State Assessor: Nome needs to pull up its socks on personal property taxation
The City of Nome has distributed green forms to mailboxes so that residents may declare their personal and business property including machines and equipment, and turn in the forms by Feb. 1.
Up to now, the City has used the honor system for residents to list their taxable personal property.
This time around, the Nome Common Council has directed City Clerk Bryant Hammond to pull a certain number of returns for an audit by a contract auditor.
Personal property can include but is not limited to snowmobiles, boats, motors, trailers (boat, snowmachine and four-wheeler), pick-up campers, motor homes, motorcycles, four-wheelers, but not automobiles. Business property may include but not be limited to operating inventory, machinery, heavy equipment (loaders, graders, backhoes, etc.), office equipment and supplies, computers, and software, but NOT inventory held for resale.
“I hope the auditor knows snow machines, so when he sees them in yards he can start them up to see if they run,” John Handeland, acting city manager quipped.
Household furniture and personal effects of household members are exempt, as well as all aircraft and business inventory for resale.
It seems that using formulas comprising area economy, population, median salaries and other data, the Office of State Assessor has an inkling that that Nome’s full value comprising assessment is underreported by about $50 million.
Several council members asked for information to account for the difference between the local figures and the OSA estimates. Several formulas and local figures go into determining Nome’s Full Value Determination, FVD for short, made by October each year. The determination of Full and True Value is required to be developed using the best information available. The amount of required local contribution for public education derives from the FVD.
In a telephone session with the Council, State Assessor Marty McGee suggested that the City perform some audits on personal property reports. Nome has always used the honor system.
“Your honor system will be more honorable if people know there will be audits,” McGee advised the Nome Common Council. “It is probable that additional taxable value will be added to the tax base; this can result in a reduction of the tax rate on all tax payers.”
He said that unless Nome could determine its full valuation, it could not achieve full benefits of the state’s contribution to its school funding.
“There seems to be a lot of variation in what is reported to the City by the tax payers,” McGee said in a letter to the City of Nome.
Real property tax is based on assessed value rather than appraised value. Assessed value should be equal or close to market value. However, other factors can raise the appraised value.
The third week in March, the City sends out statements of assessment, which states their property’s assessment according to the assessor. If they disagree with the assessor’s statement of worth or the figure they provided by mistake, they have a meeting with the assessor. If they do not come to a solution, the property owner then may go to the Board of Equalization that meets in May. The same procedure applies to personal property declarations if the error is not adjusted by the assessor. Once the Board of Equalization is concluded, the tax roll is locked and goes into the City’s budget process. The Nome Common Council sets the mill rate, which is how much real property tax an owner must pay per $1,000 assessed value of the property.
Then the tax bills get mailed in June.
“Some time in February is when a few names would be pulled to be audited, then,” Councilman Jerald Brown said. “We would pull a few forms to be audited, similar to sales tax audits.”