New bill encourages cities and counties to hammer out sales tax disagreements

A bill before the General Assembly would impose a "nuclear option" against counties and cities that fail to resolve distribution formula disputes over local option sales tax (LOST) revenues.  If counties and cities do not agree within a set time frame, the LOST would be terminated.  Once a jurisdiction has lost the LOST, they could not reinstate it for at least five years.  From the Bainbridge Post-Searchlight on Feb. 12:

Legislation introduced that will change LOST policies between cities, counties

State Representative Jay Powell (R-Camilla), Chairman of the Ways and Means Committee, which sets all tax policy in the House, introduced House Resolution 1344 and House Bill 1055, a constitutional amendment and enabling legislation, on Thursday. 

The legislation would impact negotiations between counties and cities over the distribution of the 1 cent Local Option Sales Tax (LOST), a major source of revenue for many of Georgia’s cities and counties, thus reducing their reliance on property taxes and giving property tax relief to millions of Georgia property owners.

“The way counties and cities are currently conducting LOST negotiations is an inexcusable waste of taxpayers’ hard earned money, often costing hundreds of thousands, or even millions of dollars, in expert fees, consultants, studies, legal costs and litigation fees; monies which would be better spent repairing, maintaining and even expanding infrastructure and our transportation system,” said Rep. Powell. “It is my hope that the possibility of forever losing the benefit of this tax will help local officials focus on reaching an agreement on distribution of LOST proceeds, but if not, I am sure our local school boards would welcome an opportunity to utilize this new funding source while reducing the property tax burden imposed on taxpayers for the support of our schools.”

Existing law requires that those counties which have enacted a LOST schedule negotiations every ten years to determine how the tax proceeds will be divided among the cities and counties for the ensuing ten year period. According to Rep. Powell, these negotiations often are long-drawn-out, divisive, expensive, and frequently result in costly litigation. To encourage county and city officials to negotiate in good faith and reach a timely resolution of the issues involved in determining future tax negotiations, Powell’s proposal introduces a “nuclear option” in the event counties and cities fail to agree on a distribution formula of the monies generated by the LOST. This nuclear option penalizes those who fail to agree, by terminating the LOST and preventing its reinstitution, or that of a similar tax known as the HOST for a five year period. HOST is the only similar type of tax currently available by statute.

IRS offers "Free File" program

The Internal Revenue Service is offering a "Free File" program to electronically prepare and file your income tax return if you make less than $62,000 a year.  I haven't tried it out, but it seems like a good option if want to do your own taxes and you're trying to save money and time rather than doing your taxes by hand or by buying software.  Here's the description of the program from the IRS website:

All Tax Forms Free with Free File

Feb. 12, 2016

WASHINGTON — Whether you draw a paycheck, are self-employed or own a small business, you can use all available tax forms you need for free with IRS Free File.

If you make $62,000 or less, you qualify for free brand-name software offered through a partnership between the IRS and 13 leading tax software providers. Some of these providers offer free federal and free state return preparation and electronic filing. If you made more than $62,000, you can use Free File Fillable Forms, electronic versions of IRS paper forms best for someone experienced in return preparation.

Free File offers all federal tax forms for free. That goes for the Form 1040, Form 1040EZ and Form 1040A. For example, all forms are free if you have mortgage interest deductions, children in college or made money in the stock market, among other things.

Also for example, all forms are free if you have a Form W-2, or a Form 1099 or an EIN for your own business. #February marks a high-point in the tax filing season when the IRS experiences many calls to its customer service line from taxpayers with questions. Free File software products can help answer many of your questions by walking you through a step-by-step process to complete your tax return.

And if you can’t find answers from your tax software product, there are many other online tools at IRS.gov that can help you find the answers you need when you need them.

To start your Free File tax return, you first need all your documents including your income statements such as Form W-2...

Tax agencies contend with soaring refund scams

Income tax agencies are developing new solutions and technologies to deal with increasing identity thefts and fraudulently claimed refunds.  Among the improvements being considered are IP address verification, stronger passwords on state tax websites, and better information sharing across states.  The IRS has also been providing PINs to taxpayers upon request which will reduce the likelihood that an identity thief could claim somebody else's refund without that PIN.  Government Technology magazine reports:

It’s Tax Season, and States Are Battling Bogus Requests for Refunds

Tax fraud costs state treasuries millions of dollars.

This tax season, states are employing new strategies to combat online tax fraud. Last year during tax season, Utah discovered that about 8,000 state income tax returns were filed with fake IDs, which could have cost the state $11 million in bogus refunds. The fraud discovery precipitated a weekslong halt to processing taxpayers’ returns and an intense investigation that stopped all but $17,000 in false refunds.

The scam sought to take advantage of the consumer-friendly service used by Utah and many other states of sending taxpayers their refunds quickly via pre-paid debit cards that could immediately — and untraceably — be used like cash.

No more, say Utah and the other 40 states and the District of Columbia that require taxpayers to file state or local income tax returns. This year, they are working together with the IRS and the largest private tax software companies to try to discover and stop the online filing fraud quickly — sometimes before it starts — by doing a better job of verifying the identity of the filers, strengthening password protocols and sharing information on filings that use stolen identities.

IRS Launches Campaign to Curb Tax Fraud

The dollar stakes are high in combating the cyber fraud. The IRS lost an estimated $5.8 billion to paying out fraudulent federal refunds in 2013 alone. And states are defrauded by an estimated $8 billion to $9 billion annually, said Haywood Talcove, CEO of Government and LexisNexis Special Services Inc., which works with many states to counter the scams.

The fight against tax fraud is a “battle that seems to grow every day,” IRS Commissioner John Koskinen told state, federal and private industry tax leaders in June. “The threat from fraudsters and criminals is complex and evolving.”

It Starts With Identity Theft

Crooks use various scams to file phony tax returns, but most rely on stealing a taxpayer’s identity.

They obtain a name and Social Security number from an unsuspecting taxpayer. That information can come from a doctor’s office, insurance company, school or any other entity that routinely collects names and numbers.

Then, they do a little Web searching to determine where the person worked, and approximately what their wages were. Armed with that, the scammer files a tax return, often exaggerating the number of deductions or businesses “losses” to generate a large and swift refund.

The scammers provide a phony address to send the refund and voilà! extra cash. Using algorithms and sophisticated, fast computers, the scammers can handle many phony returns in one state or many.

Often, the refund fraud is organized and highly sophisticated, says LexisNexis. #New Precautions

The Federation of Tax Administrators, a nonprofit that represents state tax administrators, began a “security summit” last spring with officials from all the states with income taxes and the IRS. From it came guidelines and recommendations for states and the IRS to help combat fraud, including extra security procedures. Among them:

• Strengthen procedures to authenticate the identities of taxpayers so that when returns are filed, the filer’s claims can be compared to the actual taxpayers. That includes verifying the Internet Protocol address from which a return was filed, and monitoring how long it takes someone to prepare and file a return — scammers do it quickly. (“The bad guys are first, and the good guys are last,” said Richard Ainsworth, director of the Graduate Tax Program at the Boston University School of Law.)
• Institute more secure online password standards for the IRS and the states, including eight characters with uppercase, lowercase, alpha, numerical and special characters; a new timed lockout feature for unsuccessful logins; and a requirement that taxpayers answer three security questions when they log in to their account.
• And simply share information between the states when fraudulent filings are spotted...

State House approves permanent exemption for boat dealers

Most business inventory in Georgia is subject to personal property taxes collected by counties and cities.  The state revenue code has previously exempted watercraft held in inventory for resale for a limited period of time.  The exemption has usually been authorized for a four-year time period; in other words, the exemption sunset after several years until it was renewed.

House Bill 769 would make the exemption permanent for boats held in inventory for sale or resale.  The bill is somewhat out of the ordinary because legislators have generally preferred putting an expiration date on most tax credits and exemptions over the last couple years.  But HB 769 was approved unanimously by the House last week and is now being considered by the Senate.

The bill would have no effect in Decatur since we have no boat dealers.  Individual boat owners in Decatur remain subject to an annual personal property tax bill from the City of Decatur and DeKalb County.

State requests dismissal of property tax discrimination case

The State of Georgia and McIntosh County are requesting that a lawsuit brought by the Geechee residents of Sapelo Island be dismissed.  The federal discrimination suit alleges that McIntosh County unduly taxes Sapelo property owners but provides them with no services.  The State asserts that there is nothing definitive in the suit that is within their jurisdiction to respond to.  The Florida Times-Union ran an article on the subject on Feb. 9:

McIntosh County, state of Georgia ask federal court to dismiss suit that says it discriminates against Gullah Geechee on Sapelo Island

McIntosh County says white and black residents of barrier island are subject to same services, however poor

By Terry Dickson Tue, Feb 9, 2016 @ 10:26 am | updated Tue, Feb 9, 2016 @ 7:08 pm

McIntosh County and the state of Georgia have asked a federal court to dismiss a lawsuit that claims both have systematically discriminated against Gullah Geechee residents of Sapelo Island in hopes of driving them off the island.

Georgia and McIntosh County also want the case moved from Atlanta, where it was filed last year, to Brunswick, which is just one county away from the island and far more convenient for all local witnesses.

In a motion filed on behalf of County Manager Brett Cook and other defendants, McIntosh County said the suit failed to show that the county had treated white residents of the island any more favorably that African American residents.

It also asserts that only five of the more than 50 plaintiffs actually live on Sapelo Island. “The vast majority [of the plaintiffs] merely allege they own property’’ on the island, the response says.

McIntosh County does not deny that it does not provide the same ambulance, police, fire, garbage collection and other services for the island as it does mainland residents, but it has an explanation.

The obvious reason for the disparity in services is that Sapelo is a barrier island accessible by boat, the suit says, and black residents there are subject to the same level of services as whites, the county says in its motion to dismiss.

The suit filed last year against McIntosh County and the state of Georgia, which owns 97 percent of the island, asserts that more than 50 residents of the Hog Hammock community on the island pay high property taxes and get no services in return. The island has no school, no ambulance service and no trash pickup, all services available on the mainland.

In its response filed Tuesday, the state says the Department of Natural Resources, the agency that oversees the island, provides emergency services and provides a trash compactor, although it does not charge a garbage collection fee.

The state also evokes sovereign immunity, which forbids federal suits against the state unless the state first agrees to be sued in that court. The state’s answer says the federal courts have long upheld sovereign immunity.

The state-run ferry is not accessible to the disabled and has a schedule that makes it nearly impossible for someone to live on the island and hold a job on the mainland, the suit said.

The plaintiffs assert that there is a plan to systematically tax them out of their homes so rich, white people can build expensive vacation homes there...

Senate approves Decatur senior exemption from school tax

The state Senate unanimously approved a referendum for an exemption from school property taxes for Decatur homeowners over the age of 65 last Thursday.  The Senate also approved SB 339, 340, 341, and 342, which would would expand homestead exemptions for Decatur city taxes.  The bills head to the House of Representatives next.  If approved by voters the exemptions would take effect in 2017.

County worried about sales tax vote

In November, voters will consider a 1 percent sales tax increase in DeKalb to fund county infrastructure projects. MARTA is also proposing a one-half percent sales tax increase. DeKalb is concerned that MARTA’s attempt will cause voters too much heartburn when they cast their ballots in November. The AJC reports:

DeKalb County’s leaders have long supported proposals to expand MARTA eastward along Interstate 20 to Stonecrest Mall.

But the latest $8 billion MARTA measure being discussed by the Georgia General Assembly causes some problems for DeKalb.

Interim DeKalb CEO Lee May and the DeKalb Board of Commissioners recently drafted a letter saying the county “has been placed in a very awkward posture” because a vote on raising MARTA sales taxes could conflict with the county’s infrastructure sales tax proposal. 

The county plans to ask voters to decide in November whether to add 1 cent per dollar to their sales taxes to pay for roads, public safety facilities and other infrastructure through a special purpose local option sales tax (SPLOST).

If a half-cent per dollar proposal to fund MARTA’s growth were also on the ballot on the same day, that initiative could undermine the SPLOST effort, according to the county’s letter.

“Unfortunately, the proposed half-penny competes with our top sales tax priority to advance a 1-cent SPLOST referendum in November 2016 to meet the basic essential needs of our constituency — crumbling roads,” said the Jan. 26 letter, which was addressed to MARTA CEO Keith Parker and MARTA’s board.

If MARTA’s proposal is approved by the General Assembly and by voters, the DeKalb and MARTA proposals together would increase sales tax in DeKalb to 8½ percent.

City Hall closed for Presidents Day

Decatur City Hall including the tax office will be closed on Monday, February 15.  If you need immediate tax information over the holiday weekend, please go to www.decaturgatax.com.  Please keep in mind if you are making or recently made a payment that it will take longer than usual to clear the bank. We will reopen Tuesday at 8:00 a.m.

New “township” tax rates would be capped at half a mill

State lawmakers are proposing an additional form of local government in Georgia: towns. Townships would have limited powers and limited tax rates. Specifically, the ad valorem millage rate would be capped at no more than 0.5 mills. Town supervisors (which is what the legislation calls them) would need to keep a pretty sharp eye on their property tax digests under this proposal, particularly if a new town started out at the 0.5 mill maximum. Any significant downturn in property values could not be offset by increasing the millage rate beyond the cap. As far as I can tell, towns would be subject to the same balanced budget requirements that cities, counties, and the state face.

Sen. Parent sponsors 5 homestead exemption bills

State Senator Elena Parent (D-Atlanta) introduced five local legislative bills on Thursday to expand homestead exemptions in Decatur. Senate Bill 339 would increase the basic homestead exemption (known as the GH1) from $20,000 to $25,000. SB 340 would increase the exemption for homeowners over 65 (GH2) from $1,000 to $10,000. SB 342 would create a new $15,000 exemption (GH3) for homeowners over 62 with household income under $50,000. SB 341 would repeal an old cap on exemption amounts. The bills would reduce property taxes for eligible homeowners by decreasing the taxable value of their homes. The bills resemble House Bill 670, 672, and 673 which did not make it out of the House of Representatives during the 2015 session, but city officials and state lawmakers are more confident that the proposed tax relief will be approved this time around.

SB 343 is a new proposal supported by the City Schools of Decatur and the Decatur City Commission that would create an exemption from school taxes (excluding school bond taxes) for homeowners over 65.

If the bills pass the Georgia General Assembly, they would have to be signed by the governor and approved by voters before they would go into effect in 2017. The new school exemption would expire in 2021 unless it is renewed.

Decatur prioritizes property tax relief

The following is a press release from the City of Decatur on its legislative priorities for the 2016 session of the Georgia General Assembly:

City of Decatur General Assembly Legislative Priorities

The City of Decatur’s primary interest during the 2016 Georgia General Assembly session is to support the passage of homestead exemption legislation amending and creating tax relief for our resident homeowners, particularly for seniors. Mayor Patti Garrett said, “Property tax relief for long-time residents who have been a part of our community for many years is our top priority, and we are focused on getting homestead exemption legislation passed this session.”

School Board Chair Annie Caiola said, “Over the past decade there have been significant austerity cuts to the State’s education budget, meaning that local residents have had to pay more and more property taxes in order to maintain the strength of our school system. The increasing property taxes are forcing too many seniors out of our community, and it needs to stop. The City Schools of Decatur School Board strongly supports legislation that will exempt our seniors from ad valorem school taxes.”

Proposed homestead exemption legislation would authorize referendums in November, 2016 and, if approved by the voters, would be effective in 2017.

In the 2015 General Assembly HB 663 was adopted by the Georgia House of Representatives that authorized a referendum to annex areas to the east of the existing city limits of Decatur. “We have new City leadership, a new School Superintendent and new Board of Education leadership,” said Mayor Garrett, “and we need to look at a variety of issues, including annexation, so we will not be pursuing adoption of HB 663 by the Georgia Senate during the 2016 session.”

It is anticipated that the City Commission and the Board of Education will revisit annexation later in 2016 to determine what options should be pursued in the future.

Contact: Peggy Merriss, peggy.merriss@decaturga.com, 404-371-4104 or Linda Harris, linda.harris@decaturga.com, 678-553-6512

Free tax preparation offered in Decatur

AARP's Tax-Aide volunteers are onsite again this year at the Decatur Recreation Center at 231 Sycamore Street.  They will be providing free income tax return preparation services from 10:00 a.m. until 2:00 p.m. on Mondays, Wednesdays, and Fridays starting this week up through April 15, 2016. 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 2015, and a copy of your 2014 tax return.  Note that Decatur Active Living staff are not trained to answer tax-related questions. Please direct income tax questions to AARP Tax-Aide volunteers when they are on site.