Grace period for 2011 taxes expires soon

The City of Decatur’s second installment property tax bills were due on Dec. 20, 2011.  No penalties or interest have been added to unpaid balances yet, but this grace period will end on January 5. 

If you haven’t already done so, please pay by Thursday to avoid additional fees.

If you aren’t sure whether or not you have paid, please check our tax look-up website at www.decaturgatax.com, or call us at 404-370-4100.  Due to mail, banking, posting, and data processing times, please allow 7 to 10 business days for payments tendered to show up on your tax records online. 

Our office will be open until 5:00 p.m. every day this week.  We accept payments through checks by mail; through credit cards or Paypal accounts online; and cash, check, or credit in person.

Postmarks will be honored on checks mailed to:

City of Decatur Lockbox

P.O. Box 945650

Atlanta, GA  30394-5650

If you intend to overnight a payment or visit us, our physical location is City Hall, 509 N. McDonough St., Decatur, GA  30030.  Please note that we do not have a secure after-hours drop box.

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.