TX - Property tax errors may cost elderly

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

TX - Property tax errors may cost elderly Miscalculations on exemptions could require added payments By STEVE BREWER Copyright 2001 Houston Chronicle

About 1,900 elderly HISD taxpayers recently received a letter with their 2000 property tax bills warning that they could be asked to pay more taxes later because of errors in calculating over-65 exemptions.

Many of them might not see adjustments until their 2001 tax bill, but others could be asked to pay additional taxes this year if they made improvements on their property, said Bill King, an attorney with the law firm that owns United Governmental Services of America.

UGSA, a private company paid $650,000 a year to handle HISD's tax business, had sent letters to 2,000 taxpayers in November saying their bills would be delayed while accounts were reviewed for possible underbilling.

King said Tuesday that bills for the homeowners in question were sent out two weeks ago, along with the letter.

The delay was caused by a glitch in UGSA's computers and a problem with getting exact data on the taxable value of homes renovated by senior citizens.

Jan. 31 is the deadline to pay local property taxes. More than 60,000 Houston Independent School District taxpayers have an over-65 exemption.

UGSA is still working with HISD and auditors to conduct a "painstaking" review of each account in question, King said.

King said UGSA is also not sure how many of the 1,900 taxpayers will be affected, how much more they might have to pay, when they would pay it or whether HISD will lose substantial tax revenue because of the problem.

King did estimate, however, that the problem could involve "hundreds of thousands" of dollars in tax money.

It is not known whether that loss will be passed on to taxpayers or absorbed by HISD, said King. Some of the money could be paid to HISD by UGSA, which takes responsibility for at least some of the problem.

Elderly taxpayers who got the letter fall into two groups: seniors who bought a home from someone who also had an over-65 exemption, and exempted seniors who made taxable improvements to their homes.

King said most of the accounts under review are in the latter group. Those taxpayers, he said, are unlikely to see an increase on their 2000 bill but might see higher tax bills in future years.

Those taxpayers apparently had their own over-65 exemption when they bought a home from someone similar between 1989 and 1992. The new homeowners assumed the more lucrative exemption held by the sellers, and that led to underbilling.

That's important because the over-65 exemption freezes one's school property tax in the year they qualify.

Other taxing entities, such as the city and county, also give such exemptions, but with different values.

In this case, King said, a "programming glitch" in UGSA's computers blocked his firm from detecting that some taxpayers were using previous owners' exemptions and gaining the benefit.

In 1999, the same glitch raised questions on about 800 accounts. UGSA sent notices, adjusted the accounts and paid HISD $200,000 to make up for lost revenue .

The problem with tracking who should be using which exemption can be traced back from 1989 to 1992, when HISD's tax office used software that didn't properly track exemptions, King said.

The new software, he said, essentially got bad data from the old system, creating the glitches.

In this case, King theorized, the answer will probably be to make sure homeowners with the tax break are using their own exemption, a relatively easy fix compared with the renovation issue.

When someone gets an over-65 break they can repair their home without increasing taxable value. But if they do any major work, such as adding a room, their home's taxable value will increase and possibly raise their taxes.

HISD and other districts depend on the Harris County Appraisal District for data on taxable values, including any major improvements that would alter one's tax bill.

King said HISD and other districts have gotten data that has not flagged those improved properties. That means HISD's tax office could not tell if increases in value were due to market changes or new construction.

Without that information, King said, HISD assumed that all increases in taxable value were due to appreciation.

That, he said, could have been the wrong assumption, and auditors are trying to determine whether there was taxable new construction based on the issuance of building permits.

Issuance of a permit, he said, doesn't necessarily mean taxable renovations were done.

But HCAD Chief Appraiser Jim Robinson said the problems of which King speaks are in the past. In the past two or three years, he said, the appraisal district has flagged properties where improvements have increased the value and stated exactly how much of the increase was due to renovation.

Wherever the blame lies, King said, homeowners who made improvements could see their home's taxable value increase if HCAD adjusts appraisals based on renovations.

But Robinson said any increase in property taxes wouldn't be seen on 2000 bills at this point anyway, since the value of any taxable renovations would probably be carried over to one's 2001 bill.

http://www.chron.com/cs/CDA/story.hts/metropolitan/786360

-- Doris (nocents@bellsouth.net), January 03, 2001


Moderation questions? read the FAQ