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DOR-GAAO District Meeting

DOR-GAAO District Meeting. FLPA Audits.

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DOR-GAAO District Meeting

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  1. DOR-GAAODistrict Meeting

  2. FLPA Audits

  3. Currently, over 4-million acres in Georgia are entered in the Forest Land Conservation Use special assessment programReimbursement Grants are issued by the state to the local jurisdictions to offset potential tax shifts associated with this special assessment program2009 $10.5 million2010 $14.0 million2011 $17.7 million2012 $22.6 million2013 $27.8 million

  4. 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%

  5. DOR has developed and initiated an audit program to ensure proper distribution of grant funds Audit Process Audit Findings

  6. 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 …..

  7. Audit Finding #1: Failure to record FLPA covenants in county deed records

  8. 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

  9. 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.

  10. 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.

  11. 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.

  12. BOA must track ‘3’ separate values for properties entered in FLPA covenants Fair Market Value (J-code on digest) True-Blue old fashioned FMV (three value approaches) Forest Land Conservation Use Value (FLCUV) Woodland values (DOR Table of Value Regulations) Forest Land Fair Market Value (F-code on digest) 2008 FMV (adjusted by economic indicator)

  13. Forest Land Fair Market Valueaka…F-Code aka…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

  14. To determine the Revenue Reduction attributable to FLPA…. 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…

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

  16. Let’s look at a few examples….

  17. “F” value example #1 1,000 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

  18. “F” value example #2 Parcel 047-058 in 2008 included 406.77 acres $2,496,300 / 406.77= 6,137 per acre in 2008 Split for 2009 to 348.28 acres and applied for FLPA 2008Base Value for 2009 covenant 348.28 acres * $6,137= $2,137,394 2008BaseValue

  19. “F” value example #3 Property 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

  20. “F” value example #4 210 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 acre 210 acres * 1136 per acre = $238,560

  21. “F” value example #5 Property 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.

  22. Audit Finding #3: Failure to accurately apply the ‘US economic index’ to the 2008 Base Value; including: Failure to apply Failure to obtain BOA approval Failure to uniformly apply index to all parcels in a year

  23. 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)

  24. 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 ……….. none 2010 Index ……….. 0.999 2011 Index ……….. 1.026 2012 Index ……….. 1.063 2013 Index ………..1.085 2014 Index ……….. 1.085

  25. 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

  26. 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.

  27. Audit Finding #5: Failure to use the Woodland Productivity rating for ALL land in FLPA covenants Conservation Use Soil Conversion Table

  28. 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 year

  29. Audit Finding #6: 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.

  30. Forest Land Conservation Use Values FLPA 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

  31. FLPA Audit Process Agents 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.

  32. 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.

  33. DOR Auditors Role DOR field agents upload the final audit documents for DOR auditors to recalculate reimbursementgrants

  34. Other FLPA audit observations Applications must be filed on or before the last day for filing tax appeals or at any time while such appeal is pending New owner cannot apply during the year of purchase Excludes any residence and up to 2 acres Excludes the value of any improvement Includes ONLY LAND; all of which is categorized as woodland Subsequently acquired contiguous acres may be added to the original covenant (must be less than 200 ac)

  35. CUVA/FLPARegistry

  36. Statewide Covenant Registry Bona Fide Agricultural Conservation Use Covenants (48-5-7.4) Forest Land Conservation Use Covenants (48-5-7.7)

  37. Statutory Requirements Registry assists the county in measuring acreage limitaitonfor 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)

  38. 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

  39. 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)

  40. 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

  41. 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.

  42. 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

  43. Covenant Registry • Full Version (confidential) • http://www.wingap.net/ • Links Page • Password protected

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

  45. Covenant Registry

  46. Searching and Filters Click the Arrow beside a column name to reveal filter options Sample is LASTNAME

  47. Searching and Filters Select TEXT FILTERS

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

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

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