Tax Collector’s Error and Taxpayer’s Responsibility

Posted on June 11, 2019

The Texas Court of Appeals recently dismissed the case of a taxpayer in Harris County Texas who sued several tax authorities. The taxpayer was seeking a refund for $17,861 of penalties and interest paid on overdue property taxes. The court stated that the individual failed to “plead facts within the scope of a clear and unambiguous waiver of governmental immunity for the claim.” The taxpayer contended that he had not received a tax bill for the year 2012 on his property due to a mistake made by the Tax Collector, who sent it to the wrong address. In this case, although the taxpayer failed to pay their property taxes timely because of an error by the tax collector; it was deemed his responsibility to be aware of an outstanding liability and pay when the tax was due. His failure to do so led to the bill becoming delinquent after a certain period, and incurring penalties and interest.

As this case proves, taxpayers carry the burden of tracking down any liabilities that they might be accountable for to avoid further penalties or interests. Not only is it crucial to understand the property tax process and related terminology, but it is just as important to know the specific due dates within the process must be met. In most state and local jurisdictions, the responsibility for identifying tax payments rests on the taxpayer. This includes the taxpayer’s responsibility to perform their due diligence in tracking down any property bills he/she might owe for the period. As noted, inexperienced taxpayers are the most affected because of the lack of knowledge of the process or the limited resources available to them.

Property taxes are an ad valorem tax levied on the fair market value of the property being taxed. After the governing jurisdiction’s assessor determines the value of the property, the tax or revenue collector then sends the taxpayer a bill based on the assessed value, which will have a specific due date.

The two types of property taxes are Real and Personal property taxes. Real property includes land and buildings. Personal property includes anything other than real property, and this type of tax is most commonly levied on businesses. A common example of personal property includes the desks, chairs, and furniture used in the day-to-day operations of a business.

The tax rate imposed on property varies from jurisdiction to jurisdiction. However, there are some states that exempt personal property from taxation. Some states also have an exemption threshold, which allows the taxpayer to reduce their tax liability, and in some cases eliminate it entirely. To verify the threshold, check with the local jurisdiction as it might vary in different taxing authorities within the same state.

The following are the states that exempt Personal Property from taxation for the year 2019:

  • DE, HI, IL, IA, MN, NH, NJ, NY, ND, OH, PA, SD

States with personal property tax will require taxpayers to file a property return stating all personal property owned. Even states that exempt personal property might still require a yearly return.

If ever in doubt, it is important to reach out to a tax professional to help determine any tax responsibility to remain compliant with the law. A tax liability might be retroactive, and it could accrue large amounts of interests and penalties. If penalties and interests are incurred, the taxpayer could have an opportunity to appeal these fines with sufficient, appropriate evidence as long as it falls within the scope period.

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Contributor: Marcos Camarena 

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