Tuesday, July 08, 2008

Let's End the Property Tax

Did you see the OWH story about Tom Klingemann's effort to get a refund of past property taxes he has paid?

The county misstated the square footage of his residence, which inflated his valuation, which inflated his property tax bill. The error was corrected in 2005.

Klingemann wants to recoup excess property tax paid from 1994-2004. State law only allows refunds going back three years.

It looks like Klingemann is out of luck.

Add this to the pile of examples of how dysfunctional the property tax system is.

Are you ready to go to a sales tax instead?

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Published Monday, July 7, 2008




Pandora's box. A can of worms. The flood gates.

Whatever the name, Douglas County leaders don't want to open it.

But the County Board may have done just that when members granted the state tax commissioner a property tax refund last month.

It all started in early June when the board, on a 4-3 vote, gave Tax Commissioner Doug Ewald a $1,505 refund for overpaid taxes in 2005. The board acted against the advice of the County Attorney's Office.

Fast forward to this week. Tom Klingemann, who lives near 47th and Walnut Streets, read a World-Herald article about Ewald's tax refund and wants $4,800 in back taxes on his home, covering 10 years.

"It appears a precedent has been set by the board to go ahead and refund back taxes," Klingemann told the County Board on Tuesday.

Board Chairman Clare Duda, who was opposed to the Ewald refund last month, said other property owners will be emboldened by the board's decision.

"Absolutely that's a slippery slope," Duda said. "It's kind of up to the other four (board members) to figure out what to do when people come up and say 'me, too.'"

He also questioned the wisdom of his fellow board members going against the county's legal advice.

"Any time we go it alone we get into dangerous waters," Duda said, conceding that in other kinds of tax cases he has sometimes differed with the county attorney.

Board members Chip Maxwell, Mary Ann Borgeson, Mike Boyle and Chris Rodgers voted in favor of Ewald's refund.

In interviews, Maxwell and Boyle said the county's action in one case will not lead to a rash of refunds for other property owners.

"Will we see more people coming out? That's a possibility," Maxwell said. "I'm not ready to use a word like precedent. To me, each (case) is unique."

Boyle said he sees big differences between the Ewald and Klingemann cases.

Both Maxwell and Boyle said the board may not be able to help Klingemann.

The board delayed taking action on Klingemann's request. Maxwell said the board needs to be careful in its deliberations and that's why he wants to research the issue more.

In Ewald's case, county records had overstated the size of his home, leading to a larger valuation and a larger tax bill for 2005. But the county didn't remeasure Ewald's home in time for his protest. That fact was cited by board members who voted to give him a refund. They said Ewald's position with the state had nothing to do with his treatment.

The refund was granted even though Ewald had signed a mediated agreement in 2005. The County Attorney's Office and County Assessor's Office said that agreement ended his right to further protest.

Klingemann says the Assessor's Office overstated the size of his house, too, before fixing the problem in 2005. He wants back taxes from 1994 to 2004.

Under state law, refunds are allowed only for taxes paid in the last three years. Ewald met that standard, while Klingemann's request does not.

The real problem, Klingemann says, is what happened when he first protested his home's valuation in 1995. Klingemann protested because his valuation went up more than surrounding homes.

One argument was that his house appeared to be smaller than those other homes. Klingemann claims that the independent appraiser hearing the protest said he and his wife had no case.

For the next decade Klingemann didn't protest and continued to pay his property taxes. But in 2005, when the home's valuation increased by $71,200, he protested again.

This time Klingemann was told that basement space doesn't count in a home's size calculation, leading him to realize that his house's size had been overstated on assessor records for the past decade. The home's valuation was lowered and Klingemann started to question the county about a tax refund for the earlier years.

He said he was told there was nothing that the county could do. But then Klingemann found out about Ewald's case from early June.

Board member Pam Tusa, who represents Klingemann's neighborhood, said she could not support his request for back taxes. She said she has to rely on the advice of the County Attorney's Office, which says refunds going back that far are not allowed under state law. Tusa, Duda and board member Kyle Hutchings voted against Ewald's refund last month.

"I totally sympathize with you, but in my mind I can't vote to let you have this," Tusa said to Klingemann.

Klingemann said he just wants the board to recognize that he overpaid his property taxes for several years. If the board made an exception for one property owner, he believes his case is valid, too.

"At what point do they say we can do it for Mr. Ewald, but not Mr. Klingemann?" Klingemann asked.


OmaSteak said...

Does your foot hurt really badly from the self-inflicted wound Chip??? The county does owe Klingemann a refund, even if it is limited to just 3 years. You guys get caught doing a "favor" giving the state tax assessor a refund and thereby set a precedent for doing so...no matter how much you protest to the contrary. Just another example of the political class doing favors for each other while the "regular taxpayer" takes it in the shorts as usual. BTW, does the OWH have it "out" for you or what???

Yes, we do need to move away from the income, capital gains, property and inheritance tax model to a 100% consumption based model. However, it needs to be backed by a constitutional amendment which sets very strong rules about the rate, if/when that rate can be adjusted, etc.

Chip Maxwell said...

Klingemann's problem was fixed in 2005. The last three years -- those for which he is eligible for relief -- are not the years at issue. The difference with Ewald is that he was seeking relief for the last three years.

Also, Klingemann did not exhaust his avenues of protest for the years at issue. Ewald did, then discovered (after accepting a settlement) that the county still had not properly remeasured his property.

But the fact remains that Klingemann was not treated well by county government and is entitled to be angry.