Assessment Errors, Corrections, Omitted Taxes & Chargebacks

Transcription

1 Assessment Errors, Corrections, Omitted Taxes & Chargebacks Clerks, Treasurers and Finance Officers Institute Wisconsin Department of Revenue June 23, 2016 Presenters Mary Gawryleski Equalization Bureau Director Valeah Foy Local Government Services Bureau Director 2 1

2 Agenda Correction of assessment errors Chargeback process Omitted process Resources 3 Correction of Assessment Errors 2016 Wisconsin Department of Revenue 4 2

3 Correction of Assessment Errors Palpable error defined (sec ) o Clerical error in description of property or computation of tax o Real property did not exist on January 1 o Property is exempt o Property not located in the taxation district o Double assessment o Arithmetic, transpositional, or similar error 5 Correction of Assessment Errors Sec Correction of Error by Assessor (sec ) o Correction of preceding year assessment (one year) o Real estate or personal property o Marginal note in preceding year roll o Written notice of correction to taxpayer Correction referred to Board of Review o Entry in separate section of current assessment roll o Plus or minus adjustment 6 3

4 Correction of Assessment Errors Sec Example of 2016 sec Correction: 1. February 2016 Assessor discovers 2015 error New construction assessed as 100 percent complete in 2015, but was only 70 percent complete as of January 1, Assessor notifies property owner of error and corrected 2015 assessment (separate from 2016 Change of Assessment Notice) 3. Makes marginal note of error in 2015 assessment roll 7 Correction of Assessment Errors Sec Example: Correction o Assessor adds correction to special section in 2016 assessment roll Correction of Error by Assessor o Property owner has right to appeal corrected 2015 assessment at the 2016 Board of Review o Assessor completes correction form (PA 5/661); Clerk calculates amount of refund 8 4

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6 Omitted Property Sec Assessment of omitted property (up to two prior years) Omitted assessments may be determined for both real or personal property Affecting the whole or partial property "Physical bricks and mortar" change, not an opinion of value o Obvious, tangible, defendable, measurable 11 Omitted Property Sec Assessor to provide written notice to taxpayer Assessment entered in separate section of assessment roll Board of review appeal available Owner may pay estimated tax in advance o Clerk escrows Omitted taxes are to be shared with overlying taxing jurisdictions o If Equalized Value was affected by property omitted from assessment, DOR will approve, and taxes are shared with overlying taxing jurisdictions 12 6

7 Examples of Omitted Property Land Real Estate o In 2014 and 2015, legal description included 40 acres, but Assessor only valued 2 acres o In 2016 Assessor discovers omission and values 38 omitted acres as part of 2016 roll o Follow statutory process for Omitted Property (sec ) to pick up omitted acres for 2014 and Examples of Omitted Property Improvements Real Estate o In 2015 the property sells; Assessor discovers property record card shows an unfinished basement; home has actually had a finished basement since 2008 o Add assessment for finished basement to 2016 roll and to account for omission in 2014 and

8 2016 Insert updated form

9 Clerk Examine and Correct Roll Sec Prior to Board of Review Clerk examines roll and correct errors o Corrections include double assessments, imperfect descriptions, apparent errors; strike parcels not taxable Add omitted real estate description and/or personal property account to the roll o Notify Assessor of omission Assessor to view and value, Clerk then enters on roll 17 Board of Review Sec (6) Reviews assessment roll for errors and omissions Reviews and certifies any sec corrections Hears any appeals of sec corrections and sec omitted property Changes current assessment based on sworn oral testimony Clerk records change(s) in red on assessment roll Assessor updates Property Record Card 18 9

10 Delayed Action of Reviewing Authority Sec Revaluation ordered by reviewing authority o Circuit Court certiorari review (sec (13)) or Recovery of Unlawful Tax (sec ) o Tax Appeals Commission (Manufacturing or Exempt Computer) o Department of Revenue (DOR) (sec ) Clerk updates assessment roll if prior to calculating property taxes Clerk issues tax refund if after property taxes calculated Assessor updates Property Records 19 Correction of Tax Roll (1) After BOR, before delivery of tax roll, Clerk or Treasurer shall correct: o (1)(a) legal descriptions o (1)(b) Personal property assessed to the wrong person, or two or more parcels with different owners that were assessed together (1)(c) Statute provides specific notification process o No changes in total assessed value (clerical correction only) 20 10

11 Correction of Assessment Roll (1m) After BOR, before extending taxes, Clerk or Treasurer shall correct a palpable error as described under sec o Correction made before calculating the taxes o Notify Assessor of the correction o Marginal note of correction in assessment roll o Revised Statement of Assessment sent to DOR o Amended Municipal Assessment Report sent to DOR 21 Recovery of Unlawful Tax Sec Taxpayer claim against municipality o Specific claim must be in writing o States claim is based on a palpable error (sec.74.33) o States amount of claim o Signed by claimant or agent o Served on the Municipal Clerk as a summons (sec (4)) 22 11

12 Recovery of Unlawful Tax Sec Taxpayer claim against municipality o Only procedure for exemption claims o Claim amount may include interest o Claim must be made by January 31 of year which tax is payable o Taxes or installment must be timely paid o Claimant not required to appear at Board of Review 23 Recovery of Unlawful Tax Sec Municipality to notify claimant of decision by certified mail within 90 days after claim is filed If allowed, claim is paid within 90 days of approval of claim District may request chargeback for refunded taxes (sec ) 24 12

13 Recovery of Unlawful Tax Sec Municipality may disallow claim by denying claim or failing to take action within 90 days o Disallow = To deny in whole or in part; fail to take final action Reasons for disallowing claim: o May be due to a claim not filed per statutory requirements o Reason for claim may not fit definition of palpable error Disallowed claims may be appealed to Circuit Court within 90 days after receiving decision 25 Claim on Excessive Assessment Sec Taxpayer claim against municipality o Specific claim must be in writing o Claim filed by January 31 of year tax is payable o States reason for excessive assessment o States amount of claim o Signed by claimant or agent o Served on the municipal Clerk as a summons (S (4)) o Taxes or installment must be timely paid 26 13

14 Claim on Excessive Assessment Sec Taxpayer claim against municipality o Claimant required to appear at Board of Review (unless required assessment notice not given) o Claim cannot be filed if also appealed to circuit court (70.47 (7)(c)(13) or(16)(c) or DOR (sec ) 27 Claim on Excessive Assessment Sec Notify claimant of decision by certified mail within 90 days after claim is filed If allowed, claim is paid within 90 days of approval of claim 28 14

15 Claim on Excessive Assessment Sec Disallow claim: o To deny in whole or in part; fail to take final action Reasons for disallowing claim: o May be due to a claim not filed per statutory requirements o May be based on a disagreement with the claim s premise Disallowed claims may be appealed to Circuit Court within 90 days after receiving decision District may request charge back for refunded taxes (sec ) 29 Correction of Tax Roll Sec Correction of tax roll information Sec Defines an error as included in: o Description of any real or personal property o Identification of the owner or person to whom the property is assessed o Amount of the tax o Result of a palpably erroneous entry in the assessment roll Assessor must acknowledge error before Clerk makes the change Clerk is required to correct error 30 15

16 Palpable Error Correction Sec After tax roll delivered o Governing body has authority to correct o May refund in whole or part o If defined as a palpable error: Difference in opinion of value is not a palpable error o Including agreed upon interest o No specific limitations on number of years that may be corrected 31 Errors in the Taxation Process Errors occur in the Assessment process o Palpable error defined (sec ) Clerical error in description of property or computation of tax Real property did not exist on January 1 Property is exempt Property not located in the taxation district Double assessment Arithmetic, transpositional, or similar error o Results in an "Illegal" tax 32 16

17 Errors in the Taxation Process Errors occur in the valuation process o Assessment is Excessive (sec , sec ) Determined by a Reviewing Body Court Tax Appeals Commission o Results in an "Excessive " tax 33 Errors in the Taxation Process Errors occur in the Tax Calculation process o Correction of tax roll information Sec Description of any real or personal property Identification of the owner or person to whom the property is assessed Amount of the tax Result of a palpably erroneous entry in the assessment roll o Results in an "illegal" tax 34 17

18 Illegal or Excessive Assessment Several statutes apply: o Sec correction of Assessor error o Sec governing body refunds o Sec allowed claim for unlawful tax o Sec allowed claim on excessive assessment o Sec delayed action of reviewing authority o Sec or Sec (2) lien of reassessed tax 35 Chargeback Process 2016 Wisconsin Department of Revenue 36 18

19 Chargeback Request If there are illegal or excessive taxes, property owner requests a refund or rescission of taxes Municipality first rescinds or refunds the tax Municipal clerk submits a chargeback request to DOR in hopes of being reimbursed by the taxing jurisdictions o Municipality is seeking approval from DOR to recover those refunded taxes from the school, county, technical college, special district and state 37 Chargeback Request Municipal Clerk e files request to DOR o Due date October 1 Submissions after due date are processed in the following year o Clerk completes prescribed form o Large requests should be submitted as soon as possible Notify the taxing jurisdictions o Before the form can be submitted, taxes must have already been refunded/rescinded 38 19

20 Form PC 201 Form PC 201: Request for Charge back of Rescinded or Refunded Taxes Must be electronically filed Adobe e file form only 39 Form PC 201 Completing Form PC 201 o Assessment year o Real or personal property o Assessment class/category o Assessment value before and after adjustment o Taxing jurisdictions o Any manufacturing interest o Net tax refunded or rescinded o Applicable statute and explanation 40 20

21 Form PC 201 New! Features added to the e file form o Field to enter class after adjustment o List of applicable taxing jurisdictions are available in a dropdown based on your municipality o Select the applicable statute and explanation

22 Form PC 201 Explanation for refund: "The 2014 assessment included real property improvements which did not exist under on the date of assessment. According to the Clerk, the owners removed the improvement prior to January 1, 2014." 43 Assessor and Clerk Role Clerk provides explanation why taxes were refunded or rescinded o Provides statutory reference o Note: Clerk is responsible to submit Form PC 201 to DOR Assessor can supplement information o Provide detailed explanation of the circumstances that created the error o If error was included in the MAR, list reason for change category Example: Assessed new construction that did not exist on January 1 o If error was not reported on the MAR totals, list reason for change category that it should have been reported Example: Improvement burned down prior to January

23 Law Change 2015 Act 317 Chargeback of Property Taxes Effective March 31, 2016 When reviewing charge back requests, DOR no longer determines if the assessment change impacted the Equalized Value DOR approves charge back requests when the request meets the requirements under 74.41(1) and the amount requirements under 74.41(2) Taxes refunded, rescinded, collected, or corrected for properties within a Tax Incremental District (TID) are not eligible for a chargeback unless the TID's current value is less than the TID's base value in the year of the tax refund Wisconsin Department of Revenue 45 Law Change Requirements under 74.41(1): o Refunded under , or 74.37; rescinded or refunded under 74.33, or 75.25(2); refunded or collected under Requirements under 74.41(2): o The refunded taxes for a single year in the taxation district total at least $5,000 or the tax for any single property is $500 or more 2016 Wisconsin Department of Revenue 46 23

24 DOR Review of Chargeback Requests Confirm the request meets the statutory requirements sec (1) and (2) Confirm the request was completed accurately LGS review includes: o Submitted requests meet the statutory threshold o Compare provided net tax versus calculated net tax (using their SOT, SOA and SLTC amounts) o Taxing jurisdictions correctly listed o Identify duplicate requests o Contact municipalities to correct any errors 47 DOR Review of Chargeback Requests Equalization review Property located in a TIF District (TID) o If the assessment error is on a property in a TID, chargeback is typically denied Apportionment calculations exclude value of TID increment "TID Out" apportionment remains the same o Chargeback requests for error in a TID would be approved if: TID increment is negative Error causes current year TID value to fall below base value of TID Error is in the base value because it existed the year the TID was created 48 24

25 DOR Review of Chargeback Requests Equalization review Property located in a TIF District (TID) o If parcel is in a TID If the TID has a negative increment in the year of the error Approve chargeback If the TID has a positive increment, but the assessment reduction creates a negative increment for the year of the error Approve partial chargeback TID has a positive increment and it remains positive with the assessment reduction Deny chargeback 49 DOR Review of Chargeback Requests DOR issues decision by November 15 o Denied: Municipal Clerk notified of decision o Approved: municipality and each taxing jurisdiction is notified of chargeback amount Taxing jurisdiction pays its share of the refund to municipality by February 15 of the following year Payment does not count against any imposed levy/revenue limit 50 25

26 Chargeback Appeals Chargeback determination can be appealed o sec , Wis. Stats. Submitting an appeal o Contact Equalization Bureau District for explanation of determination o Within 30 days after the date of the notice, you must: Circuit Court file a petition with your county's circuit court Wisconsin Department of Revenue (DOR) serve the DOR Secretary with a petition for review, using one of the following methods: Deliver in person (physical address provided) Send certified mail (mailing address provided) 51 Omitted Process 2016 Wisconsin Department of Revenue 52 26

27 Omitted Request Opposite of Chargeback If property is omitted from assessment in either of two prior years (five years for Manufacturing Property), it can be assessed as omitted in the current assessment year When the property is placed on the tax roll in the current year, the omitted taxes are collected by the municipality but not shared with the taxing jurisdictions Municipality submits a request to DOR to determine if they should share the omitted taxes with the taxing jurisdictions 53 Omitted Request Omitted taxes are to be shared with overlying taxing jurisdictions o If Equalized Value was affected by property omitted from assessment, and o If apportionment would have been affected Due date October 1 o Submissions after due date are processed in the following year o Clerk completes prescribed form o Total omitted taxes to be included on the tax roll exceed $5,

28 Form PC 205 Form PC 205: Request for Sharing of Non Manufacturing Omitted Property Tax Must be electronically filed Adobe e file form only 55 Form PC 205 Completing Form PC 205 o Yea tax was omitted o Year tax was added to the tax roll o Real or personal property o Assessment class/category o Omitted assessed value o Taxing jurisdictions o Net tax omitted o Explanation 56 28

29 Form PC 205 New! Features added to the e file form o List of applicable taxing jurisdictions are available in a dropdown based on your municipality

30 DOR Review of Omitted Requests Confirm the request meets the statutory requirements sec Confirm the request was completed accurately LGS review includes: o Submitted requests meet the statutory threshold o Compare provided net tax versus calculated net tax (using their SOT, SOA and SLTC amounts) o Taxing jurisdictions correctly listed o Identify duplicate requests o Contact municipalities to correct any errors 59 DOR Review of Omitted Requests Equalization review includes: o Determine if Equalized Value was impacted If yes, determine if apportionment was impacted If yes, request approved If no, request denied 60 30

31 DOR Review of Omitted Requests Approvals Locally omitted assessment o If not reported on MAR Omitted New Construction Omitted personal property Property that had been erroneously exempted o Can only be up to two years of omissions Manufacturing Omitted assessment o Generally same reasons as local omission o Can be for up to five years of omissions 61 DOR Review of Omitted Requests Denials Existing home omitted from assessment and tax roll o DOR would not have removed that value, because it is unlikely it would have been reported on the MAR Existing property assessed to the wrong person o Person whose property was omitted will receive an omitted bill; incorrect owner will receive correction But Equalized value was unaffected; value was in Equalized 62 31

32 DOR Review of Omitted Requests Denials Omitted Property was in a Tax Increment District o Equalized Value may be impacted, but apportionment would not be o Those taxes would stay with the municipality to pay off TID 63 DOR Review of Omitted Requests DOR issues decision by November 15 o Denied: Municipal Clerk notified of decision o Approved: municipality and each taxing jurisdiction is notified of omitted amount Municipality pays each taxing jurisdiction when the taxes are collected 64 32

33 Resources 2016 Wisconsin Department of Revenue 65 Resources For more on property tax refund requests and the chargeback process, go to: o Pub PA 600: o Common questions: o E file form:

34 Resources For more on the sharing of omitted taxes, go to: o Common questions: o E file form: 67 Thank you Questions/comments/suggestions? 68 34