Proposal to extend property value freeze advances

The Georgia House of Representatives approved HB 596 yesterday which allows for a referendum to extend the property tax freeze in DeKalb County up through 2021. The bill now heads to the state Senate where Sen. Fran Millar says he’s already been promised support for the measure by fellow DeKalb legislators.

The freeze doesn’t actually prevent property values from increasing, but it offsets increases in property values by exempting the value by which the property has increased. The freeze applies to county property taxes. Homeowners can apply for the freeze when they apply for their DeKalb County homestead exemption. The DeKalb freeze can save taxpayers money even if they live within the city limits of Decatur by potentially reducing their county property tax bill.

Equalized HOST bill passes Georgia Senate

State lawmakers have approved House Bill 215 which would allow for a referendum on increasing the sales tax by 1 percent in DeKalb County. If approved by voters, the existing homestead option sales tax (HOST), which mostly provides property tax relief but also generates revenue for infrastructure improvements in DeKalb and its cities, would be reconfigured solely to provide property tax relief to homeowners. The new, additional penny sales tax would be dedicated to infrastructure improvements in DeKalb.

Contrary to an earlier report in the news that indicated that taxes for a home in Decatur would decrease by $625 under the proposal, the equalized HOST would probably save homeowners in Decatur about $20 in 2016 on their county property tax bill compared to 2014.

HB 215 now returns to the Georgia House for final approval before heading to the governor’s desk for signature. The bill is almost certain to pass since an earlier version of the bill was already approved by the House earlier this month.

The bill passed the Senate unanimously including an aye vote from Sen. Elena Parent, who represents Decatur and large swaths of DeKalb County. However, Sen. Parent voted against an earlier motion to engross the bill, meaning that she supported the ability of senators to propose amendments from the floor before the final vote. It is not clear what amendments may have been proposed if amendments had been allowed.

10 days left to reduce your business inventory tax liability for 2015

Businesses are required to file a return annually with the DeKalb County assessor’s office by April 1. Businesses that fail to file are assessed a 10 percent penalty that will increase your tax bill with DeKalb County and the City of Decatur for 2015. Failing to file will also result in DeKalb determining a value for you for 2015 rather than accepting your stated value.

Your return (also known as a “PT50”) should list your business’s property including inventory, equipment, furniture, machinery, fixtures, computers, and other assets. This type of property is known as “personal property.” If your property is worth less than $7,500, you should still file a return, but no personal property taxes are levied.

Personal property tax is different from real property taxes which are taxes on buildings and land. It is also different from occupational taxes which are for business licenses. It is also separate from income taxes, but many accountants or tax professionals who prepare income tax returns for businesses may also notify DeKalb of your business property value on your behalf.

The deadline to apply for a Freeport exemption with DeKalb County (which is like a homestead exemption but for businesses’ personal property) is also April 1. Please visit DeKalb’s website or call them at 404-371-2000 for instructions of filing your return, information on filing for DeKalb’s Freeport exemption, or to notify DeKalb if your business has closed or moved. Taking a moment now to focus on your personal property could help reduce the personal property tax bills that you’ll receive from DeKalb and Decatur later this fall.

Clean sweep for sales tax proponents

Local option sales taxes were extended or renewed in four North Georgia counties in yesterday’s election. Majorities of over 80 percent supported 1-percent sales taxes for education in Dawson and White County. Over 60 percent of voters supported penny sales taxes for public safety and infrastructure improvements in Hall and Whitfield County. A bond proposal in the City of Atlanta also passed with 88 percent voting yes.

North Georgia counties vote on sales taxes

Today was election day in Dawson, Hall, and Whitfield County.  Voters there considered local option sales tax proposals.  11 Alive has a summary of the ballot measures:

Dawson County: ELOST
The 1% local option sales tax would raise $36.5 million for the Dawson County School District. They'd use the money to renovate old schools, buy buses, and build a performing arts center for Dawson County High School.

Hall County: SPLOST
The 1% SPLOST would last 5 years and raise $158 million to cover a long list of county projects including acquiring ambulances, upgrading the 911 system, renovating the library, expanding the landfill, and buying public safety vehicles.

Whitfield County: SPLOST
The 1% SPLOST would last four years and raise $63.6 million. The money would purchase fire-fighting turnout gear, breathing equipment, fire trucks, and patrol vehicles. It also includes money for building out the library, storm water system, and Tunnel Hill Depot restoration.

The City of Atlanta also had a bond referendum today, but it would not affect Atlanta's sales tax rate at this time.  Only 5 percent of Atlanta's precincts have reported results at the time of this posting.

Tax legislation that survived crossover day

At least 20 bills involving taxes stand a chance at passing during the 2015 session of the Georgia General Assembly. Another 30 tax measures failed to pass at least one chamber of the Assembly before last Friday’s “crossover” deadline. The viable bills deal with electronic notices of taxes due (HB 49), assessment and appeal procedures (HB 202), changes to the homestead option sales tax (HB 215), the postponement of tax and filing deadlines if those deadlines fall on a Federal Reserve holiday, and several changes to what is considered to be exempt from sales tax.

Revenue bills that didn’t survive include HB 68 which would have prohibited mailing tax bills for less than $5, SB 97 which spelled out additional requirements for tax officials before they could set or transfer liens for delinquent property taxes, and HB 265 which would have reduced the interest rate charged against delinquent tax amounts.

Local legislation such as annexation or local homestead exemption legislation aren’t subject to the crossover deadline and could still pass this session. Bills that don’t pass during this session could be reconsidered during 2016.

Billing ordinance adopted for 2015

The City Commission has approved Decatur’s property tax due dates and grace periods for 2015. Decatur will bill in two installments as usual. The first installment will be due by June 1 with a grace period up through June 15. The second installment will be due by Dec. 21 with a grace period through Jan. 7, 2016. The Revenue Division will send the bills out 60 days before the bills are due. The City Commission also approved the sanitation (solid waste) pick-up rates for 2015. A single-family home will owe $240 for the year for sanitation compared to $237 in 2014. Motions to adopt the due dates and sanitation rates carried unanimously.

Decatur’s first installment bills are based on the prior year’s property values, millage rates, and homestead exemption amounts. DeKalb will send us new values for 2015 this summer. Those new values, along with any changes to Decatur’s millage rates, will be used to calculate the final, total year’s bill during the second installment billing.

Last call for new property owners

If you purchased a property in Decatur anytime between the fall of 2014 to the present, or you have had a change of mailing address during that time period, I would encourage you to review your property record on the DeKalb County website. If they are not showing a record of your purchase or your current mailing address, please contact the DeKalb assessors office at 404-371-0841 to update their records. Please also let us know at the City of Decatur Revenue Division at 404-370-4100. Decatur will send out first installment property tax bills on or before April 1. If we do not have current ownership or mailing address information, your bill may go to the prior owner.

Free income tax assistance in Decatur through April 15

The AARP Tax-Aide program provides free federal and state income tax preparation services at the Decatur Recreation Center at 231 Sycamore Street in Decatur on Mondays, Wednesdays, and Fridays from 10:00 a.m. to 2:00 p.m up through April 15.  The main focus of Tax-Aide is providing tax assistance to seniors in Decatur and DeKalb County, but other taxpayers with straightforward returns are welcome as well.  Please bring your social security card, photo ID, any tax or income documents you have for 2014, and a copy of your 2013 tax return.  For more information about Tax-Aide and a list of other tax sites in DeKalb, to to the AARP's webpage here.

Bill aims to have HOST in Cobb County

Cobb County officials are interested in offering some property tax relief to be offset by an increase in their sales tax. Their proposal would resemble DeKalb County’s existing homestead option sales tax which primarily provides for property tax relief but also allows for some of the sales tax revenue to go toward infrastructure improvements. Rep. John Carson (R-Marietta) is sponsoring the proposal, which is being called an "alternative HOST," through HB 548.  The bill, which was just introduced last week, probably faces an uphill climb to get passed this year given how late we are into this legislative session.

At this point it seems like the Cobb County proposal more closely resembles DeKalb’s older/existing HOST model, rather than the DeKalb legislators’ newly proposed “equalized HOST” model that’s being considered through HB 215. DeKalb County and Rockdale County are the only counties currently administering a HOST.

Equalized HOST passes State House

But take figures cited with a grain of salt

The Georgia House of Representatives has passed HB 215 on Monday by a vote of 128 to 35. HB 215 would increase sales taxes in DeKalb County by one percent to fund infrastructure improvements. The bill would adjust a portion of existing sales taxes to go toward property tax relief for homeowners (but not for commercial properties, rental properties, land lots, etc.) The nay votes were all from Republicans.

The Atlanta Journal reports:

“Residents in the cities will see a significant property tax reduction,” said the bill’s sponsor, Rep. Mike Jacobs, R-Brookhaven. “All of DeKalb’s legislators — Republican and Democrat; north, south, east and west — agreed this is how we’re going to address deficiencies of how HOST is allocated.”

For example, property taxes would decrease by $625 on a $300,000 home in Decatur, Jacobs said. On a $500,000 Decatur home, property taxes would drop $1,065. 

There may be some miscommunication about the jurisdictions and numbers cited. Decatur homeowners should be aware that the HOST will not affect your city property tax bill. The HOST would only affect the tax bill you pay to DeKalb County. In 2014, a $300,000 home in in Decatur with the homestead exemption and HOST credit on their county tax bill would have paid $458 in property taxes to DeKalb. A decrease of $625 on a $458 tax bill is not possible. The HOST credit on the county tax bill for a $300,000 home in Decatur was about $605 in 2014. Rep. Jacobs or the AJC may have meant to say that the new HOST credit amount would be would be $625 for a home in Decatur, which would be a savings of $20 compared to last year.

Tax savings tip to businesses that pay personal property taxes

Taxes for personal property (which generally consists of business inventory, office equipment or furniture, and certain tangible items such as boats and aircraft) may be deductible expenses on your federal tax return if you itemize. TurboTax offers the following information about personal property tax deductions:

If you itemize deductions on your federal tax return, you may be able to claim a deduction for the personal property taxes you've paid. One method that states can use to raise revenue is to charge you a tax on your personal property. This type of tax is separate, and may be in addition, to the state and local taxes you pay on your real estate. However, if you itemize deductions on your federal return, you may be eligible to claim a deduction for all personal property taxes you pay…

When you can deduct personal property tax
If you end up paying personal property taxes to your local government, the IRS allows you to claim a deduction for it on your federal tax return. However, the IRS requires you to satisfy certain requirements, regardless of how your government classifies the tax. To claim the deduction, the tax must only apply to personal property you own, be based on its value and be charged on an annual basis, irrespective of when the government collects it from you. Therefore, if the state only charges the tax at the time you purchase the property then it does not meet the IRS definition of a deductible personal property tax. 

How to deduct personal property taxes
Paying a personal property tax is not always enough to claim the deduction. In addition to satisfying the IRS requirements, you must also be eligible to itemize, since this is the only way you can claim the deduction. To determine whether you are eligible to itemize, simply add up all of your expenses for the year that are eligible for a deduction, such as medical expenses, charitable contributions and mortgage interest payments. If the total is more than the standard deduction you can claim for your filing status, then go ahead and itemize and take a deduction for your personal property tax payments. 

There are about 400 personal property taxpayers in Decatur that pay these taxes to Decatur and to DeKalb County.  To verify how much you paid in personal property taxes to Decatur in 2014, please use our website at www.decaturgatax.com where you can print a receipt from your account or a tax bill reflecting your charges and payments.

As always, this blog is not intended to provide instructions on how you should file your income taxes or how much you should deduct. Since individual circumstances vary, please contact an income tax professional for verification and further guidance.

If you haven’t previously filed, please apply for your homestead exemption this week

Decatur offers several homestead exemptions and tax assistance programs.  By law we can accept new homestead exemption applications for 2015 until April 1. However, we encourage all eligible homeowners to apply for any new exemptions between now and next Monday, March 16, to ensure your exemption appears on your 1st installment 2015 tax bill which will be mailed out later this month.

If you have already applied with the city, you do not need to re-apply. If you already have a homestead exemption, the exempt amount appears under the Exemption column of your tax bill. Your exemption remains on your account for as long as you continue owning and residing in your home. If you applied with DeKalb County, you must also apply with the City of Decatur separately. If you’ve only applied with Decatur, you should apply with DeKalb. If you recently reached the age of 62, 65, 70, or 80, please review our exemption descriptions to see if you may have become eligible for an exemption for which you did not previously qualify.

Six lawmakers want lower interest charges on delinquent taxes

Interest on past-due property taxes accrues at a rate of 1 percent per month. Six state legislators are sponsoring House Bill 265 which would reduce that rate to one-quarter of one percent per month, or 3 percent per year.

The bill is somewhat favorable to delinquent taxpayers, but it also runs the risk of reducing the incentive to pay taxes on time. In Decatur, we don’t count on interest charges being a significant source of revenue. To put it another way, the purpose of charging interest isn’t really about raising revenue. The purpose of charging interest on late payments—and this is true with accounts receivable in general, not just taxes—is to induce debtors to pay off before additional interest accrues. Charging interest is a technique to help collect the principle. Interest charges of less than one percent may not have the impact of a full percent.

But it’s probably all a moot point because the bill appears unlikely to pass this year. HB 265 hasn’t been marked up the Ways & Means Committee and hasn’t been scheduled for a floor vote. The Atlanta Journal-Constitution gives HB 265 only a 12 percent chance of passing this session.

HB 202 would modify assessment and appeal provisions

Georgia House Bill 202 would make several changes to existing property tax law especially regarding assessments and appeals, along with some routine housekeeping edits to the state revenue code. The House passed the bill on Feb. 20 with only one dissenting vote. The 37-page bill is divided into nine sections summarized as follows:

• Section 1 gives taxpayers the option of requesting bills and delinquent notices by email. 
• Section 2 shortens the public notice period before school millage rate adoption from two weeks to one week. 
• Section 3 allows notices of interest due to be sent by email upon taxpayer request. 
• Section 4 extends the deadline for counties to submit their tax digests to the state until September 1 rather than the current August 1 due date. 
• Section 5 would relax current parameters for two or more counties that wish to consolidate their property appraisal departments through intergovernmental agreements. 
• Section 6 would strike the penalties involved for not filing a return for real property. Penalties for unreturned personal property would remain in effect. 
• Section 7 extends the deadline for county boards of assessors to review property returns by two weeks. 
• Section 8 and 9 provide several changes to the appeals process including additional authorities vested in the clerk of superior court over appeals, changes to serving on a board of equalization, changes to the accrual of interest on appeals, new nonbinding arbitration procedures, and other tweaks to existing appeals procedures.  Section 9 is the largest and most complicated section of the bill. 

The bill is currently under review by the state senate. The Georgia Municipal Association’s position on this bill is “neutral.”  The Atlanta Journal-Constitution's legislative tracker gives HB 202 a 77 percent chance of passing this session.

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

State considers banning $5 tax bills

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

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

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

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

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

HB 215 approved by committee

Georgia House Bill 215, which would change sales tax rates and distributions in DeKalb County, has been approved by the House Ways & Means Committee. Next it will be considered by the House Rules committee which will probably schedule the bill for a floor vote. The bill would:

• Provide for a vote on whether to replace the existing HOST with a new “equalized HOST.” 
• In addition to the equalized HOST, an additional 1 percent county special purpose local option sales tax (SPLOST) would be put before voters countywide. 
• Both ballot questions would have to be approved in order for either to go into effect. 

The existing HOST credit saves homeowners a several hundred dollars a year depending on their property value and tax district. For example, a resident with a $200,000 home in unincorporated DeKalb saved about $790 on their county property taxes in 2014 because of HOST. A resident with a $200,000 home within Decatur’s city limits would have saved about $390 on their county property tax bill in 2014 because of HOST. The HOST tax credit does not alter municipal tax bills.

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

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