Thursday, June 19, 2014

Part of HB 755 gets mixed reviews from tax officials

When a property is under appeal in Georgia, the property owner is generally billed for property taxes at 85 percent of the current year value. Last year, legislation was enacted that allowed the taxpayer to pay based on the 100 percent value if they preferred. House Bill 755, which was signed into law by Gov. Deal last month, includes further adjustments to the temporary value statute used for billing properties under appeal, with six different possible scenarios for determining the correct temporary value to use for billing based on the value of the property, whether or not improvements have been made to the property, and whether or not the property has been homesteaded.

Non-homestead properties valued at less than $2 million and homesteaded properties with no new improvements made to the property would pay 1) the 85 percent value or 2) the most recent final, settled value, whichever is less. 3) Homestead properties with new improvements would be billed at 85 percent. Non-homestead properties with proposed values greater than $2 million could pay 4) 85 percent of the proposed value, 5) 100 percent of the current year value, or 6) “the difference between the 85 percent tax bill based on the current year's valuation and the tax bill based on the valuation from the last year for which taxes were finally determined to be due on the property in conjunction with the amount of the tax bill based on valuation from the last year for which taxes were finally determined to be due on the property.”

When these different scenarios in the legislation were presented to the Georgia Association of Tax Officials at their annual conference in Athens last month, the response was unenthusiastic. During her presentation of legislative updates, Vicki Lambert, director of the Local Government Services Division (overseeing property and ad valorem taxation) of the Georgia Department of Revenue, said that the 6th possible calculation (referencing the difference between the values over two years) is too confusing to understand or explain.

Some county tax officials indicated that they would continue using 85 percent as their standard temporary value for most properties under appeal, but that they would include language on the bill or other printed materials describing the different possible values.

For the City of Decatur, we would base our bills on whatever value DeKalb County informs us is the temporary value—whether that is the 85 percent value or some other temporary amount dictated by law—and then adjust it by the same factor that we use to increase DeKalb’s 40 percent assessment to City’s 50 percent assessment (ie, 50 percent of the 85 percent value, or 50 percent of whichever value applies by law).

There are probably valid reasons for carving out all these different possible temporary values under the law, but it is a challenge to implement and communicate this clearly to taxpayers under appeal. Appealing your property value is already complicated enough without having multiple possible methods for calculating an accurate temporary value.

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