DIRECTIVE 14-1
Supersedes Directive 13-1

July 1, 2014

REAL PROPERTY TAX CREDIT AND TAX STATEMENTS FOR 2013 AND 2014

Purpose. This directive advises county assessors and treasurers of their responsibilities for implementing the Property Tax Credit Act (Act), Neb. Rev. Stat. §§ 77-4209 through 77-4212. This Act provides a real property tax credit (credit) based on the valuation of each parcel of real property compared to the valuation of all real property in the state. The Act was originally funded at $115 million for 2013 and 2014 (Laws 2013, LB 195). The funding for this Act has been increased by $25 million for 2014 (LB 905). The total amount of the credit available for statewide distribution in tax year 2014 is $140 million.

Procedure and Implementation. The credit must be computed and displayed on the tax list of the county as prepared by the county assessor or county clerk, pursuant to § 77-1613 and § 77-1615. The credit amount must be displayed on the tax statement as a credit, as provided by § 77-4212(1). Tax statements are required to display the amount of taxes levied by each political subdivision for the current year and for the immediate past year on the same parcel, pursuant to § 77-1704.01(1). The credit cannot be netted against the taxes levied, but must be shown as a credit to the taxes levied on the tax statement, similar to homestead exemption tax loss amounts in § 77-3509.03.

The credit is applicable to all taxable real property parcels.

The Property Tax Administrator, county assessor, and county treasurer must take the following five steps to properly administer the credit. Note: the valuation amounts used in these examples do not reflect actual certified numbers.

Step 1 – County’s Share of Credit. By September 15, the Property Tax Administrator must determine the credit amount to be disbursed to each county. The amount disbursed to the counties is equal to the amount available for disbursement -- $115 million in year 2013 and $140 million in year 2014, multiplied by the ratio of the total real property valuation in the county to the total real property valuation in the state eligible for the credit. The Property Tax Administrator certifies the credit amounts to the State Treasurer and the county on or before September 15. The disbursements to the counties occur in two equal payments: the first, on or before January 31; and the second, on or before April 1 of years 2014 and 2015, respectively.

The credit amount to be disbursed to each county is calculated below.

Example 1

State's total real property value $196 billion
County's total real property value $2.5 billion
Amount available for disbursement  $140 million

County's real property value as a percent of the state's total real property value
          $2.5 billion divided by $196 billion = .0127551

County's share of credit
          $140 million multiplied by .0127551 = $1,785,714

Step 2 – Credit per Parcel Calculation. The county treasurer will then determine the amount of credit for each parcel in the county based on the ratio of the valuation of the real property parcel to the total real property valuation in the county. For ease of administration, the credit for each real property parcel may be determined by using the state’s uniform “rate of credit” as determined by the Property Tax Administrator. For example, for year 2014, the rate of credit is calculated by taking $140 million divided by the total real property value in the state eligible for the credit.

Example 1A

Real property parcel's value             $100,000
County's total real property value  2.5 billion

Real property parcel's value as a percent of the county's total real property value
          $100,000 divided by $2.5 billion = .00004

Real property parcel's share of the county's credit
          $1,785,714 multiplied by .00004 = $71.43

An alternative calculation for the “rate of credit” for each parcel in the county or the state is below.

Example 1B

Step 3 – Homestead Exemption. If the real property owner qualifies for a homestead exemption under §§ 77-3501 to 77-3529, the homestead owner also qualifies for the credit to the extent of any remaining liability after the homestead exemption is applied. If the credit results in a property tax liability on the homestead that is less than zero, the amount of the credit which cannot be used by the taxpayer shall be returned by the county treasurer to the State Treasurer by July 1 of the year the credit amount was disbursed to the county.

Step 4 – Disbursements. The credit disbursements to the counties occur in two equal payments: the first, on or before January 31; and the second, on or before April 1 of years 2014 and 2015, respectively. After retaining one percent of the credit for costs, the county treasurer allocates the remaining credit to each taxing unit that levies taxes on taxable property in the tax district where the real property is located. This allocation is done in the same proportion that the levy of each taxing unit bears to the total levy on taxable property of all the taxing units in the tax district where the real property is located, § 77-4212(4).

Step 5 – Tax List Corrections. For tax list corrections that occur on or before July 1, the county treasurer should use the unused credit amount to cover those corrections. The amount returned to the State will be the amount shown on the tax lists as unused credit, plus or minus the corrections on or before July 1.

After July 1, if additional tax list corrections occur resulting in a need for additional credit amounts for that tax year, the county treasurer may file a claim form, along with supporting documentation, with the Risk Management State Claims Board.

See Attachment I for examples of tax due and credit computations.

APPROVED:

Ruth A. Sorensen
Property Tax Administrator
July 1, 2014

APPROVED:

Kim Conroy
Tax Commissioner
July 1, 2014