Property Tax Exemption Administration

During the 2015 legislative interim, the office of the state auditor published an audit of the senior and disabled veteran property tax exemption program, which exempts 50% of the first $200,000 of actual value of the owner-occupied primary residence of a qualifying senior or disabled veteran from property taxation. Despite program limitations that allow a senior, disabled veteran, or married couple to claim an exemption for only one primary residence even if he, she, or they own multiple residences, the audit identified several statutory and administrative process deficiencies that have made it difficult for the state to prevent individual seniors and disabled veterans and married couples from claiming and being allowed multiple exemptions and from claiming and receiving exemptions for residences other than owner-occupied primary residences. The act implements the audit recommendations as follows:

• The department of revenue, after receiving from the property tax administrator (administrator) a list of individuals who are claiming the exemption, must share with the administrator certain taxpayer information pertaining to the listed individuals, including their names, social security numbers, marital and income tax filing status, and residency status, needed by the administrator to prevent exemption applicants who claim multiple exemptions or exemptions for residential real property that they do not own and occupy as their primary residence from receiving the exemption;
• The administrator must work with the state registrar of vital statistics to annually identify individuals who have received exemptions and have died so that the administrator and county assessors can terminate exemptions for which no living individual qualifies;
• The scope of the administrator's exemption application review responsibilities is expanded and the timelines and process by which the review is conducted is modified in order to enhance the ability of the administrator to prevent exemptions from being erroneously allowed. The expanded review process includes an additional review of exemptions granted by counties to ensure that exemptions denied by the administrator as a result of the initial review have been removed and that no new exemptions have been added.
• The administrator is required to annually conduct a second review of exemptions allowed in each county for the immediately preceding property tax year, to identify any exemptions that should not have been allowed, and to advise the state treasurer to reduce the amount of reimbursement paid to each county treasurer to account for any disallowed exemptions; and
• In addition, if the administrator identifies any exemption improperly allowed for a prior property tax year commencing on or after January 1, 2016, for which the state treasurer reimbursed a county treasurer or identifies any exemption properly allowed for such a prior property tax year for which the state treasurer did not reimburse a county treasurer, the administrator must advise the state treasurer to adjust the current year reimbursement to the county treasurer to correct the error.

For the 2016-17 state fiscal year, $29,270 is appropriated from the general fund to the department of local affairs for use by the division of property taxation in implementing the act.

(Note: This summary applies to this bill as enacted.)