DIRECTIVE 11-2
Supersedes Directive 09-3

July 1, 2011

REAL PROPERTY TAX CREDIT AND TAX STATEMENTS FOR 2011 AND 2012

Purpose,This directive is to advise county assessors and treasurers of the 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 upon the valuation of each parcel of real property compared to the valuation of all real property in the state. This Act has been funded for two additional years (LB 374). The total amount of the credit available for statewide distribution is $115 million for year 2011 and $115 million for year 2012.

Procedure and Implementation. The credit shall 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 shall also 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). Pursuant to Nebraska Law, the credit shall not be netted against the taxes levied, but shall 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.

• If the real property owner qualifies for a homestead exemption, the homestead owner shall also qualify for the credit to the extent of any remaining liability after applying the homestead exemption.
   
• The credit is applicable to the total value of a real property parcel that is part of a community redevelopment project (TIF); e.g., base and excess valuations.
   
• The credit is applicable to the real property portion of centrally assessed railroads and public service entities. For centrally assessed companies recorded on the tax list by individual taxing subdivision, the credit shall be determined by using the county’s total real property value for each company; i.e., each railroad branch line or each public service entity. The total credit shall then be apportioned to the respective individual taxing subdivisions based upon the company’s real property taxes levied computed for each subdivision compared to the total real property taxes levied for the company. If a centrally assessed company is 100% personal property, no credit will be received.
   
• The credit is applicable to the real property value as adjusted by any tax list correction made to the tax list for year 2011 and year 2012.
   
• The credit is not applicable to real property parcels acquired by Nebraska Game & Parks Commission for wildlife habitat and subject to the in lieu of tax, pursuant to § 37-335.

Below are the steps that the Property Tax Administrator, county assessor, and county treasurer will need to take to properly administer the credit. Note: The valuation amounts used are merely examples and do not reflect actual certified numbers.

Step 1 – County’s Share of Credit: By September 15, the Property Tax Administrator shall determine the credit amount to be disbursed to each county. The amount disbursed to each county shall be equal to the amount available for disbursement -- $115 million dollars in year 2011 and $115 million dollars in year 2012, 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 shall certify these amounts to the State Treasurer and the county on or before September 15. The disbursements to the counties shall occur in two equal payments; the first on or before January 31 and the second on or before April 1 of years 2011 and 2012, respectively.

Example:

State's Total Real Property Value: 143 billion
County's Total Real Property Value: 1.6 billion

County's Real Property Value as a percent of State's Total Real Property Value:
          1.6 billion divided by 143 billion = .01118881

County's Share of $115 million credit:
          $115 million multiplied by .01118881 = $1,286,713

Step 2 – Credit per Parcel Calculation: The county treasurer will then determine the amount of credit for each parcel in the county based upon 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 2011, the rate of credit is calculated by taking $115 million divided by the total real property value in the state eligible for the credit.

Example 1:

Real Property Parcel's Value:             100,000
County's Total Real Property Value:  1.6 billion

Real Property Parcel's Value as a percent of County's Total Real Property Value:
          100,000 divided by 1.6 billion = .0000625

Real Property Parcel's share of county's $1,286,713 credit:
          $1,286,713 multiplied by .0000625 = $80.42 credit for the parcel

Or calculate the "rate of credit" for each parcel in the county or the state:

Example 2:

• County's rate of credit: County's share of credit is $1,286,713 divided by county's total real property value of 1.6 billion = .0008042
   
• State's rate of credit: State's credit of $115 million divided by the state's total real property value of 143 billion = .0008042
   
• Or, $80.42 credit per 100,000 dollars of value

Step 3 – Homestead Exemption: If the real property owner qualifies for a homestead exemption under §§ 77-3501 to 77-3529, the homestead owner shall also be qualified 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 shall occur in two equal payments, the first on or before January 31 and the second on or before April 1, of years 2012 and 2013, respectively. After retaining one percent of the credit for costs, the county treasurer shall allocate the remaining credits to each taxing unit levying taxes on taxable property in the tax district in which the real property is located in the same proportion that the levy of such taxing unit bears to the total levy on taxable property of all the taxing units in the tax district in which 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, along with supporting documentation, with the Risk Management State Claims Board, 521 South 14th Street, Suite104, Lincoln NE 68508-2707.

See claim form available at:
http://das.nebraska.gov/risk/forms/claim_for_injury_damage.pdf.

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

APPROVED:

Ruth A. Sorensen
Property Tax Administrator
July 1, 2011

APPROVED:

Douglas A. Ewald
Tax Commissioner
July 1, 2011