Wednesday, March 23, 2016

Bill protects deployed troops from tax penalties

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

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

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

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