The owners of 180 properties spread throughout Clarendon County will be getting an interesting letter from the county soon.
Clarendon Administrator David Epperson said Tuesday that these properties are misidentifying as “primary residences,” and they are being assessed at the wrong interest rate for property tax purposes.
“There are certain requirements you have to go through and meet for the Assessor’s Office to qualify your property as one of primary residence, which leads to a lower interest rate of 4 percent,” Epperson said. “If you can’t meet those requirements, your property is assessed at the rate of 6 percent.”
Through a partnership with Charlotte, N.C.-based Tax Management Associations, Epperson, Assessor Robert F. “Bob” Everett, Treasurer Matt Evans and Auditor Patricia Pringle discovered that the individuals who own the 180 properties listed as a primary residence in Clarendon County also gain similar benefits for properties in other counties and states.
The officials - sans TMA - met Tuesday with The Manning Times to explain the situation.
“So, what we’re going to do is send out these letters letting these individuals know what we have found,” Epperson said. “And then they will be getting a bill in the very near future for back taxes and penalties as the property should have been assessed at the 6 percent rate.”
OK, WAIT … WHAT?
Epperson said that property taxes are assessed at two separate rates – 4 and 6 percent.
“Four percent is for your primary residence, and it comes with certain perks, I guess you could say,” he said. “If you own a second home, that one cannot be your primary residence if you already have a primary residence. That home would then be assessed at a 6 percent rate, and that’s whether it’s in Clarendon County or in another county.”
Therefore, as Everett said, you cannot have more than one primary residence at a time.
“Primary residence, by definition, is your main residence,” he said.
Therefore, the 180 properties identified by Tax Management Associates will automatically be recognized as non-primary residences and assessed at the 6 percent rate.
“This has been a group effort between all the county agencies involved,” Epperson said. “Our offices will be getting with employees, because they will be the ones getting the phone calls. We expect the letters to go out within a week.”
HOW DID THIS GET STARTED?
Epperson said Pringle was approached by Tax Management Associates. The company offered its services, and will ultimately receive a fee totaling 30 percent of what the county gains from the back taxes and penalties and other fees from the 180 misidentified properties.
“It’s premature at this point to say what that figure might be,” Epperson said. “There are so many factors involved, and no one property is the same.”
County officials gave The Manning Times an example sheet that uses a home with a taxable value of $82,7000 for 2011-13. For each of the three years, the 4 percent assessed value is $3,308.
Millage changes each year, so the taxes at 4 percent are $529.28 for 2011, $540.53 for 2012, and $567.65 for 2013. Everett said, therefore, that for the 180 properties, a penalty will be assessed based on state law that is “a minimum of $30, or no more than that year’s taxes.”
In the example provided by the county, the interest – unpaid penalty – for 2011-13 is $95.27, $64.86 and $34.06, respectively.
Everett said the same property at 6 percent would have an assessed valued for 2011-13 of $4,962, leading to a tax of $1,394.31 for 2011, $1430.05 for 2012 and $1,483.64 for 2013.
“It’s quite a difference,” Everett said.
Ultimately, the owner of this home, when reassessed at the 6 percent rate and the unpaid penalty, will owe the county $4,502.20 in back taxes.
WHY GO TO AN OUTSIDE AGENCY?
“The work we’ve done with TMA is tied to their ability to scan nationwide through Lexis-Nexis and other databases, and what they’ve provided for us is this set of taxpayers and associated properties who either have properties elsewhere in the state or elsewhere in the country that get similar tax treatment as a primary residence,” Everett said.
It gives the county only one choice.
“If you can call it a choice, it’s the only one we have: Removing the 4 percent classification and billing them in terms of what you’ve (provided from the example page),” Everett said.
He noted that for Clarendon County property owners claiming primary residence here and also in another South Carolina County, county officials will be in touch with those other counties.
“We will be notifying those counties where these owners also have 4-percent properties that they are claiming a 4-percent property here,” Everett said. “We have a choice, and now you are going to have a choice: You can do it here, or you can do it there, but you cannot do it in both places.”
WHY CLAIM TWO PROPERTIES?
Everett said a property assessed at 4 percent has an exemption for school taxes under S.C. Act 388.
“Where the fraud comes in is with the school taxes,” Everett said. “And that can amount to a substantial sum.”
“Up to 50 percent of the total bill on some properties,” Evans interjected.
HOW DID TMA ZERO IN ON THESE PROPERTIES?
Like Everett said, the company scanned nationwide databases and utilized software programs.
“The company didn’t single out these properties for no reason,” Everett said. “They made contact with many of the owners. They performed surveys.”
Everett said some of the property owners shouldn’t be surprised by the letters.
“This won’t be the first time many of them are contacted about this,” he said.
WHAT DO YOU DO IF YOU GET A LETTER … AND A BILL?
Well, first, you’re going to have to pay up.
“They have to pay immediately,” said Pringle. “With it being so behind, they can’t make installments.”
Appealing TMA’s finding will also not delay payment.
“Normally, you’d have 30 days to appeal, but in this case, you don’t,” Everett said. “But if you pay, and then appeal the decision and we recognize the home as your primary residence, you will get a refund.”
Either way, if you want to contest TMA’s findings – after you pay, of course – you will have to go through the entire process of proving the home is your primary residence.
“The burden of proof is on the taxpayer in this situation,” Epperson said. “They will have to go through all the qualifications with the assessor’s office to prove this to us.”
