dor-gaao district meeting

Georgia Department of Revenue

DOR-GAAODistrict Meeting

FLPA Audits

Currently, over 4-million acres in Georgia are entered in the Forest Land Conservation Use special assessment program

Reimbursement Grants are issued by the state to the local jurisdictions to offset potential tax shifts associated with this

special assessment program

2009 $10.5 million2010 $14.0 million2011 $17.7 million2012 $22.6 million2013 $27.8 million

FLPA Reimbursement Grant works like this….

If property entered into this program causes an ad valorem tax revenue reduction in a jurisdiction; the state will pay assistance grants to such jurisdiction as follows:

– 50% of the first 3% of revenue reduction– 100% of the amount of revenue reduction

over 3%4

Audit ProcessAudit Findings

DOR has developed and initiated an audit program to ensure proper

distribution of grant funds

FLPA Audit Process

Beginning in February 2012, DOR agents visited counties and obtained 2008 thru 2013 data files

– Spreadsheets were created from the data and several relevant tabs were established …..

Microsoft Excel 97-2003 Worksheet

Audit Finding #1:

Failure to record FLPA covenants in county deed records

O.C.G.A. 48-5-7.7 (j) (1) The FLPA statute requires that the approved covenant be filed/recorded with clerk of the superior court in the county in which the eligible property is located.• Agents will be checking for recordings• A copy of the recorded covenants may be required at Digest

Submission

O.C.G.A. 48-5-7.7 (j) (1) If the covenant is not so recorded in the real property records, a transferee of the property affected shall not be bound by the covenant or subject to any penalty for its breach.

Reg. 560-11-11-.06(a)(2)The QFLP Covenant and benefits derived therefrom shall not extend to any portion of the tract for which the QFLP Covenant has not yet been signed and recorded in that county’s real property index.

Audit Finding #2:Failure to accurately calculate 2008 Base Value (F-code) as a result of splits or combinations that changed the parcels as they existed on the 2008 digest.

Counties must go back to 2008 and calculate the 2008 base value using 2008 base value-per-acre.

BOA must track ‘3’ separate values for properties entered in FLPA covenants

1. Fair Market Value (J-code on digest)• True-Blue old fashioned FMV (three value approaches)

2. Forest Land Conservation Use Value (FLCUV)• Woodland values (DOR Table of Value Regulations)

3. Forest Land Fair Market Value (F-code on digest)• 2008 FMV (adjusted by economic indicator)

Forest Land Fair Market Valueaka…F-Codeaka…2008 Base Value

…used ‘only’ in the calculation of the Reimbursement Grants issued to the local jurisdictions

…does not directly affect the property owner’s assessment or tax bill

…and this is the value referred to in Audit Finding #2 which is often incorrectly calculated

First…the difference between the Forest Land Fair Market Value (F-code) and the Forest Land Conservation Use Value (FLCUV) is calculated:

2008 Base Value + economic indicator (F-Code on the Digest) − Current Use Woodland Value from DOR Table of Values regulation = Total Digest Value Loss due to FLPA

Then … the ‘Total Digest Value Loss due to FLPA’ is compared to the Net Digest absent FLPA to establish the 3% threshold…

To determine the Revenue Reduction attributable to FLPA….

Agents must verify “F” values (2008 Base Value) including the associated index adjustments

Let’s look at a few examples….

“F” value example #11,000 ac parcel in 2008; entered in FLPA in 2009

– $1,991,200 value for 2008 digest after appeal

– 2008BaseValue would be $1,991,200 for 2009 Covenant

“F” value example #2Parcel 047-058 in 2008 included 406.77 acres• $2,496,300 / 406.77= 6,137 per acre in 2008Split for 2009 to 348.28 acres and applied for FLPA• 2008Base Value for 2009 covenant

– 348.28 acres * $6,137= $2,137,394 2008BaseValue

“F” value example #3Property entered in FLPA Covenant in 2009 included three contiguous parcels for 2008; which were combined into one tract for 2009

• 047-100 (20 acres) (2008 value = $50,000)• 047-101 (100 acres) (2008 value = $100,000)• 047-102 (100 acres) (2008 value = $100,000)

2008 base value would be $250,000 for newly combined 220 acre property covenanted in 2009

“F” value example #4210 acres entered in 2009 FLPA Covenant included three contiguous 2008 parcels that were combined for 2009. Prior to entering the FLPA covenant, the taxpayer sold 10 acres.

– 047-100 (20 acres) (2008 value = $50,000)– 047-101 (100 acres) (2008 value = $100,000)– 047-102 (100 acres) (2008 value = $100,000)

2008 base value equals $238,560 for the 210 acre tract.

$250,000 / 220 acres = 1136 per acre210 acres * 1136 per acre = $238,560

“F” value example #5Property entered in 2009 FLPA covenant included three separate contiguous parcels in 2008 which were entered in one covenant but were maintained as separate tracts in tax records.(shown as 3 separate parcels with the same FLAPPNUM)

• 047-100 (20 acres) (2008 $50,000) 2009-147-000009• 047-101 (100 acres) (2008 $100,000) 2009-147-000009• 047-102 (100 acres) (2008 $100,000) 2009-147-000009

If covenanted as separate parcels in one FLPA Covenant then the 2008 base value would be the corresponding value for each parcel from 2008 digest.

Audit Finding #3:Failure to accurately apply the ‘US economic index’ to the 2008 Base Value; including:

Failure to applyFailure to obtain BOA approval Failure to uniformly apply index to all parcels in a year

Such 2008 valuation (Forest Land Fair Market Value) may increase from one taxable year to the next by a rate equal to the percentage change in the price index for gross output of state and local government from the prior year to the current year as defined by the US Bureau of Economic Analysis and indicated by the Price Index for Government Consumption Expenditures and General Government Gross Output (Table 3.10.4)

DOR annually publishes the index referenced in statute as the “US Bureau of Economic Analysis and indicated by the Price Index for Government Consumption Expenditures and General Government Gross Output (Table 3.10.4)”

2009 Index ……….. none2010 Index ……….. 0.9992011 Index ……….. 1.0262012 Index ……….. 1.0632013 Index ……….. 1.0852014 Index ……….. 1.085

Audit Finding #4:Failure to delineate each soil type for each parcel when establishing the FLPA Current Use Value and instead, in some cases, basing such value on the predominate soil productivity

Agents are verifying the process the county uses to assign soil productivity and instructing the counties to follow GA law and regulations

Forest Land Conservation Use Values

48-5-271. Table of values for conservation use value of forest land.

(a) The commissioner shall promulgate and county tax officials shall follow uniform rules and regulations establishing a table of values for the conservation use value of forest land conservation use property. Such values shall be the same as provided for forest land values under Code Section 48-5-269.

All FLPA covenants use value should be applied based on the soil productivity for Woodland class soils.

Audit Finding #5: Failure to use the Woodland Productivity rating for ALL land in FLPA covenants

Soil Cnty Soil Soil Agric Wood TYPE No Composition Description Prod Prod

CoB COWARTS LOAMY SAND, 2 TO 5 5 2

Cob CHEWACLA 4 2

CoB 010 CARNEGIE SANDY LOAM, 2 TO 5 5 2CoB 023 CONASAUGA SILT LOAM, 1 TO 6 6 7CoB 086 CARNEGIE SANDY LOAM, 2 TO 5 5 2

Conservation Use Soil Conversion Table

What does 48-5-271 tell us?Commissioner has promulgated regs establishing table of values

Such values shall be the same as provided for forest land in 48-5-269

Table of values limited to 3% change per year28

Failure to adhere to the 3% limit on increases for Forest Land Conservation Use values from one year to the next; including failure to apply new table of values for the year; and failure to ignore the 3% limit when a split occurs to the property.

Audit Finding #6:

Forest Land Conservation Use ValuesFLPA Use values for 2012 should have only increased 3% from the 2009, 2010, and 2011 Moratorium Use Value.

FLPA Use Values are compared for each digest year and to see if Moratorium was held on Use values for 2009, 2010, 2011.

Agents compare the FLPA table of values to the Soil Productivities used by the counties

FLPA Audit ProcessAgents request the Chief Appraiser sign an audit document upon completion of such audit in order to attest the process was performed by the county to the best of their knowledge.

I, the undersigned, do hereby attest my answers contained and presented to this properly identified and authorized agent of the Department of Revenue, empowered by O.C.G.A. 48-2-1, to be true and correct to the best of my knowledge.

FLPA Audits Progress

Currently, Field Agents have performed FLPA audits for 2009, 2010, and 2011 in approximately 65 counties.

Tax year 2012 and 2013 FLPA Audits have been performed in approximately 5 counties.

DOR Auditors RoleDOR field agents upload the final audit documents for DOR auditors to recalculate reimbursement grants

Adobe Acrobat Document

1. Applications must be filed on or before the last day for filing tax appeals or at any time while such appeal is pending

2. New owner cannot apply during the year of purchase3. Excludes any residence and up to 2 acres4. Excludes the value of any improvement5. Includes ONLY LAND; all of which is categorized as woodland6. Subsequently acquired contiguous acres may be added to the

original covenant (must be less than 200 ac)

Other FLPA audit observations

CUVA/FLPARegistry

Statewide Covenant RegistryBona Fide Agricultural Conservation Use Covenants (48-5-7.4)

Forest Land Conservation Use Covenants (48-5-7.7)

Statutory Requirements

Registry assists the county in measuring acreage limitaiton for conservation use (48-5-7.4)

– Each owner of conservation use is allowed up to 2000 acres in conservation use statewide

(FLPA has no acre limitations)37

Covenant Registry• Standardized layout for all 159 counties.• Data must be included with annual Digest

Submission• DOR emailed each county an addendum to

the 2014 digest submission package alerting you of this requirement – we didn’t want you to submit it then – submit with digest

Covenant Registry• Data layouts in 2013 had some inconsistency

(some asked for Class/Strat and shouldn’t have) … layouts made uniform for 2014

• Data submitted by county is presented in registry as-is (no edits other than removal of commas in names and addresses and multiple owner fields)

Covenant Registry• County Name• Digest Year• Parcel Number• Total Acres• Covenant Acres• Lastname• Firstname• Middle

• Address1• Address2• Address3• City• State• Zip• Multiple Owners• CCY• FLCY

Covenant Registry

The impact and usefulness of the registry will be greatly enhanced when the county takes the extra step to include the owner names and percentage ownership in each covenant where owned by multiple owners.

Covenant Registry• Some CAMA systems do not separate names into

three columns (Last, First, Middle), in those instances, the entire name will be found in the LASTNAME column

• Some CAMA systems contain commas (they should not per USPS regulations), those have been removed from the registry

• File is too large to email, must be downloaded

Covenant Registry• Full Version (confidential)

– http://www.wingap.net/– Links Page– Password protected

Some of the multiple owner columns appear to be pulled from CAMA comment fields, some include DOB and SSN information – therefore data should remain strictly confidential

Covenant Registry

Searching and FiltersClick the Arrow beside a column name to reveal filter options

Sample is LASTNAME

Searching and FiltersSelect TEXT FILTERS

Searching and Filters• Select CONTAINS• Enter desired text: SAYER

Details• 181,341 total rows• Covenants represent 18,230,897.14 acres

Sample Queries• Query for all CUV covenants that began in

2012 in Cobb, Gwinnett, or Fulton County• Query for all CUV covenants owned by people

with “Lee Michael” in their names• Query for all covenants less than 3 acres• Query for conservation use covenants larger

than 2000 acres

HB463IRP Distribution

What is IRP?The International Registration Plan is a special agreement between member-states for registering vehicles that must travel between two (2) or more member-states.

In the past, ad valorem tax was paid directly to the GA county where the vehicle was based; and once paid, the owner could make application to DOR to obtain multi-state registration.

Now there’s a one-stop-shop…..

Amended the way in which IRP vehicles are assessed and taxed for ad valorem purpose;

The vehicle owner pays an ALTERNATIVE tax to DOR and obtains the multi-state registration at the same time

DOR will distribute the ALTERNATIVE ad valorem tax based on the percentage of tax collected by each taxing authority as compared to statewide total.

HB463 – passed in 2013 session

How does that affect the digest?

Since the net digest of each jurisdiction is the basis for distribution of the tax…..

….assessors and tax commissioners must take special care to produce city tax digest consolidation sheets…with accurate homestead and freeport exemption amounts applicable to CITY EXEMPTIONS.

1938: ‘S1’ Homestead Act of 1937: $2,0001957: ‘S5’ and ‘SD’ Disabled veteran homestead exemption1964: ‘S4’ Elderly homestead age 65 $4,0001967: Assessment level 40%1972: Rev Commissioner to factor digests; BOE created 1974: ‘S3’ Elderly homestead age 62 $10,0001983: Current GA Constitution1989: Factoring eliminated…new digest review provisions1992: Three-year digest review cycle1994: ‘SS’ and ‘SE’ Surviving Spouse of Service member homestead1995: ‘S6’ Floating Homestead age 62 $30,0002006: ‘SC’ Elderly age 65 total state homestead2006: ‘SG’ Surviving spouse of peace officer homestead

State Homestead….which ones apply to cities?

Local CITY Homestead ExemptionObtain copy of house bill detailing qualifications and exemption amount

GA Const. Article VII. Section II. Paragraph II.Exemptions from taxation of property … (2) Homestead exemptions from ad valorem taxation levied by local taxing jurisdictions may be granted by local law conditioned upon approval by a majority of the qualified electors residing within the limits of the local taxing jurisdiction voting in a referendum thereon….

GA Const. Article VII. Section II. Paragraph III.Exemptions which may be authorized locally …(a) (1) The governing authority of any county or municipality, subject to the approval of a majority of the qualified electors of such political subdivision voting in a referendum thereon, may exempt from ad valorem taxation, including all such taxation levied for educational purposes and for state purposes, inventories of goods in the process of manufacture or production, and inventories of finished goods….

CITY Freeport Exemption Obtain copy of city referendum & resolution setting percentage of exemption

Georgia Department of RevenueG E O R G I A 'S F R E E P O R T S T A T U S

RATIFIED STATE *CLASSES OF AMOUNT OFCOUNTY/CITY FREEPORT ACT INVENTORY EXEMPTION Appling Co. 11-7-78 1 and 2 100%

11-4-86 class 3 100% Baxley 11-6-90 all 100% Atkinson Co. 11-6-01 all no decision Pearson 11-7-78 all 100% Willacoochee 11-7-78 all 100% Bacon Co. 11-7-78 all 100% Alma 11-7-78 all 100% Baldwin Co. 9-21-77 all 100% Milledgeville 9-21-77 all 100% Banks Co. 11-6-84 all 100% Barrow Co. 11-2-93 all 100% Auburn 11-2-93 all 100% Statham 11-2-93 all 100% Winder 11-7-78 all 100%

• Many tax commissioners do not collect for their cities so the information regarding exemptions is not readily available

• Cities may have different timelines for finalizing their tax bills

Issues:

Refunds due to appeal resolution

House Bill 755Revises paragraph O.C.G.A. 48-5-311(m) & adds new subparagraph (1) & changes title from Refunds to Interest: (line 164)

– If final value is reduced requires refund to be paid within 60 days within final determination of value

– Includes interest from latter of November 15th or due date – or 60 days from final determination whichever is earlier

• Maximum interest - $150.00 for homestead • Maximum interest - $5,000 for non-homestead

House Bill 755

– If Refund paid later than 60 days – Interest is calculated at 1% per month (48-5-35) – No limit on this interest

• Refund and interest paid by taxing jurisdictions in proportion to taxes collected.

House Bill 755Revises paragraph O.C.G.A. 48-5-311(m) & adds new subparagraph (2) (line 185)

– Appeal increases amount of tax due – 15 days to send new tax bill

• Interest due calculated from latter of November 15th or due date

OR • 15 days from final determination whichever is earlier

– Maximum Interest $150 for homestead, $5,000 for non-homestead property

House Bill 755– Additional Tax Due:

• 60 days to pay adjusted bill + interest• After 60 days apply delinquent interest

House Bill 755Section 5 amends the Refund Statute –

O.C.G.A. § 48-5-380 – Adds new paragraph (a.1)

• to require county or city to reimburse property owner– Add language that a taxpayer who alleges that a tax was

collected illegally or erroneously may request a refund – Submitting a request for refund not a prerequisite to

bringing suit

House Bill 755– Changes refund limitation from 1 year to:

• Suit may be filed at the earlier of the date the request is denied or the expiration of 90 days from date of filing the claim

• Taxpayer may skip the refund request and proceed directly to filing suit

– Subparagraph (f) allows 5 years from date taxes were paid for a taxpayer to file suit

House Bill 755Effective date of July 1, 2014

Appeal Final - Refund Due to TaxpayerRefund interest calculated from latter of 11/15 or Final due date

EXAMPLE #1:12/20/13 Due for 2013 taxes5/20/14 Final determination of valueInterest due from 12/20/2013 through 5/20/2014equals 5% interest due on overpayment

EXAMPLE 1: Refund Due to Taxpayer if Homestead Property

$1,000 Refund due $ 50 Interest due (5% = $50; $150 Cap)$1,050 Total Due*

*If paid within 60 days of final determination

EXAMPLE 1: Refund Due to Taxpayer if NON-homestead Property

$1,000 Refund due $ 50 Interest due (5% = $50; $5,000 Cap)$1,050 Total Due*

Appeal Final - Refund Due to TaxpayerRefund interest calculated from latter of 11/15 or Final due date

EXAMPLE #2:11/1/13 Due date for 2013 taxes 5/20/14 Final determination of valueInterest due 11/15/2013 through 5/20/2014equals 7% interest due

$100,000 Refund due $ 150 Interest due (7% = $7,000; $150 Cap)$100,150 Total Due*

$100,000 Refund due $ 5,000 Interest due (7%=$7,000;$5,000 Cap)

$105,000 Total refund due*

Appeal Final – Refund Due to TaxpayerRefund interest calculation from latter of 11/15 or Final due

EXAMPLE #3:11/01/13 Due date for 2013 taxes 5/20/14 Final determination of value5/20/15 Refund Paid (failed to pay within 60 days)

Appeal interest due 11/15/2013 through 5/20/2014 equals 7%Additional interest due 7/20/14 through 5/20/2015 equals 10%

$100,000 Refund due $ 150 Interest due (7% = $7,000; $150 Cap)$ 10,000 Additional Interest due (10%)$110,150 Total Refund Due*

*no interest cap on 60-day provision

$100,000 Refund due $ 5,000 Interest due (7%=$7,000;$5,000 Cap)

$ 10,000 Additional Interest due (10%)$115,000 Total Refund Due*

* no interest cap on 60-day provision

Now…lets review interest calculations when the appeal is final and the taxpayer owes additional tax….

Appeal Final –Taxpayer owes Additional TaxInterest due from earlier of 11/15 or Final due date or 15 days from final determination

EXAMPLE #4:12/20/14 Due date for 2014 taxes 5/20/15 Final determination of value

Interest due 11/15/2014 through 5/20/2015 equals 7% interest due

*Taxpayer has 60 days from mailing date to pay additional tax due plus interest

EXAMPLE 4: Taxpayer Owes Additional Tax on Homestead Property

$ 5,000 Refund due $ 150 Interest due (7% = $350; $150 Cap)$ 1,150 Total Refund Due*

*If paid within 60 days of final billing

EXAMPLE 4: Taxpayer Owes Additional Tax on NON-homestead Property

$ 5,000 Refund due $ 350 Interest due (7% = $350; $5000 Cap)$ 1,350 Total Refund Due*

*If paid within 60 days of final billing

Appeal Final –Taxpayer owes Additional Tax (delinquent)

Interest due from earlier of 11/15 or Final due date or 15 days from final determination

EXAMPLE #5:12/20/14 Due date for 2014 taxes 5/20/15 Final determination of value10/1/15 Additional tax paidAppeal Interest due 11/15/14 -- 5/1/15 = 7%*Taxpayer has 60 days from mailing date to pay additional tax due plus appeal interest

Delinquent Interest due 7/1/15 -- 1/1/16 = 6%

EXAMPLE 5: Taxpayer Owes Additional Tax on Homestead Property (delinquent)

$ 5,000 Refund due $ 150 Appeal Interest due (7% = $350; $150 Cap)$ 300 Delinquent Interest (6% = $300)$ 500 Delinquent penalty (10% after 90 days)$ 5,950 Total additional tax due

* no interest cap on 60-days to pay + there’s a 10% penalty after 90 days

EXAMPLE 5: Taxpayer Owes Additional Tax on NON-homestead Property (delinquent)

$ 5,000 Refund due $ 350 Appeal Interest due (7% = $350; $5000 cap)$ 300 Delinquent Interest (6% = $300; no cap)$ 500 Delinquent penalty (10% after 90 days)$ 6,150 Total additional tax due

* no interest cap on 60-days to pay + there’s a 10% penalty after 90 days

Caution – Handle with Care!Additional interest and penalty owed by county or taxpayer depends on

– Outcome of the appeal– Temporary tax amount paid by taxpayer on

original due date– Date refund of overpayment issued to taxpayer– Date payment of additional tax paid by taxpayer

GAAO District Issues

Solar Farms W/Cuva Breach,Regulated by PU

Ratio StudiesSection 42 LIHTC/HB 954

Hot Topics in GAAO Districts

North District Topics List• FLPA Audits• IRP• Covenant Registry• Interest on Refunds• New Legislation• WinGAP SQL Conversion• Solar Farms

– CUVA Breaches– Chicken Houses

• Ratio Studies (DOAA)• LIHTC / HB 954• Overview of PU Process (Op,

NonOp, Notices, Billing, Listing in Cama)

• Dealing with Covenants < 10 acres– Gate cards

• Cell Towers Audits• “In My County” Q&A• GAAO News

Metro District Topics List• BOE Problems – Rules of

Evidence/Defense of Value by staff

• DOAA – Ratio Studies• Map & List of Districts in

Power point Presentation• Development Authority

Schedule of Returns “Ramp up appropriate for DA”

• FLPA Audits• IRP• Covenant Registry• Interest on Refunds• New Legislation

Central District Topics List• FLPA Audits• IRP• Covenant Registry• Interest on Refunds• New Legislation• BOA Minutes• Solar Farms• WinGAP SQL Conversion

• Ratio Studies (DOAA)• LIHTC / HB 954• “In My County”• Overview of PU Process

(Op, NonOp, Notices, Billing, Listing in Cama)

• Dealing with Covenants < 10 acres

Southeast District Topics List• FLPA Audits• IRP• Covenant Registry• Interest on Refunds• New Legislation• WinGAP SQL Conversion• Marine Dealer Inventory

Detail• Solar Farms

– CUVA Breaches

• FLPA 2 AC exclusion• CUVA 10 AC tracts-

Additional Info• Valuation of land solar farm

installed on• IDA administration of solar

Southwest District Topics List• FLPA Audits• IRP• Covenant Registry• Interest on Refunds• New Legislation• WinGAP SQL Conversion• Marine Dealer Inventory

Detail• Solar Farms

– CUVA Breaches

• FLPA 2 AC exclusion• CUVA 10 AC tracts-

Additional Info• Valuation of land solar farm

installed on• IDA administration of solar

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