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HomeMy WebLinkAboutAgenda - 01-23-2018 8-e - Property Tax Refund Request – 107 Boulder Lane, Chapel HillORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: January 23, 2018 SUBJECT: Property Tax Refund DEPARTMENT: Tax Administration ATTACHMENT(S): Memorandum NC General Statute 105 -381 uest — 107 Boulder Lane. Ch Action Agenda Item No. 8 -e Hill INFORMATION CONTACT: Dwane Brinson, Tax Administrator, (919) 245 -2726 1 PURPOSE: To consider a refund request for the property owned by Ms. Doris Tippens at 107 Boulder Lane, Chapel Hill. BACKGROUND: In 2016 it was discovered that the exterior measurements for 107 Boulder Lane, Chapel Hill were recorded incorrectly many years ago. Upon the discovery, tax office records were corrected for the 2017 tax year and forward. The Tax Administrator and County Attorney view this as a clerical error, and advised the taxpayer that a refund of five years could be recommended to the Board of County Commissioners (BOCC). Mr. Tom ODwyer, Power of Attorney for Ms. Tippens, has requested that all affected years (dating back to the 2005 purchase) be refunded in addition to interest. The Tax Administrator and County Attorney have expressed to Mr. ODwyer that such a request is not supported by State law. On September 5, 2017, Mr. ODwyer addressed the BOCC and provided an analysis showing the contended amount of revenue Ms. Tippens would lose as a result of processing the refund for only five years. Staff believes this analysis may be flawed in that it assumes the increase in value from 2008 to 2009 was the result of the square footage error. However, the value increase was actually due to the 2009 revaluation as the square footage error existed many years prior. FINANCIAL IMPACT: Staff has calculated a total recommended refund amount of $1,678.89 for the five year period. SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board approve a statutorily - supported refund for tax years 2012, 2013, 2014, 2015 and 2016. �i ORANGE COUNTY TAX ADMINISTRATION 228 S CHURTON STREET, SUITE 200, PO BOX 8181 HILLSBOROUGH, NORTH CAROLINA 27278 Telephone (919) 245 -2725 Fax (919) 644 -3332 T. Dwane Brinson, Director Memorandum To: Orange County Board of Commissioners Cc: Bonnie Hammersley, County Manager John Roberts, County Attorney From: Dwane Brinson, Tax Administrator Date: January 5, 2018 Re: Property Tax Refund —107 Boulder Lane, Chapel Hill On September 5, 2017 Mr. Tom ODwyer, Power of Attorney for Ms. Doris Tippens, addressed the Board of County Commissioners (BOCC). Mr. ODwyer requested that the BOCC provide full restitution by approving a refund of property taxes for tax years 2006 -2016. During this period of time the property at 107 Boulder Lane, Chapel Hill was assessed with an inaccurate square footage due to a transcription error of an exterior measurement. This memorandum provides the BOCC with summary case details as well as a refund analysis. Clerical Error North Carolina General Statute 105 -381 provides that a refund may be issued for any of three reasons: (1) a tax imposed through clerical error, (2) an illegal tax and (3) a tax levied for an illegal purpose. Case notes supplement the statute and provide additional details as to what may fall into each of the three categories. The property at 107 Boulder Lane had an exterior measurement that appears to have been transcribed incorrectly: a wall length of 28 feet instead of 20 feet was recorded. This resulted in an inaccurate square footage calculation of 1,784 instead of the 1,336 correct square footage calculation. Transcription errors qualify as a clerical error. As such, a refund of up to five years may be approved. 3 A refund of greater than five years is not supported by State property tax law. Rather, case notes of the statute go on to clarify by stating (summarized): The demand for return of taxes must be made within the prescribed time after payment (5 years), and it was held that the statute applied to all taxes, that the remedy provided was exclusive, and that a failure to make demand within the time prescribed was fatal to the right to maintain an action to recover the taxes. The requirement of making a demand within the prescribed time is mandatory. Refund Analysis For the statutorily- affected tax years of 2012 -2016, the tax assessment for 107 Boulder Lane would have been $237,300 instead of $258,413 had the property record reflected the more accurate 1,336 square feet instead of 1,784 square feet. Applying the corresponding tax rates for each year and each jurisdiction, this results in a 5 -year refund amount of $1,678.89. Figure 1: Tax Office Analysis below shows this illustration. Figure 1: Tax Office Analysis Doris Tippens's property tax Overcharge analysis for 107 Boulder Lane Schedule Tax Year Assessed Value Corrected Value Difference Tax Rate Difference Refund Due 2016 $ 258,413 $ 23 7, 300 21,113 0.016104 21,113 340.00 2015 $ 258,413 $ 23 7, 300 $ 21,113 0.016104 21,113 340.00 2014 340.40 2-.58,413 $ 237,300 $ 21,113 0.016104 $ 340.00 2013 $ 258,413 $ 23 7, 300 $ 21,113 0.015804 5 333.67 2012 $ 258,413 $ 23 7, 300 $ 21,113 0.015404 $ 325.22 $ 325.22 2011 $ 258,413 $ 23 7, 300 $ 5 1,678.89 Figure 2 below provides an expanded analysis showing the difference in billed amount for tax years 2006 -2016, which includes all tax years the property has been owned by Ms. Doris Tippens. The difference between the recommended refund of five years and the taxpayer's request of full restituation is $1,755.58. Figure 2: Tax Office Analysis - Expanded ❑orisTippens's prupertytax Overcharge analysis for 107 Boulder Lane Schedule Tax Year Assessed Value Corrected Value Difference Tax Rate Refund Due 2015 258,413 2-37,300 $ 21,113 4.015144 $ 340.40 2015 $ 2.58,413 $ 237,300 $ 21,113 0.016104 $ 340.40 2014 258,413 $ 23 7, 300 $ 21,113 0.015104 $ 340.00 2013 $ 258,413 $ 237,300 $ 21,113 4.01 -5844 $ 333.57 2012 $ 258,413 $ 237,300 $ 21,113 0.015404 $ 325.22 2011 $ 258,413 $ 23 7, 300 $ 21,113 0.01.5404 $ 325.22 2010 $ 258,413 $ 23 7, 300 $ 21,113 0.015404 $ 325.22 2009 $ 258,413 $ 2-37,300 21,113 0.015404 $ 3 25.22 2008 $ 191,041 $ 175,743 15,29 ^9 0.01809 $ 276.74 2007 $ 191,041 $ 175,743 $ 15,29.8 0.016755 $ 256.32 2005 $ 191,041 $ 175,743 $ 15,298 0.015135 $ 245.83 3,434.47 C! The taxpayer analysis, as provided to the BOCC on September 5, 2017, provides different numbers. It is assumed in said analysis that the increase from 2008 to 2009 was the result of the clerical error. This is shown by the illustated correct value of $191,041 in 2008, and further confirmed in conversation with Mr. ODwyer. However, the increase was due to the 2009 countywide revaluation as the clerical error existed many years prior. Figure 3: Taxpayer Analysis IDwisTippens's property tax Overcharge analysis for 107 Boulder Lane Schedule Tax Year Status Tax Value Charged Approximate Overcharge' 3.% interest S% interest Orange County's 10% interest 2017 Correct 237,6CC.CC 3901.32 2016 Error 258,413.00 4346.93 732.00 756.15 790.55 869:62 2015 Error 258,413.00 4346.93 732.00 776.58 853.80 939.19 2014 Error 258,413.00 4342.73 687.80 751.58 866.43 953.07 2013 Error 258,413.00 4272.95 658.02 740.51 895.23 984.75 2612 Error 258,413.01) 4157.59 542.66 629.09 797.35 877.08 2011 Error 258,413.01) 4152.59 537.66 641.99 853.20 938.52 2010 Error 258,413.01) 4147.59 532.66 655.10 912.89 1,01)4.17 21)09 Error 258,413.00 4147.59 532.66 674.75 985.92 1,084.51 2909 Correct 191,041,00 3614.93 -c _a I's bused on 0%/ 3 %/ 8%/ 10% 4,955.46 5,625.87 6,955.37 7,650.91 Total amount Staff offered on 4/6/17 1,678.89 1,678.89 1,678.89 1,678.89 Even if it was 5 years maximum 3,352.48 3,654.01 4,203.37 4,623.71 Tax rates wouid need to be reconciled to each year by staff. Estimated }/- 196 variance Conclusion North Carolina law allows for a refund of up to five years in the result of a clerical error. The transcription error on the property located at 107 Boulder Lane, Chapel Hill qualifies as a clerical error. A refund of principal tax for only five years including tax years 2012, 2013, 2014, 2015 and 2016 can be recommended to the BOCC. The total recommended refund amount of $1,678.89 can be found above in Figure 1: Tax Office Analysis.