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HomeMy WebLinkAboutAgenda - 04-06-2010 - 4f 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 6, 2010 Action Agenda Item No. SUBJECT. Property Tax Refund Request DEPARTMENT: Tax Administration PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: Resolution Jo Roberson, 245-2735 05/11/2009 Refund Request Letter 12/04/2009 Opinion of Staff Attorney 01/27/2010 Follow-up Letter 02/01/2010 Assessor Letter PURPOSE: To consider adoption of a refund resolution to deny one (1) request for property tax refund. BACKGROUND: The Tax Administration Office has received one (1) request from a taxpayer for refund of property taxes paid in a prior fiscal year. North Carolina General Statute 105- 381(b), "Action of Governing Body" provides that "upon receiving a taxpayer's written statement of defense and request for release or refund, the governing body of the Taxing Unit shall within 90 days after receipt of such a request determine whether the taxpayer has a valid defense to the tax imposed or any part thereof and shall either release or refund that portion of the amount that is determined to be in excess of the correct liability or notify the taxpayer in writing that no release or refund will be made". North Carolina law allows the Board to approve property tax refunds for the current and four previous fiscal years. Under GS105-380 "the governing body of a taxing jurisdiction is prohibited from releasing, refunding, or compromising all or any portion of the taxes levied against any property within its jurisdiction except as expressly provided". Per the same statute, any tax that has been refunded in violation of law may be recovered from any members of the governing body who voted for the refund. In this case, the taxpayer has requested a refund for tax years 2005 through 2008. In response to the taxpayer's inquiry, this property was re-visited in October 2009. After review, it was the appraiser's judgment that a reduction in square footage to the improvement was warranted. For 2009, the valuation of the improvement was reduced. Although the 2009 field review did result in a reduction in value, the General Statutes (GS 105-381) are very clear in defining what can and cannot be refunded. For a refund to be legal, the taxpayer must demonstrate that there was (a) a tax imposed through clerical error; or (b) an illegal tax; or (c) a tax levied for an illegal purpose. 2 It is the recommendation of the Tax Administrator that the request for the 2005 through 2008 refund be denied. This recommendation is being made for several statutory reasons. First, neither appraiser judgment nor an error in measurement constitutes an illegal tax. The Tax Administration office has worked closely with the County Attorney's office in defining what can and what cannot be considered an illegal tax. The square footage in question is the area above the garage. The County incorrectly assessed the area as being finished. A field inspection in October 2009 verified that the area was not a finished space. However, the space does exist and has not been taxed twice. By definition, an illegal tax is a duplication of taxation, a situation where one is taxed twice for the same property. An example of this would be where the same house is taxed on two different tracts of land, when it only existed on one tract. An illegal tax could also occur when the County appraiser mistakenly appraises the home as having two floors when only one floor exists. Second, appraiser judgment does not constitute a clerical error. Again, the Tax Administration office has worked closely with the County Attorney's office in defining what can and cannot be considered a clerical error. By definition, a clerical error is an error of transposition. For example, a clerical error would result when the clerk is keying from the appraiser's property record card and the clerk keys two stories when the appraiser indicated on the property record card that the house is a single story. Another example might be when the appraiser indicates that the house was built in the year 2000 but the clerk keys 2000 into the data entry area for fireplaces. Finally, the taxpayer has been notified at least twice each year as to the value of the property and had the opportunity to appeal the value each year within the statutory deadlines. In addition, there is no guarantee that the value would have been changed in previous years had the appeal been timely. FINANCIAL IMPACT: Denial of this application for refund will result in no reduction in monies from the County, municipalities, and special districts. However, approval of this request would result in a reduction in monies from the County, municipalities and special districts for the total of all refund years in the amount of$1,616.67. RECOMMENDATION(S): The Manager recommends that the Board approve the attached resolution denying one (1) property tax refund request in accordance with N.C. General Statute 105-381. NORTH CAROLINA RES - aolo - ORANGE COUNTY REFUND/RELEASE RESOLUTION(Denial) Whereas,North Carolina General Statutes 105-381 and/or 330.2(B)allows for the rdund and/or release of taxes when the Board of County Commissioners determines that a taxpayer applying for the mlMd/release has a valid defense to the tax imposed;and Whereas,the properties listed in each of the attached"Request for Property Tax Refund/ReleW has been taxed and the tax has been collected:and Whereas,as to each of the properties listed in the Request for Property Tax Rdund/Release,the taxpayer has timely applied in writing for a refund of the tax imposed but has not presented a valid defense to the tax imposed as indicated on the Request for Property Tax Refund/Release. NOW,THEREFORE,IT IS RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF ORANGE COUNTY THAT the presented property tax refunds)and release(s)are denied Upon motion My.made and seconded,the foregoing resolution was passed by the following votes: Ayes: Commissioners Noes: I,Donna Baker,Clerk to the Board of Commissioners for the County of Orange,North Carolina, DO HEREBY CERTIFY that the foregoing has been carefully copied from the recorded minutes of the Board of Commissioners for said County at a regular meeting of said Board held on said record having been made in the Minute Book of the minutes of said Board, and is a true dopy of so much of said proceedings of said Board as relates in any way to the passage of the resolution described in said proceedings. WITNESS my hand and the corporate seal of said County,this day of 2010. Clerk to the Board of Commissioners yam; 17q' Julian R. Marsall 3826 Riders Trail Hillsborough,N.C. 27278 Ms.Judy Ryan Deputy Assessor Orange County 200 S.Cameron Street Hillsborough,N.C. 27278 May 11,2009 Reference Tract#601272 Dear Ms. Ryan, On Monday, May 4, I contacted my mortgage lender in order to refinance the loan on my home. To complete the process he sent an appraiser to verify that the size, condition,etc.of my house was i correct. The lender's appraiser arrived on Thursday, May 7. She told me that she had begun her appraisal process by examining the records in the Orange County tax office. Her research on my home revealed that the tax office had incorrectly identified the area over my garage as finished, habitable space. I visited the Orange County offices in the Gateway center on Friday, May 8, and spoke to Brad. He verified what the appraiser had told me, in that the space over the garage was indicated in county records as livable and would have someone verify the condition of the space. Today, Monday, May 11, Mr. Ray Jordan, a county real estate appraiser, visited my home, examined the space and found it to be unfinished, storage space. He indicated that he would be updatingtrevising the plans to my house in the next several days. To be specific, I have been billed for the last eight years for 3094 square feet when the currently verified amount is 2470 square feet. I am requesting that you, as Orange County's representative in assessing the appraised value of property, to do two things: First , correct the reappraised value of my home that is used for assessment purposes so that I will be taxed on the appropriate value of my home in the current and future years. Second,provide me w� tlif the property taxes that I overpaid in since 2002 based on the incorrect valuation of my home:`' .:LL In closing,I want to commend the Orange County Tax Office personnel that I have spoke with as being especially polite,respectful and helpful. Their promptness in checking this out and assistance in getting the proper adjustments made has been very much appreciated. If you would like to discuss this matter with me I will be happy to meet with you or discuss it with you over the phone- 929-5706. Sincerely, J t an R Mars 1rJr. 5 f ORANGE COUNTY Office of the County P.O.BOX 8181 rr R Attorney 200 S.CAMERON STREET HILLSBOROUGH,NC 27278 �. 1Cacet��e MEMORANDUM TO: Jo Roberson,Tax Administrator John Smith,Tax Assd sor FROM: Annette M.Moor At ney RE: 2009 Refund Requests DATE: December 4,2009 This memorandum is in response to your request that the County Attorney's Office provide a legal review of the nine requests for a refunds of a portion of the tax levied on taxpayer's property under'N.C. Gen. Stat. § 105-381(a)(3). The taxpayers requesting such a refund must assert in a written statement a valid defense to the enforcement of the collection of the tax assessed on their property. The General Statutes provides"valid defenses"to the collection of taxes are: • A tax imposed through clerical error; • An illegal tax; A tax levied for an illegal purpose.t Case law has fltrther defined what constitutes a valid defense under one of time categories. The term "clerical error"applies to transcription errors;mistakes in the writing or copying that are unintended but ordinarily apparent on the face of the instrument. The Court further found that even if a statement is in error, it is an error of"judgment or law"are not a clerical error under N.C. Gen, Star § 105-381. An Illegal or invalid tax occurs when a taxing body imposes a tax without authority in cases such as: taxing property that is legally entitled to an exemption;taxing property that is not within the jurisdictions taxing authority or taxing property twice.2 A tax levied for some reason other than a public purpose is taxing for an illegal purpose s The defenses listed above are the only valid defenses to the collection of tax assessed on a taxpayer's property provided by the North Carolina General Statutes.a The Board of County Commissioners "is prohibited from releasing, refunding or compromising all or any portion of the taxes levied against any N.C.Gen.Slat. §105-381(1) i Donning,Shoa Riggsbee and Wagner,Gary A.,County and Municipal Government in North Carolina,Atticie id,The Property lax,University of North Carolina at Chapol Hill,School of Governrnont 2007p.26 See also Redavolopment Comrnissiorr Y.Guilford County,274 N.C.585,589, 164 S.R.2d 476,479(1968). 3!d 4 N.C.Gen.Slat.§ 105-381(1) • 6 property witlun its jurisdiction"except when the taxpayer has asserted a valid defense to the collection of taxes.5 And in fact, as you are aware, the statute provides that if the Board authorizes release, refund or compromise of a tax that the taxpayer's does not have a valid defense to, any member or members of the governing body who voted for the release,refund or compromise may themselves have to pay the tax 6 I have reviewed the taxpayer's request for a refund of property taxes. Based upon the Information you provided, I concur with your recommendation that the following taxpayers have not asserted a valid defense to the enforcement of the collection of the tax assessed on their property: 1. TMBL: 6.7..49C Owner: Timothy Herter t/ Refund Rec uest: Taxpayer is requesting a refund because his existing basement was taxed as finished and his basement is not finished. The basement does exist and has not been taxed twice. This does not constitute a clerical error,an illegal tax or a tax for an illegal purpose. 2. TMBL: 6.20.39 Owner: Julian Marshall l/ Refund Request: Taxpayer is requesting a refund because the area above his garage was taxed as finished and the area is not finished. The area above the garage does in fact exist and has not been taxed twice. This does not constitute a clerical error,an illegal tax or a tax for an illegal purpose. 3. TMBL: 7.52..223 Owner: Marc Roth Refund d Request: Taxpayer is requesting a reftind because his existing basement was taxed as finished and his basement is not finished. The basement does exist and has not been taxed twice. This does not constitute a clerical error,an illegal tax or a tax for an illegal purpose. 4. TMBL: 7.108 40J Owner: Marc Fritz v-"^- Refund Request: Taxpayer is requesting a refund because Isis existing basement was taxed as finished and his basement is not finished, The basement does exist and has not been taxed twice. This does not constitute a clerical error,an illegal tax or a tax for an illegal purpose. 5. TMBL: 7,109F..38 / Owner: Laura and Martin Brooks Refund Rcguegt: Taxpayer is requesting a refund because there was an overestimation of square footage on the second floor of his property. The second floor does In fact exist and has not been taxed twice. This does not constitute a clerical error,an illegal tax or a tax for an illegal purpose. 6. TMBL: 7.122F..4 Owner: Steve Freedman s N.C.Gvn,Slat.§105-380(c) 6 N.C.Gen.3tat.§ 105-380(c) Page 2of3 7 Refund Request: Taxpayer is requesting a refiind because the area above his garage was taxed as finished and only are small area is finished. The area above the garage does in fact exist and has not been taxed twice. This does not constitute a clerical error,an illegal tax or a tax for an illegal purpose. Based on the infoirnation you provided one on the following requests for refund, I concur with your recommendation that the following taxpayers have asserted a valid defense to the enforcement of the collection of the tax assessed on their property: 1. TMBL: 7.126.D.33 Owner: William Stoneeypher Refyind Request; Taxpayer is requesting a refund for an, overestimation of square footage Involving the second and third floor. The existing'third floor is finished and being taxed for a larger square footage than actually exists. The third floor actually exists and is not been taxed twice.This is not a clerical error,an illegal tax or a tax for an illegal purpose. Two areas are taxed as two stories when the areas are actually one story(the second stay does not exist). This would constitute an illegal tax because the second story area does not exist. 2. TMBL: 7,109M..79 Owner: Jocelyn Leigh Refund Request: Taxpayer is requesting a refund for an existing third floor taxed as finished but it is not finished. The third floor does exist and is not taxed twice. This is not a clerical error, an illegal tax or a tax for an illegal purpose. The taxpayer was also taxed for a fourth floor that does not exist. The fourth floor does not exist and would constitute an illegal tax. 3. TMBL: 7.126K..I Owner: Duddles Trust Refund Re uest: The taxpayer is requesting a refund of a second floor area that was taxed as an entire second floor but which the majority of the floor is only one story. The majority of the area taxed does not exist and this could be considered an illegal tax. Please let me know if you have any additional question. Page 3 of 3 ........... ?7' e3 —e 2M ,7-411 All LAO' -:z pw/l/ kill ---------- 616 V 71-7 9 u u <<1 lac ORANGE COUNTY TAX OFFICE 228 SOUTH CHURTON STREET P.O.BOX 8181 HILLSBOROUGH,NORTH CAROLINA 27278 TELEPHONE (919)245-2100,FAX 644-3091 February 1, 2010 Julian R Marshall Jr. 3826 Riders Trail Hillsborough,NC 27278 RE: Tract#601272 Refund Request Dear Mr.Marshall: This letter is in reference to your correspondence dated May 11,2009 requesting a refund of taxes paid for the 2009 and prior tax years. North Carolina General Statute 105-381 allows for the refund of taxes under very limited circumstances. Since receiving your refund request we have tried to find a way to legally honor your request. We keep ending up at the same conclusion that this situation falls under a category that statutorily is not refundable. Instead,the proper step is to make the correction for the current tax year and future years. In accord with these conclusions,I am enclosing a copy of your 2010 property record card to assist you in determining that you are properly taxed now. Please review the property record card and let me know if there are any further changes or questions. If it would be helpful,I will be glad to have an appraiser meet with you at your home to go over everything and make certain everything is correct. We always endeavor to find a way to make refunds. Sometimes we are not successful. Refunds have to be approved by the Board of County Commissioners. If the commissioners were to make a refund not authorized by the statutes those commissioners individually become personally liable for those improperly refunded funds. Due to this liability we are always careful and diligent in determining the legality of each refund request. 10 On the basis of our findings, a refund is not authorized under NC GS 105-38 land could not be recommended to the county commissioners for approval. However,you do have until March 31,2010 to informally appeal the 2010 valuation as indicated on the enclosed property record card. If you wish to appeal you should make written request to the Orange County Revaluation Team,PO Box 8181,Hillsborough,NC 27278. If I can provide any further explanation or assistance of any kind,please do not hesitate to call. Sincerely, Judy Ryan Deputy Assessor