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HomeMy Public PortalAbout2016-10-25 Resolution adopting a higher maximim qualifying gross receipts amount for tax defferal applicants TOWN OF 1630 WATERTOWN Office of the Town Manager rf q 'i (Ss Administration Building 149 Main Street Watertown,MA 02472 Phone: 617-972-6465 Michael J.Driscoll tw w.watertown-ma.gov totV❑111PT�lvafei[ONir-1nA.POV Town Manager - To: Honorable Town Council . From: Michael J. Driscoll, Town Manager Date: October 20, 2016 RE: Agenda Item—Resolution Adopting a Higher Maximum Qualifying Gross Receipts Amount for Tax Deferral Applicants Enclosed please find, for your consideration and review, email correspondence from Joseph A. DiVito, Jr., Town Treasurer/Collector regarding a request to adopt a higher maximum qualifying gross receipts amount for tax deferral applicants. Therefore, I respectfully recommend and request your favorable consideration on the attached Resolution at the November 9, 2016 Town Council meeting. Mr. DiVito will be attending the November 9, 2016 Town Council meeting and available for any further discussion on this matter. Thank you for your consideration in this matter. cc: Steven Magoon,Director of Community Development and Planning/Assistant Town Manager Thomas J. Tracy, Town Auditor/Assistant Town Manager for Finance Joseph A. DiVito,Jr., Town Treasurer/Collector Francis J. Golden, Town Assessor Anne-Marie Gagnon, Director of Senior Services Mark R. Reich, Esquire, KP Law Resolution # R-2016- A Resolution Adopting a Higher Maximum Qualifying Gross Receipts Amount for Tax Deferral Applicants WHEREAS, the provisions of G.L. c. 59, §5 cl. 41A allow seniors 65 years of age or older who meet certain income and other requirements to defer all or part of their property taxes; and WHEREAS, the provisions of G.L. c. 59, §5, cl. 41A(2)provide that the Town, by a vote of its Town Council, may adopt a higher maximum qualifying gross receipts amount for the purposes of such deferral,provided that such maximum qualifying gross receipts amount shall not exceed the amount of income determined by the Commissioner of Revenue for the purposes of G.L. c. 62, §6(k), for a single person'who is not a head of a household. NOW THEREFORE, BE IT RESOLVED that the Town Council of the City known as the Town of Watertown hereby adopts a higher maximum qualifying gross receipts amount for the purposes of such deferral in the amount of$57,000. Council Member I hereby certify that at a regular meeting of the Town Council for which a quorum was present, the above Resolution was adopted by a vote of_ for, _ against and present on November 9, 2016. Marilyn W. Pronovost Mark S. Sideris Clerk of the Council Council President Driscoll, Michael From: Divito,Joseph Sent:Thursday, October 20, 2016 4:43 PM To: Driscoll, Michael Subject; FW: Tax Deferral Request Mr. Driscoll, As you are aware, all Cities and Towns in the Commonwealth offer a Tax Deferral to qualified property owners who are 65 years of age which allows them to defer a portion or all of their real estate taxes. Currently the "gross receipts" maximum for Watertown property owners is$40,000. Since my return to Watertown, I have met with several seniors who showed sincere interest in entering into the Tax Deferral program to free up limited personal financial resources. They were not able to apply because they did not meet the current"maximum gross receipt" requirement of$40,000. 1 believe Waterown's current maximum gross receipt amount is in part the reason we only have four seniors taking advantage of this program. The Tax Deferral law(MGL 41A,Sec 5, subsection 2) allows a community to increase the "maximum gross receipt" amount for applicants up to the current amount allowed in Mass Gen Law Chapter 62 (Circuit Breaker Law),Section 6, subsection k. That amount is currently$57,000 (see attachment).The communities of Arlington, Belmont, Boston, Natick and Newton utilize the maximum gross receipt amount of$ 57,000. Consequently and as a follow-up to our earlier conversations, I am requesting that the Town Council increase the "maximum gross receipt" amount for Tax Deferral applicants to $57,000. In conjunction with this proposed change, Mr. Golden, Chairman of the Board of Assessors,Anne-Marie Gagnon, Director of Senior Services and I are planning to hold a workshop at the senior center to bring awareness of the Tax Deferral program as well as other exemptions available to Watertown seniors. Also, additional outreach to seniors will be ongoing. Thank you for your consideration and please do not hesitate to contact me with any questions regarding this matter. Joe DiVito,Jr. Treasurer-Collector t Senior "Circuit Breaker" Tax Credit What is It? No credit is allowed if ilia taxpayer claims the`married Senior citizens in Massachusetts may be eligible to claim filing separate"status,receives a federal or state rent a refundable credit on their stale income taxes for the real subsidy,rents from a lax-exempt entity,or is the depen- estate taxes paid on ilia Massachusetts residential prop- dent of another taxpayer. arty they own or rent and which they occupy as[heir prin- clpal residence.The maximum credit allowed is$1,070 Is the tax credit considered Income? for the tax year beginning January 1,2015.If the credit Tax credits received by eligible taxpayers are not con- due the taxpayer exceeds the amount of the total In- sidered income for the purpose of obtaining eligibility come tax payable for the year,the excess amount of the or benefits under other means-tested assistance pro- credit will be refunded to the taxpayer without Interest. grams including food,medical,housing,energy and Eligible taxpayers who own their properly may claim a educational assistance programs. credit equal to[he amount by which their property tax How does a taxpayer claim the credit? payments in the current tax year(excluding any oxemp- Taxpayers who are oligibie for the tax credit in the 2015 dons and/or abatements),Including water and sewer tax year can claim the credit by submitting a completed debt charges,exceed 10%of their"total income"for the Schedule CB,Circuit Breaker Credit,with their 2015 same cu«enl tax year.Taxpayers residing 1n communi- slate income tax return, Iles that do not include water and sewer debt service in their property tax assessments may claim,in addition Note;Taxpayers who qualified for[he tax credit In a to their properly tax payments,50%of the water and prior year but did not file Schedule CB online with their sewer charges actually paid during the tax year when original slate income tax return should file an online figuring their credit. Application for Abatement,available at vnvw.mass.gov/ dor/amend.Also,taxpayers who qualified for(lie tax For renters,the law assumes that 25%of their rent goes credit in a prior year and did not file a tax return should toward properly tax.Accordingly,renters may claim a file a state income tax return with Schedule CB. Either credit in the amount by which 25%of their annual option must be completed within three years from rental payment Is more than 10%of[heir total Income the last day for filing ilia return,without regard to For purposes of the tax credit,a taxpayers"total in- any extension of time to file. come"includes taxable Income as well as exempt in- come such as social security,treasury bills and public What If the taxpayer is not required to file pensions. a state Income tax return? An eligible taxpayer who does not normally file estate Who is eligible for the credit? income lax return may obtain a refund by filing a return To be eligible for the credit for the 2015 tax year,a lax- with Schedule CB,Circuit Breaker Credit, payer must be 65 years of age or older before January 1,2016(for joint liters,it is sufficient if one taxpayer is What documentation must the taxpayer keep? j 65 years of age or older),must own or rent residential As with all claimed lax credits and deductions,ilia tax- property in Massachusetts and occupy the property as payer must keep all pertinent records,receipts and other his or her principalM71,000 he taxpayer's total In- documentation supporting his or her claim for the credit. come cannot exceer a single filer who is not the head of aho for a head of Schedule CB and further information is avail- household,or$85,000 for taxpayers filing jointly.No able at www.mass.gov/dor or by contacting credit isallowed fora married taxpayer unless a joint the Massachusetts Department of Revenue's oepaib Aoraeveoue return is filed,Moreover,the assessed valuation of the Customer Service Bureau at(617) 887.6367 Comm malNorMassa<WWS real estate cannot exceed$693,000, or toll-free in Massachusetts at800.392.6089. (#)D Afark R.Nunnellf•Coni isslonce ofRevome DIVISION OF LOCAL SeRVICSS Seim H.Cronin ntn De➢nmTtt&NT or RKVENVE Senior Deputy Conunissioner TAXPAYER'S GUIDE TO LOCAL PROPERTY TAX DEFERRALS SENIORS Clause 41A The Department of Revenue (DOR) has created this fact sheet to provide general information about local property tax deferrals for seniors. It is not designed to address all questions or issues and does not change any provision of the Massachusetts General Laws. To find out about the specific eligibility and application requirements in your city or town, you must contact your local board of assessors. The DOR cannot determine your eligibility or give you legal advice. Property taxes are assessed and collected by cities and towns, not by the DOR. Under state law, only your board of assessors, as the local tax administrator, can decide whether you qualify for a deferral. If you disagree with its decision, you may appeal to the state Appellate Tax Board (or county commissioners if your county's government has not been abolished). INTRODUCTION Cities and towns may give property tax exemptions to some individuals as defined by state law. An exemption discharges the taxpayer from the legal obligation to pay all or a part of the tax assessed for the fiscal year. Exemptions are found in various Clauses of Massachusetts General Laws Chapter 59, Section 5 W,G.L. c. 59. &5), Under Clause 41A, seniors may also be able to delay payment of their property taxes. A property tax deferral does not discharge the tax obligation like an exemption. Instead, it defers payment until the senior sells the property or passes away. A deferral allows seniors to use resources that i would go to pay taxes to defray living expenses instead. Taxpayers who qualify for personal exemptions under other clauses in M.G.L. c. 59, § 5 (for example, for seniors, disabled veterans, blind persons or surviving spouses) may defer all or part of the balance of their reduced taxes. If you qualify, you must enter into a written tax deferral and recovery agreement with the local assessors. The assessors will record a statement at the Registry of Deeds to continue the lien that exists on your property by law to secure payment of the deferred taxes. Joint owners, remaindermen and mortgagees must give prior written approval. APPLICATIONS You must file an application for each fiscal year with the assessors in the city or town where your property is located. The application is due on December 15, or three months after the actual tax bills are mailed, whichever is later. Filing on time is required. By law, the assessors may not waive this filing deadline, nor act on a fate application, for any reason. Filing an application does not entitle you to delay your tax payment. For more information, please contact your local assessors, Local Property Tax Deferrals for Seniors Rev. 7/2015 DOCUMENTATION You must provide the assessors with whatever information is reasonably required to establish eligibility. This information may Include, but is not limited to: 1. Birth certificates. 2. Evidence of ownership, domicile and occupancy. 3. Income-tax returns. ELIGIBILITY You must satisfy tests relating to age, domicile, ownership, REQUIREMENTS occupancy and annual Income. You must meet all eligibility requirements as of July 1 of the tax year. (The fiscal year of cities and towns begins July 1 and ends the following June 30.) If you do not meet all requirements as of July 1, you cannot defer all or any portion of your taxes for that tax year. AGE You must be 65 or older. DOMICILE You must have had a domicile in Massachusetts for at least 10 consecutive years before the tax year begins. You must also be domiciled'in the property. Your domicile is where your principal and legal home Is located, your family, social, civic and economic life is centered and you plan to return whenever you are away. You may have more than one residence, but only one domicile. OWNERSHIP AND You must have owned and occupied the property, or other real , OCCUPANCY property in Massachusetts, as a domicile for at least 5 years, The years do not have to be consecutive or at the same location. 1. You may own the property solely, as a joint owner or as a tenant in common. 2. If you hold a life estate in the domicile, you are the owner. 3. If your domicile is held in a trust, you are the owner only if: ! a. You are a trustee or co-trustee of that trust, and i b. You have a sufficient beneficial interest in the domicile. INCOME LIMITS Your income (gross receipts) for the previous calendar year I cannot exceed $20,000. If you are married, the combined gross Irv` I�� receipts of you and your spouse cannot exceed $20,000. The �V�r 000n' gross receipts limit may be increased up to the income limit tAo) allowed for the "circuit breaker'state income tax credit for single i non-head of household filers, by vote of the legislative body of your city or town. Gross receipts means Income from all sources and is broader than taxable income for federal or state income tax f purposes, Ordinary business expenses and losses are - deducted but not personal or family expenses. For more information, please contact your local assessors. 2 1 Local Property Tax Deferrals for Seniors Rev. 7/2015 DEFERRAL AMOUNT You may defer payment of all or a part of the taxes owed each year so long as (1) you continue to qualify, and (2) the cumulative deferred taxes and accrued Interest are not more than 50% of your proportional ownership share of the fair cash value of the property. For example, if you are a joint owner with one other person, the total amount deferred cannot be more than 25% of the property's value. If you own the property with someone who is not your spouse, the amount you may defer annually is also limited to your proportional ownership share of the year's tax. Interest on deferred taxes accrues at 8%, or a lower rate voted by the legislative body of your city or town before July 1 of the tax year. SURVIVING SPOUSE Your surviving spouse who qualifies may continue to defer taxes but must enter into a new deferral and recovery agreement. Surviving spouses who inherit a property must have occupied it, or other real property in Massachusetts, as a domicile for at least 5 years. Any additional taxes plus interest deferred by your surviving spouse, plus the amounts previously deferred and unpaid, cannot be more than 50% of the spouse's proportional ownership share of the fair cash value of the property. PAYMENT The payment of deferred taxes and accrued interest is due when the property is sold or you pass away, unless your surviving spouse continues to defer. As of that date, the Interest rate goes up to 16%. If 6 months later, the deferred amount has not been paid, the treasurer may petition the Land Court to foreclose the lien on the property. APPEALS Appellate Tax Board The Appellate Tax Board (ATB) is an Independent, quasi-judicial state board that hears taxpayer appeals from local assessors' decisions on property tax abatements and exemptions. If county government has not been abolished, appeals may be made to the county commissioners instead, but assessors may and usually do transfer those appeals to the ATB. ATB decisions may be appealed to the Appeals Court and, ultimately, to the Supreme Judicial Court. You can obtain the ATB's ug ide to the property tax appeal process from its website /www.mass.aov/atbl or by calling 617- 727-3100. For more information, please contact your local assessors. 3 I Local Property Tax Deferrals for Seniors Rev. 712015 Appeal of Action of You have three months from the date of the assessors' Assessors decision on your deferral application to appeal to the ATB. This includes decisions to deny a deferral or to grant a deferral of a lesser benefit. If the application was deemed denied, your appeal must be filed within three months of the deemed denied date. As a general rule, if the real estate tax on your domicile is over$3,000, you must also have paid each actual tax installment on time for the ATB to hear your appeal. ' The assessors may grant the deferral or higher deferral in final settlement of your application during the three month period for filing an appeal, In that case, you do not have to have filed an appeal with the ATB. However, If a settlement is not reached and a deferral not granted during that period, you must have filed your appeal by the deadline. If not, the ATB cannot hear the appeal. ASSESSMENT AND DEFERRAL CALENDAR January 1 Property Tax Assessment and Lien Date for Next Fiscal Year July 1 Fiscal Year Begins I Real Estate Deferral Eligibility Date for Fiscal Year October - December Actual Tax Bills Mailed for Fiscal Year November 1 (Semi- 15t Actual Tax Installment Payment Due annual Payment Communities) February 1 (Quarterly Payment Communities) December 15, or 3 Deferral Applications to Assessors Due s Calendar Months from Mailing of Actual Tax Bill if later Contact your assessors. The due date depends on the payment system used in your community and the date actual tax bills were malled for fiscal year. 2 Some assessors may accept applications before actual tax bills are mailed. If not, or your application is not approved, you must apply by this deadline to claim the deferral. For more information, please contact your local assessors. 4 Local Property Tax Deferrals for Seniors Rev. 7/2015 3 Calendar Months from Assessors Grant or Deny Deferral Filing of Application (or Application Deemed Denied if Assessors Have Not Acted Date of Written Extension Given by ' Taxpayer) 3 Calendar Months from Appeal to ATB Due Assessors' Action on Application, or Deemed Dental of Application I i i I I i i I I I i- I For more information, please contact your local assessors. 5 I I