 12-month total from March 2009 to March 2010 recorded the first decline in total property taxes since 2003.

Alert: Georgia in top 10 for mortgage fraud

The FBI recently released its 2009 Mortgage Fraud Report. Georgia was one of the states with the highest amount of mortgage fraud according to law enforcement and industry data. The FBI considered factors such as the number of loan investigations by state, the number of reported misrepresentations during the loan process, the number of foreclosure filings, and the prevalence of debt elimination schemes.

Other states named included Illinois, California, Florida, Texas, New York, Maryland, Colorado, Ohio, and Pennsylvania.

In related news at last week’s World Elder Abuse Awareness Day Scam Jam 2010 in Decatur, state Attorney General Thurbert Baker warned the audience of mortgage debt elimination scams. Baker said that some elderly owners become so financially desperate that they hand over the deed to their house to con artists claiming that they can help. Owners end up with their equity stolen in the process.

Atty. Gen. Thurbert Baker warns of fraud at Scam Jam

Potential scams should be reported to authorities such as the DeKalb district attorney, the DeKalb solicitor’s office, the Attorney General, or the Governor’s Office of Consumer Affairs.

Benfield on “property tax waivers”

LWV’s Voter Guide includes local candidates’ property tax positions

In questionnaires distributed to candidates for office, the League of Women Voters of Georgia asked, “What specific changes, if any, to property tax policy would you like to see?”

State Representative Stephanie Stuckey Benfield (D-House District 85), whose district covers parts of Decatur, gave one of the more provocative answers to the question of any local candidate for office, floating the idea of empowerment zones for depressed areas where property taxes could be waived. Here is her full response:

My district includes several neighborhoods that have been hard hit by the foreclosure crisis, so I'd work to enact changes in our tax policy to help those who are most in need. Some legislative ideas include: state rebates or tax credits for homeowners with modest incomes, property tax waivers in empowerment zones to attract new investors to hard hit communities, and encouraging more homeowners / renters to appeal their property tax assessments.

In response to the same question, Jason Carter (Democratic incumbent for Senate District 42) said he would like to see a bottom-up review of taxes in Georgia.

State Senator Steve Henson of North DeKalb says he would reinstate the HTRG property tax exemption. Henson is one of several politicians recently making a campaign issue out of the defunct exemption.

Decatur-area candidates Mary Margaret Oliver (Democratic incumbent in HD 83), Stacey Abrams (Democratic incumbent in HD 84), Tom Stubbs (Democratic challenger for SD 42), and Kenneth Quarterman (Republican candidate for HD 85) did not respond to the LWV survey questions.

Georgia's median property tax rate

With a median property tax rate of a bit under 1 percent of home value, Georgia falls smack-dab in the middle of residential property taxes nationwide according to this Tax Policy Blog map published yesterday:

Avoid assessment scams

The World Elder Abuse Awareness Day Scam Jam 2010 takes place today at the Decatur Active Living Center (231 Sycamore Street). The DeKalb County TRIAD event will provide information about scams and fraud to seniors.

Although property tax scams are somewhat rare, property owners should still be aware of recent developments in other states.

In March, Oregon property owners were flooded with solicitations to send in $189 fee to get your property taxes lowered. The letters were made to look like official government documents but were fake. The attorney general of Oregon issued a fraud alert to state residents. Fraudulent letters were also sent to cities in California in late 2009.

Although we have not heard of fraud like this recently in Georgia, we are likely to see an increase in the number of owners trying to appeal their taxes in 2011 because of assessment reform enacted by the state legislature. The new law will allow any property owner in Georgia to appeal their assessed value every year.

The new Georgia law may also result in an increase in the number of companies and consultants saying that they’ll help you file your appeal and reduce your assessment. While some of them may be true, be careful. Just remember:

• You can file your own appeal for free
• No government office in Georgia charges you a “service fee” to lower your assessment.
• When in doubt, call. The City of Decatur tax office can be reached at 404-370-4100, and the DeKalb County tax commissioner’s number is 404-371-2000.

The city tax office will have a booth at the Scam Jam with information about homestead exemptions for the elderly.

Campaigning for a property tax exemption

In what’s turning out to be a political hot topic leading up to the statewide elections this fall, another prominent politician has endorsed the restoration of the Homeowner Tax Relief Grant (HTRG). The HTRG was an exemption that Georgia homeowners received in addition to the basic homestead exemption. In Decatur the HTRG had reduced annual property taxes by about $250.  The HTRG was basically eliminated by the Georgia General Assembly in 2009 until the economy rebounds.

Wayne Hill, who served as chairman of the Gwinnett County board of commissioners for years and was integral in developing the Republican Party in Gwinnett, is seeking nomination to run for state representative in the Sugar Hill area (District 98). Hill told the League of Women Voters, “I would like to reinstate the State credit on property taxes for all citizens of Georgia.”

Former governor and Democratic candidate for governor Roy Barnes has made similar statements. In radio ads, Barnes has said defunding the HTRG was “not right and it's not fair and when I'm Governor, it won't stand.”

If more and more candidates from both sides of the aisle continue running on this platform, it’s possible that we could see legislation during the 2011 session to amend the HB 143, the 2009 act that limited the circumstances under which the tax credit could be funded.

News roundup for homeowners

• Countrywide has been accused by federal authorities of collecting excessive fees from mortgage borrowers.  On June 7, the AP reported that Bank of America, which bought out Countrywide, has reached a $108 million settlement to compensate the borrowers. 
• According to the AJC on Monday, “DeKalb County wants taxpayers to foot the bill to redevelop the sprawling GM plant in Doraville, a $36-million proposition.”
• The Hill says that Congress is considering the elimination of the tax deduction for mortgage interest (h/t TaxProf Blog).
• Zillow warns of “flopping”—an emerging form of short sale fraud.

School millage rates: some up, some down, says GSU

At an Urban Institute conference in late May on the effects of the housing crisis on state and local governments, James Alm and David Sjoquist from Georgia State University gave a presentation entitled “Rethinking Local Government Reliance on the Property Tax.”

Alm & Sjoquist look at national property tax trends for the first half of their slides, but then focus on Georgia as a case study. One of their observations (on slide #22 of their presentation) is this table showing that declining property values have not caused an increase in the number of Georgia school districts increasing their millage rates:

However, it looks to me like an increasing number of school districts are no longer lowering their millage rates.

Their full PowerPoint presentation is available here.

Update on IRS evacuation

TaxProf Blog gives the latest news links about the IRS mailroom grenade in Atlanta.

Evacuation near Atlanta IRS offices

WSB 750 is reporting on air that the Peachtree Summit building is being evacuated because of a possible grenade onsite.

It may be totally unrelated, but the news caught my attention because the IRS has offices in that building, and we remember what happened in Texas earlier this year when a man flew an airplane into IRS offices in Texas.

Fox 5 has a photo of the evacuation on its website.

Tax-exempt musicians?

In a case that could possibly affect property owners in Georgia whose tax-exempt status is murky, Athens-Clarke County is taking Nuci’s Space to court.  (See this article from the Athens Banner-Herald.)  Nuci’s operates a nonprofit venture for musicians but also stages for-profit concerts. They pay no property taxes, but Athens-Clarke argues that they should.

Meanwhile,the University of Georgia is being audited by the IRS for income from UGA’s non-educational ventures like its golf course. Athens-Clarke officials say the Nuci’s Space lawsuit would have no bearing on UGA because Georgia law is ironclad with respect to the non-taxability of schools. The outcome of the Nuci’s case should have no effect on educational, government, or religious institutions.

By the way, the largest tax exempt property owners in Decatur are DeKalb County, Agnes Scott, the City of Decatur, Columbia Seminary, the Decatur Housing Authority, DeKalb Medical, the First Baptist Church, Decatur First United Methodist Church, MARTA, and Decatur Presbyterian Church. Two final notes: 1) Decatur’s tax-exempt owners do pay stormwater bills and 2) they’re also some of the largest employers in town.

Assessment fairness under scrutiny

The sunk housing market, studies by the Atlanta Neighborhood Development Partnership, a news expose about property assessments, publicity surrounding the assessment reforms of SB 346, and a class-action lawsuit in Fulton County have all highlighted the discrepancies between falling property values and rising or stagnant tax assessments in Georgia.

Nevertheless, some owners did not file property tax returns during DeKalb County’s January to March return season. (Or for that matter, throughout the state during the January to April return window of most counties.) What that means for owners who did not file a return is that no automatic review of the property’s value was initiated. Owners who did not file for a new value and who did not receive a notice of assessment change will retain their value from last year even though the market value may have declined.

Even the people who did file or who received a notice of assessment change for other reasons have begun questioning their assessor’s determinations. State Rep. Mike Jacobs has questioned the validity of change of assessment notices here in DeKalb. Jacobs and other critics have argued that the county ignored property returns and that they’ve proposed increased values despite a statewide freeze. Any defense of the county is likely to include the arguments that it is within the assessor’s authority to disagree with the returned value, and that property improvements are not subject to the freeze.

But leaving the legal wrangling aside for the moment, the most important and time-sensitive thing that property owners can do if they disagree with their new assessment is to appeal within 30 days of receiving their notice. If you did not receive a notice, you cannot appeal your value for 2010.

Although the City of Decatur tax office is not involved with assessments and we cannot change assessments, I strongly encourage any property owner in Decatur who believes their assessment to be out of line, but who has missed the deadline to appeal this year, to put a reminder to yourself on your calendar for 2011.  The good news for Georgia property taxpayers is that because of SB 346 (which was signed by Gov. Perdue today), everybody will receive an assessment notice in 2011 meaning everybody will have the chance to appeal (even though this could have been done through the return process anyway).  You don’t want to pay on the basis of a flawed assessment, and we have zero desire to bill you on that basis either.

Buying properties at tax sales

A few items have popped up on the web recently about buying tax lien property in Georgia. The message board of auctions.org shows this unfair but entertaining exchange on May 15:

Q: I live in Ga. Does anyone know the process for acquiring tax lien property? The vacant lot next to me is going up for auction the first week in May because the owner has not paid his property taxes. Is it true that if I win the property through the bidding process, that the owner has at least a year in order to try and get the property returned to him?

A 1: loslunas87031 says:

have you ever been to a tax auction ? Its a zoo of idiots who watch too many late night tv infomercials, run the bids past market value and then realize they do not automatically own the property and the owner has up to several years to pay the tax and recover it.

A2: acermill says:

Yes, it is quite true. Georgia offers a one year redemption period for the delinquent taxpayer after the tax lien sale/auction. The delinquent payer need only pay the tax delinquent, plus a 20% penalty, and the ownership reverts to the original owner.

That conversation highlights the risks of buying properties at tax sale, but on May 22, http://www.financemoz.com/tax-liens-vs-tax-deeds-which-is-the-best-investment.html described the potential benefits:

If you are interested in either owning the property or getting a very good return on your investment and you live in or near a redeemable deed state, than you should consider investing in redeemable deeds. Redeemable deeds are kind of in-between tax liens and tax deeds. You purchase the tax deed at the sale, but there is a redemption period in which the previous owner can come back and redeem the deed from you. They have to pay a pretty hefty penalty in most redeemable deed states in order to do so, and the penalty is on the total amount that you bid at the sale. In Texas the penalty is 25% and in Georgia it’s 20%. Not a bad rate of return!

It should be kept in mind that whether it’s a good or bad investment, ultimately tax sales are unfortunate events. They signify that for whatever reason, somebody is in jeopardy of losing their own property, investment, or even their own home because they couldn’t pay the taxes.

Tax payments due today

Property taxes are due today to the City of Decatur for the first installment of 2010. We honor postmarks. You can mail your payment to:

City of Decatur Lockbox
P.O. Box 945650
Atlanta, GA 30394-5650

Please enclose the payment stub of your tax bill with your mail, and write your real estate ID and tax year (2010) on your check. If you prefer, you can deliver your payment in person to 509 N. McDonough Street on the first floor of City Hall. If you bring in your whole tax bill, we’ll stamp the top portion as paid for your records. We don’t have a “drop box,” so please plan for parking accordingly.

First installment bills are based on 2009 DeKalb County property assessments. Your payment is due today even if your property value is under appeal with DeKalb County. If the county lowers your assessment in the 2010 digest we will receive from them this summer, your total year’s taxes will be recalculated during the second installment of 2010, and your first installment payment will serve as a credit against the tax total for the year.

Although payments are now due, there is a grace period up until June 15. A late penalty of 10 percent and a montly interest charge of 1 percent will be charged on unpaid amounts after that time.

State rep calls DeKalb's process "absurd"

On his blog yesterday, State Rep. Mike Jacobs criticized DeKalb County's reassessment notices and offered guidance to property owners who have appealed their property values. Here’s an excerpt:

They’re at it again.

The DeKalb County Tax Assessors have sent out reassessment notices. Having received one this year, and having heard from many of my constituents who have received one, it appears that there is a common thread in this year’s crop of reassessments.

The common thread is that, if you filed a Form PT-50R Georgia Real Property Tax Return (click for an article that I previously wrote on how to file this form), the tax assessors included the amount that you provided on your Property Tax Return as the “previous year’s value” for the bygone 2009 tax year. Then, the assessors increased that amount to what had been your 2009 assessment amount, telling you that the old 2009 amount would be the “current year’s value” for the 2010 tax year.

The rest of Rep. Jacob’s commentary is available here.  The City of Decatur receives all its property assessment values from DeKalb County.

Property taxes less popular than income tax

According to an April 2010 compilation of public opinion data by the American Enterprise Institute, property taxes are among the least popular of all taxes, and are perceived as less fair than the income tax. Findings include:

• “Thirty-six percent in February-March 2003 told Kaiser/NPR/Harvard that local property tax was the tax they disliked the most, followed by 29 percent who chose the income tax.” 
• “Gallup shows a substantial jump since the late 1980s in the proportion of people mentioning the local property tax as the worst or least fair tax.”
• The March 2009 Harris/Tax Foundation poll found that 5 percent of people think local property taxes are “very fair,” 6 percent think it’s somewhat fair, 33 percent think it’s fair, 30 percent think it’s somewhat fair, and 25 percent think it’s “very unfair.”

Does this mean that property tax offices are more disliked than the IRS? Gulp.

Barnes scolds loss of HTRG

In 2009 the Georgia General Assembly passed HB 143, which allowed for the funding of the Homeowner Tax Relief Grant for 2008 (which lowered the most Decatur homeowners’ tax bills by $252) but denied funding for 2009. Locally, this resulted in an effective tax increase of $252, although the Decatur City Commission simultaneously increased a low income, senior exemption which reduced taxes by $230 for qualified homeowners. HB 143 left the door open for funding the exemption in future years if state revenues increase 3 percent above inflation.

Former governor and gubernatorial candidate Roy Barnes has come out with an ad criticizing the legislature and the current governor for not funding the HTRG saying:

As Governor, we increased the homestead exemption to give everyone a property tax break. But the politicians under the gold dome took away our tax cut. So our taxes went up but the taxes of the special interest went down. That's not right and it's not fair and when I'm Governor, it won't stand.

Morris News Service reports that the ad is running in Savannah, Macon, Augusta, and Albany.

More Georgia school boards balance spending cuts and millage rates

While Muscogee and Chatham County school districts are considering property tax hikes to deal with thorny school budgets, DeKalb County is looking at spending cuts instead.

The AJC has reported that in DeKalb, “The tax rate will remain at 22.98 mills, which is the third highest in Georgia for schools, board chairman Tom Bowen said.” Budget savings will include 289 cut jobs, bigger class sizes, teacher furloughs, and a pay cut for the county school board.

According to the Times-Georgian, Douglas County is also looking at teacher furloughs and a hiring freeze, although Douglas hasn’t ruled out a change to their millage rate.

It’s official: Governor signs HB 1055

Gradually over the next five years, Georgia property owners will see the state’s portion of their county property tax bills eliminated. Like I projected before, this will save the typical owner about $30 a year once fully implemented. Since counties are responsible for collecting the state’s portion, City of Decatur residents will see no change to their city tax bill, but will see their DeKalb County tax bill lowered. This all assumes that there is no legal challenge to the law due to the lack of a fiscal note being attached to the bill during the legislative process. 

Here are the details from BusinessWeek:

Georgia Gov. Sonny Perdue has signed legislation that would increase dozens of Georgia user fees and slap a new tax on hospitals to help balance the state's struggling budget.

The legislation Perdue signed Wednesday would also cut taxes for property owners and upper-income senior citizens.

"Signing this bill ensures a balanced budget and lays the groundwork for economic recovery," the Republican governor said in a statement.

The tax cuts would phase in over five years and were tacked on during this year's legislative session to give some GOP legislators cover to vote for a controversial proposal to tax hospitals on their revenue. The additional money from the 1.45 percent tax on hospital revenue is to be funneled to Medicaid.

Lawmakers were struggling to close a $785 million budget shortfall for the fiscal year that starts July 1. It follows 15 months of plunging revenues.

Perdue had pushed both tax cuts in past years without success. Together, they'll mean the loss of $387 million in revenue when they are fully phased in by 2016.

The approved property tax cut would eliminate the state portion of property taxes. Perdue's office said savings would amount to roughly $31.50 a household…

Property taxpayer news

The special election to fill state Senate District 42 is today. Decatur News Online has been covering the candidates’ positions including what their budget priorities would be during an era of dwindling tax revenues.

For his advocacy of SB 346, state Sen. Chip Rogers has been named legislator of the year by Georgia Property Taxpayers Committee. GaPTC also named Rep. Ed Lindsey.

In a class action securities fraud case, Countrywide has agreed to a $600 million settlement for misrepresenting the quality of its loan portfolio to investors. Until collapsing during the nationwide mortgage meltdown and being taken over by Bank of America, Countrywide was the biggest mortgage lender in America.

Proposition 13, California’s landmark 1978 measure that capped property tax assessments, and arguably inspired legislative reform proposals nationwide and in Georgia over the last several years (such as HB 233, HR1, and SB 346), is undergoing new scrutiny by lawmakers in Sacramento. Some critics have blamed property tax reforms for California’s fiscal problems.

Lawmakers tout assessment reform

Early on during the 2010 legislative session, SB 346 faced opposition from some officials about allowing year-round assessments. Their argument was that it would be too difficult to budget for when you have an unknown number of people who could appeal their value at any given time. But after scrapping that part of the bill, the Senate passed the bill unanimously.

The House wasn’t completely satisfied with the language in the bill that came over to them. They cleaned up the legal wording, inserted clauses to encourage electronic notices of assessment, and changed the Senate’s proposal for property value arbitration. An overwhelming majority of representatives (137 to 7) voted for the House substitute.

Now, any initial disagreements appear to be water under the bridge as state legislators head back home to highlight legislative accomplishments during the 2010 session, especially SB 346. Here’s a sampling of what state legislators are telling their voters:

Sen. Bill Heath (R-Bremen) declared, “Georgia’s property owners triumphed with the overwhelming bi-partisan support of Senate Bill 346.”

Rep. Lee Thompson (D-Lawrenceville) announced to his constituents that SB 346 passed and “is aimed at protecting taxpayers from unfair assessments and guaranteeing the right to appeal.”

Sen. Chip Rogers (R-Woodstock), the architect of SB 346, calls it “a point of pride.” The Marietta Daily Journal reported, “Rogers said a point of pride is his Property Tax Assessment and Appeals reform bill, Senate Bill 346, which is aimed at ensuring all Georgia properties are properly assessed at fair market value and that property owners have guaranteed rights to appeal. Rogers called it the most sweeping overhaul of the Georgia property tax system in decades.”

Rep. Barbara Macey Reece (D-Menlo) used nearly identical language as Lee Thompson (I think this must come from some type of press release template) saying, “Lawmakers gave final passage to comprehensive property tax reform legislation April 29. SB 346 is aimed at protecting taxpayers from unfair assessments and guaranteeing the right to appeal. The bill requires that every property owner receive an annual Notice of Assessment that includes the estimated property tax and expands the appeal time from 30 to 45 days. All relevant sales, including distress sales, must be included when determining Fair Market Value.”

Rep. John Lunsford (R-McDonough) said, “In an effort to give greater rights to our property owners and to expand those rights, the legislature passed Property Tax Reform, Senate Bill 346. This bill will protect taxpaying property owners by guaranteeing their right to appeal assessments and protecting them from unfair tax assessments.”

Sen. Tommie Williams (R-Lyons) said, “SB 346 revises numerous provisions relating to real property tax assessments and appeals and is considered to be the most sweeping overhaul of Georgia’s property tax system in decades.”

But not all reviews have been so positive. As noted earlier, some property taxpayers themselves have been more skeptical about the provisions of the bill. Also, Brett Harrington, an appraisal professional and blogger at Taxing Issues, has expressed concerns that SB 346 may not be “pro-taxpayer.” In response to my comment about SB 346’s requirement to fix the purchase price of a property as its property value for tax purposes for one year, Harrington noted:

Regarding the purchase price requirement, I agree, it could be significant. However, I am not 100% sure it is entirely taxpayer friendly. In some respects it places an emphasis on the purchase price, which can be problematic. This has been the case in places like CA & OH. When it comes to commercial/industrial transactions, the purchase price is not always the best indicator of market value for property tax purposes.

I believe the annual notice requirement is a favorable requirement. However, I think that changing/eliminating the “annual return” requirement would be much better. Taxpayers can file a return annually to initiate an appeal, but most taxpayers do not know this. What about eliminating the return requirement and allowing taxpayers to appeal after they receive their tax bills? Not only would it provide the opportunity to appeal, it would also be more cost and time effective for the municipalities.

Harrington concluded that, “Overall, in my opinion, this bill constitutes tweaks far more than reform.”

Different counties, different sales tax rates

The Atlanta Journal-Constitution ran a lengthy piece on sales tax collections yesterday. They concluded with this handy rundown on sales tax rates in the metro Atlanta area and what they’re based on:

Paying the pennies

Here are the 1-cent state and local sales taxes charged in five metro Atlanta counties, plus Atlanta. Everyone pays 4 percent to the state, and local governments may add sales taxes of their own. A LOST is a local-option sales tax, and a SPLOST is a special local-option sales tax, which may be used for specific purposes such as building schools or roads. SPLOSTs may end or be replaced by other SPLOSTs, so these figures may change over time. Bear in mind that each county or city tax will go up another penny if voters approve the transportation tax in 2012.

Atlanta — 8 percent

4 percent local (the same three taxes as DeKalb or Fulton, plus a 1 percent sewer tax) and 4 percent state

Sales tax on $50 pair of shoes: $4

DeKalb County – 7 percent

3 percent local (education tax, a homestead tax and MARTA) and 4 percent state

Total sales tax on $50 pair of shoes: $3.50

Fulton County – 7 percent

3 percent local (education tax, LOST and MARTA) and 4 percent state

Total sales tax on $50 pair of shoes: $3.50

Clayton County – 7 percent

3 percent local (education tax, SPLOST and LOST) and 4 percent state

Total sales tax on a $50 pair of shoes: $3.50

Cobb County – 6 percent

2 percent local (education tax and SPLOST) and 4 percent state

Total sales tax on $50 pair of shoes: $3

Gwinnett County – 6 percent

2 percent local (education tax and SPLOST) and 4 percent state

Total sales tax on $50 pair of shoes: $3

Millage rates & public hearings

Under certain circumstances, Georgia law requires public hearings before a change to the property tax millage rate can be adopted. News from Muscogee County (Columbus, Ga.) provides a good illustration of this. Muscogee’s school board, which oversees one of the biggest school districts in the state, recently proposed a millage rate increase of 1 percent.

If the Muscogee Board of Education had decided to keep total school tax revenues constant, they would have had to lower their millage rate (assuming their total property values have increased since the prior year’s digest). In that case, they could have simply adopted the lesser millage rate at any public meeting.

But if a taxing authority (school board, county commission, city council, etc.) decides to increase the millage rate, as in the case of Muscogee, or even hold the rate steady (which would lead to an increase in total taxes if total property values had risen), then they must hold three public hearings to give taxpayers a chance to speak their minds. That’s why Muscogee’s school board has already scheduled and advertised three meetings.

You may wonder how total property values can increase in the midst of a statewide freeze. Well, the freeze does not apply to new property developments and improvements to existing property. That means that city and county values could rise leading to roll-back rates that would require taxing authorities exceeding the roll-back rate to hold three public hearings first.

Judging from comments on the Columbus Ledger Enquirer about the Muscogee school board’s decision, many taxpayers down there will take advantage of the opportunity to participate in those hearings!

Chatham County (including Savannah), which also runs one of the biggest school districts in the state, is also considering a millage rate increase for its school system.

Income tax assistance

The IRS has announced that 200 of its “taxpayer assistance” centers will be open for special hours from 9 a.m. to 2 p.m. on Saturday, May 15 “to provide help to small business owners and individual taxpayers dealing with notices and payments, return preparation and a variety of other tax issues.” (Hat tip to Tax Policy Blog for announcing this.)

It might be a good idea to arrive early because the IRS’s press release says that “two-thirds” of taxpayers who showed up to their last Open House were assisted. I suppose the other third were either too late or turned away?

Anyhow, the closest IRS location to Decatur will be in downtown Atlanta at 401 W. Peachtree St. NW (ZIP code 30308) at the Peachtree Summit Building. (Other Georgia locations are listed here.)

For parking, it looks like the parking deck at 384 Peachtree Street is your best bet, or just ride to the Civic Center MARTA station.

Feeling under-taxed?

State lawmakers passed a little noticed measure during the final days of the 2010 legislative session that would allow state income taxpayers to donate as much as they want into the state’s general fund. Filers have become used to seeing options to donate to earmarked funds like the Georgia Wildlife Conservation Fund and the Georgia Cancer Research Fund. For the first time, House Bill 1272 will allow general contributions beyond what your tax amount due.

The Athens Banner-Herald wrote a harsh rebuke of the bill on their editorial page today partly on the grounds that taxpayers would have no clear indication of what purpose their donation is actually funding.

Nonetheless, the measure obtained bipartisan support in the General Assembly, passing 145 to 6 in the Georgia House (including yea votes by Decatur-area representatives) and passing unanimously in the Georgia Senate. The legislation says that, “it is the policy of this state to enable and encourage citizens voluntarily to support the general welfare of the state.”

SB 346 awaits governor's signature

The final version of SB 346 (which I’ve described and given updates on here, here, and here) passed the Georgia General Assembly today. The AJC’s Gold Dome Live blog gives this summary:

A long-promised property tax reform bill — promising annual assessments and longer appeal time — received final passage from the General Assembly Thursday.

“With the passage of SB 346, we will protect taxpayers from unfair assessments and guarantee the right to appeal,” Senate Majority Leader Chip Rogers (R-Woodstock said). “While this is a huge victory for Georgia property owners, it’s only part of the solution to providing a system that actually works With the passage of SB 346, we will protect taxpayers from unfair assessments and guarantee the right to appeal.”

The bill, considered the most sweeping overhaul of Georgia’s property tax system, would:

• Requirement that every property owner receive annual Notice of Assessment, which guarantees right to appeal
• Every Notice of Assessment must contain estimated property tax
• Expansion of appeal time-period from 30 to 45 days
• Alternative streamlined appeal option for property valued in excess of $1,000,000
• Automatic taxpayer victory on appeals when government fails to respond within 45 days
• Requirement that all relevant sales, including distress sales, be included when determining Fair Market Value
• Requirement that only “current use of property” be used in determining Fair Market Value
• Taxpayer must be given access to all data used in determining Fair Market Value
• Sales price establishes Fair Market Value for next tax year

Rep. Ed Lindsey (R-Atlanta), who squired the bill through the House, said before the House’s final vote Thursday that the bill should give “greater rights to our property owners when it comes to appeals."

Countrywide investigation “heating up”

From the Wall Street Journal’s law blog on Apr. 18:

With all eyes on Goldman Sachs, it might be easy enough to overlook an investigation that seems to have moved well past where we are in the Goldman matter. The subject of that investigation: Countrywide Financial Corp. (now owned by Bank of America).

Things seem to be heating up in the federal investigation of Countrywide and what brought on the company’s collapse. According to a WSJ story out on Monday by John Emshwiller, federal criminal investigators looking into the collapse of Countrywide have been calling witnesses before a grand jury, say people familiar with the matter. That step suggests, of course, that the investigation of the one-time mortgage giant, which has been continuing for about two years, could be moving closer to a resolution.

According to Emshwiller’s story, the grand jury began hearing witnesses on the Countrywide case late last year, though isn’t known which individuals the Countrywide grand jury here is looking at or what potential crimes are being investigated.

In the Countrywide criminal probe, the calling of witnesses before a grand jury doesn’t mean that charges will be filed. However, it does appear to signify a pick-up in the tempo of a probe that previously hadn’t appeared to be moving very quickly.

In the meantime, the SEC’s suit against former Countrywide executives rolls on. The suit asserts that the three men, including former CEO Angelo Mozilo (pictured), defrauded investors by falsely claiming that Countrywide underwrote low-risk mortgages at a time when the company was getting into increasingly risky parts of the lending business, including so-called “subprime” mortgages made to less creditworthy borrowers.

The SEC additionally accuses Mozilo of insider trading of Countrywide stock. A trial in the case is scheduled for October. All three defendants vehemently deny any wrongdoing and say they plan to fight the SEC charges.

Tax legislation cast in doubt

State Attorney General Thurbert Baker, who is also a candidate for governor, has determined the tax and fee bill that includes a five-year phaseout of the state’s portion of property taxes (HB 1055) may run into legal trouble. The AJC explained it this way on Apr. 21:

Baker questions legality of legislative action on tax break

By Aaron Gould Sheinin

Attorney General Thurbert Baker said Wednesday that Republicans in the House and Senate might have violated state law in approving a controversial $387 million tax break last week, but said it's difficult for him to determine if courts would rule against lawmakers.

Baker said it "appears" Republican leadership "has not strictly adhered to the procedures imposed on itself by statute," according to a letter the attorney general sent to House Minority Leader DuBose Porter (D-Dublin).

Porter said Wednesday that Baker's letter "clearly indicates they did not follow the law." House Speaker David Ralston (R-Blue Ridge) and Lt. Gov. Casey Cagle declined comment on Baker's letter, which does not have the power of law.

But, should the new law be challenged in court and overturned, it would throw the 2011 state budget out of balance, leading to up to an additional $100 million in cuts.

Porter had asked Baker for an official opinion of the General Assembly's action last week in approving a bill, HB 1055, that originally featured nearly $100 million in fee increases. But when the bill hit the House floor last week, Republican leaders amended it to include a tax cut for wealthy retirees and a phaseout of the small property tax bill that goes to the state.

Seniors and property owners wouldn't see any savings before January 2012 and wouldn't get the full benefit of the tax breaks until January 2016, when fully phased in.

Porter and other Democrats argued that state law says no bill that has a "significant impact on the anticipated revenue or expenditure level of any ... state agency" can be considered by the House or Senate if it is introduced after the 20th day of the legislative session. The law also requires an official estimate, known as a fiscal note, of a bill's impact on state revenues.

The bill was approved in the House and Senate on April 15, the 36th day of the 40-day session. It was introduced well before the 20th day, but no fiscal note was included. The bill passed largely along party lines as Democrats questioned whether the bill was legal as amended. Both Ralston and Cagle overruled Democrats' objections and said the bill was allowable.

"The apparent failure of the General Assembly to adhere to laws generally applicable here raises significant legal questions that could result in challenges to the process engaged by the Legislature," said Baker, a Democrat seeking the party's nomination for governor. Porter is one of his four opponents in the Democratic primary.

But Baker said the "ultimate question ... is whether a court would determine there exists a substantive remedy for the failure to follow the procedural requirements established" in state law.

Baker said he has not been privy to what legal advice Cagle and Ralston received in ruling the bill allowable, so "it is impossible for me to ascertain whether or not their decision making was consistent" with state law.

Baker noted, however, that the state Supreme Court has ruled that the lack of a fiscal note on a bill signed into law does not necessarily mean the bill is unconstitutional.

One final note—although the reduction in your tax bill offered by this legislation would vary based on your property value, I’ve estimated that the typical Decatur homeowner would see their DeKalb County tax bill decrease by about $30 over the next five years.

Readers write: exemptions questions

In response to my “Where is my exemption?” post, reader John Rose asked the following questions:

A few questions for you about exemptions, Russ:

1) Which of the eight exemptions listed on the city website are actually city laws (vs. state laws)?

2) How many people on average take advantage of each of those exemptions?

3) How much of an impact do each of those exemptions have on the city's tax revenues?

Good questions!

First, the Homestead Tax Relief Grant (HTRG), the exemption for residents over 62 with income less than $10,000 (S-1), and the exemption for disabled veterans come from general legislation that is applicable statewide. Currently the HTRG is not being funded by the state, so there are really only seven “active” exemptions.

The Georgia General Assembly passed local legislation which allowed for referendums and approval by a majority of Decatur voters for each of the other five exemptions: the basic homestead exemption (GH-1), the exemption for being age 65 or older (GH2), the exemption for being older than 62 with an income of less than $30,000 (GS-1), the exemption for being over 80 with less than 40,000 in income (S-2), and the exemption for residents over 70 (S-3).

To answer your other questions, this chart shows a very rough estimate of how many property owners benefit from these exemptions and approximately how much each exemption reduces tax bills by over the course of a year:

Of course those numbers fluctuate depending on the digest value, who’s aging and applying for additional exemptions, who’s moving out, and changes in the millage rates. There are also tax exempt properties like churches and homeowners who are on “year support” or deferment. Altogether, taxes are reduced by about $2½ million a year because of these exemptions (which includes the city and the school system taxes). More details on who’s eligible for these exemptions and how they’re calculated is available here.

I hope those answers help, and keep’m coming!

Property assessment bill advances

SB 346 passed the state House yesterday. The Macon Telegraph ran this Associated Press story about the bill:

ATLANTA -- The House has approved a wide-ranging overhaul of property taxes in Georgia.

The bill's supporters say it's designed to create uniformity in the way homes are taxed and to give homeowners access to more information.

It passed the House 137-7 on Wednesday.

The bill requires that homes be assessed every year. It extends the appeals process from 30 to 45 days and requires that all comparable sales, including bank sales and foreclosures, must be applied when officials set an assessed value.

The bill has already passed the state Senate but the House made minor changes so it must return there for another vote.

State Rep. Ed Lindsey, an Atlanta Republican, said the bill would create transparency and fairness.

The Senate passed an earlier version of the bill unanimously in March.  There were a couple of nay votes on the bill in the House.  Among the lawmakers who represent portions of the City of Decatur, Rep. Mary Margaret Oliver voted yes, Rep. Stephanie Stuckey Benfield voted yes, and Rep. Stacey Abrams did not vote.

After the Senate passes this new amended version of the bill, it goes to the governor’s desk.

It should be noted that saying the bill “requires that homes be assessed every year” is misleading. The bill doesn’t require annual appraisals; it requires that notices of assessment be sent annually.

One property, two freezes

The April edition of the Oakhurst Leaflet included a nice, short piece by Greg Wilkinson entitled, “Didn’t House Bill 233 freeze my property value?”

Mr. Wilkinson wrote, “Most homeowners are probably aware of Georgia HB 233, which was supposed to freeze your property value so the tax assessor can’t raise it while we are in this sour market. On the surface this is true, but there are caveats in the bill that allow the tax assessor to raise your property values should it meet certain criteria.”

Indeed, several exceptions to the statewide freeze bear mentioning. 1) First and foremost is the exception for improvements made to the property. The law says, “Additions or improvements to property…shall be added to the owner’s valuation amount…” 2) Counties may also correct errors in the digest during the freeze. 3) There is also an exception for counties which had begun a “comprehensive county-wide revaluation of all properties in the county” prior to the bill’s passage, (which is why Bibb County, for example, has been in the news here and here for a revaluation that may lead to higher property values in Macon even in the midst of a statewide value freeze.)

As noted in the Leaflet, the statewide freeze in HB 233 expires in 2011.

Just to amplify on that aspect of the article, I’d like to note that HB 595, a piece of local legislation passed by the General Assembly in 2006, authorized a ballot question to let DeKalb residents vote to approve a DeKalb-specific freeze. HB 595’s freeze was approved by 80 percent of voters that fall, but that freeze also expires in 2011.

Because HB 595 is expiring, the state House has approved HB 1320 during the current legislative session. HB 1320 would extend DeKalb County’s freeze “indefinitely.” But the scuttlebutt is that the Senate will probably amend HB 1320 to make it simply another 5 year extension, presumably 2012 to 2016.

Unlike the statewide freeze that puts the burden on county assessors to freeze the value, HB 1320 requires property owners to apply for the freeze. More details and restrictions on DeKalb’s freeze are available on their tax commissioner’s website.

Property assessments in a down market

All counties in Georgia are subject to the same state laws regarding property assessments for taxes. Although this story in today’s news from coastal Georgia is about Glynn County, the article does a good job of explaining why county assessments in Georgia may not capture the full decline in a property’s fair market values even when real estate is weak.

“Property tax digest may see little change”

4/19/2010

By NEVIN BATIWALLA The Brunswick News

Some homeowners hoping for property tax relief may be in for a rude awakening next month when Glynn County releases new property valuations.

While a small number of homes will drop in value, resulting in lower tax bills for owners, thousands of parcels won't dip in value at all.

How can that be when it seems almost everyone's house has lost value in an unprecedented nationwide real estate meltdown?

To determine what a house is worth, the county uses a complex mathematical system based heavily on sale prices of other houses in a neighborhood.

In years with a lot of sales, it works well because appraisers have more data from which to calculate a more accurate value for similar houses.

But when houses are not selling, as in today's weak housing market, it becomes more difficult to determine a true value.

"Our system doesn't work as well in low sales," County Chief Appraiser Bobby Gerhardt said.

As a result, homeowners in neighborhoods in which no houses have been sold will likely see no change in their values, he said.

Decatur Tax Blog in the news

Decatur News Online has published an article entitled “City's Tax Blog Seeks To Keep Residents in the Loop” spotlighting this blog (and myself). Take a look! Decatur News Online is also one of the local websites on our blogroll.

Incidentally, DNO publisher Geoff Koski and I were both recent graduates of Decatur 101, which--if you haven’t taken that class--is a terrific way of learning more about City operations and how your tax dollars are spent! If you’re interested in the 2011 class, read more about it here, and sign up early since there’s always a waiting list.

Legislative action on property taxes

Yesterday was a busy day at the state capitol. Amidst a flurry of legislation being considered during the final days of the session, the Georgia General Assembly moved closer toward enacting two property tax related measures.

1. One bill would phase out of state’s share of property tax collections over the next five years. (The Senate had already passed SB 517 which would have ended the state’s portion immediately, but that bill looks moot now.)  According to the Macon Telegraph, the newly proposed five-year phase out was tacked on to a bill about license plate and poultry inspection fees (HB 1055), and was designed in part to make the state budget more palatable to lawmakers. 
2. SB 346, which would reform property valuations and appeals, was approved by the House Ways & Means Committee. The committee made several revisions including 1) improved legal wording of the bill, 2) requiring annual assessment notices but moving the notification date to July, 3) giving the option of sending assessment notices electronically if the jurisdiction is able to and the taxpayer chooses to, and 4) changing the arbitration process. Now the bill moves to the Rules Committee to be scheduled for a floor vote in the House.

My prior posts about the state’s share of property tax revenues is here and details about SB 346 are here.

Tip for homeowners & last-minute filers

With federal income tax returns due tomorrow, I'm sure that most homeowners in Decatur have already completed their returns and claimed the interest paid on their mortgage loan as an itemized deduction. I ran across this article from Bankrate.com by Kay Bell who did a great job of explaining that tax breaks are also available to homeowners even if they only claim the standard deduction:

Homeownership offers many tax benefits. But recently, laws have been modified so that two home-related costs -- private mortgage insurance and property tax payments -- get special treatment at tax-filing time.

Real estate taxes have always been part of property ownership, as well as a valuable tax break for owners who itemized. Now some homeowners can add at least a part of their property tax payments into their standard deduction amount.

Another common home cost is private mortgage insurance, or PMI. This PMI is a policy that, as a homebuyer, you pay for, but it protects your lender in case you default. Homebuyers who don't put at least 20 percent down when they purchase a residence usually have to buy PMI. And some of those folks now can deduct that cost.

Property tax additions

Many homeowners itemize because they have substantial enough mortgage interest and property tax amounts to exceed their standard deduction amount. But in some cases, such effort isn't worth it.

Standard deduction amounts have increased over the last few years as part of tax-law changes. Those figures then are bumped up each year to reflect inflation. That means that some homeowners, such as longtime residents who've paid down their loan and don't have much in the way of mortgage interest anymore, don't have enough expenses to itemize.

Because it isn't worthwhile to itemize, these folks then lose the tax break offered by their property taxes. Not anymore.

Now homeowners who claim the standard deduction can add at least some of their property tax payments to their tax return's standard amount.

Single homeowners (which includes those who've never married, a married taxpayer filing separately, as well as heads of households) can add up to $500 of property tax payments to their standard deduction amounts. Married taxpayers who file a joint return can add up to $1,000 to their standard deduction.

To include the property tax amounts in your standard deduction, you'll need to file Schedule L.

Making your PMI claim

For most property owners who pay PMI premiums, the insurance is simply part of the price of owning a home. But some homeowners who purchased their primary residences or second homes in 2009 can claim a tax deduction on PMI premiums.

This tax break was tucked into the Tax Relief and Health Care Act of 2006 and originally applied to policies on home loans taken out in 2007. As the housing market continued to sag, Congress extended this tax break to certain premiums paid through 2010.

The tax deduction can be taken for policies issued by private insurers as well as insurance provided by the Federal Housing Administration, the Department of Veterans Affairs and the Rural Housing Administration.

Claiming the deduction is easy. Most homeowners are already familiar with Schedule A, the form on which itemized expenses are claimed. The second section of that form, titled "Interest You Paid," is where mortgage interest and loan points are claimed, specifically on line 13.

Your lender also helps out when it comes to reporting PMI amounts. In box 4 of your Form 1098 (or the substitute year-end loan information statement your lender uses), you'll find the amount of PMI premiums you paid last year as part of your home payments…

To read about additional restrictions and rules about claiming the PMI deduction, read the rest of the article here.

One final note about your federal income tax. We sometimes get people during tax season coming to our office asking for federal tax forms or trying to turn their income tax payment to us. Sorry, but we can only accept local taxes and fees. But the Decatur post office will be open to take all of our federal tax returns.

State proposal offers slight reduction to total tax

The Georgia General Assembly is back from a two week recess and in the homestretch of their 2010 legislative session. Before their break, the state Senate passed SB 517, which would eliminate the state’s portion of property tax bills in Georgia. If this measure passes the House and is signed by the governor, what this would mean for Decatur residents is a reduction of one-quarter mill from their DeKalb County tax bill.

Let’s say your total value is $275,000 and your DeKalb County 40 percent taxable assessment is $110,000. The state millage rate is 0.25 mills (keeping in mind that a mill means one one-thousandth). To calculate how much your bill would be reduced by, you would multiply your taxable assessment by one one-thousandth by the millage rate.

The $27.50 tax reduction in this example would be more or less depending on the taxable value of your property.

DeKalb County bills and collects the state’s share of your property taxes, not the City of Decatur. Since we do not bill for state taxes, there would be no change in your city taxes if this legislation passes.

Is my value correct? Reading your tax bills

DeKalb County determines the fair market value (also referred to as your “100 percent value, ” “appraised value” or “total value”) of the properties in DeKalb County including properties within the city limits of Decatur.

State law establishes that counties’ property taxes are levied against 40 percent of the total value. This is known as your “assessed value,” “taxable value,” or your 40 percent “assessment.” Municipal governments may apply different assessments depending on the city ordinances.

As authorized by state law and city ordinances, Decatur uses a 50 percent assessment. We start with DeKalb County’s “total value.” For example, if your total value on DeKalb’s website is $250,000, DeKalb will tax you on $100,000 of that as shown on one of their tax bills:

The City of Decatur would also start with $250,000, but would tax you on $125,000:

This is why your taxable value for Decatur won’t match your taxable value for DeKalb. Please also note that the city does not have its own appraiser or assessor and cannot change your assessment. More information about property assessments, appeals, and billing is available on our homepage.