Wednesday, August 31, 2011

Did You Know - Accounting Errors Could Make Property Taxes Increase

Due to an accounting error that has misrepresented the value of the village’s business district, village property taxes could increase in 2012 by 5.8 per cent.

According to Shorewood Village (Wisconsin, United States) officials, the Tax Incremental Financing District No. 1 that blankets much of the business district was recorded and published as $76.7 million too high by the Department of Revenue. This was where the error occurred.

Since the value of the village was erroneous, and that its value must be based on the total equalized value of property in Sherwood published by the Department of Revenue, its property taxes could be artificially high too next year.

Property owners will have to contribute an extra of 5.8 percent in property taxes should this error not be corrected.

This error could mean a total of $2 million extra in property taxes or $442 more for a house assessed at $300,000. This computation was based on the 2011 tax rates.

When the tax district’s value reached the department in an electronic file, it was already wrong. It came from the contracted assessor for the village, the Associated Appraisal Consultants, Inc. This was according to Scott Shields, Section Chief of the Department of Revenue Equalization.

Furthermore, Shields said that a department employee was sent to contact the assessor to confirm the value and the assessor confirmed it.

Image: Shorewood Village trustees and officials discuss their long range financial plan at a meeting Tuesday, when Village Manager Chris Swartz announced the error in recorded TIF value. Credit Rory Linnane

On the same date the data was released, village officials immediately caught the error. However, state officials say they could not change it since it has been published and many other entities are already using the data for planning and taxing purposes.

“As soon as we publish them people are running with them, using them, estimating impacts,” said Shields.

According to Shields, the department has to wait until the following year to correct the error as it is bound by state statute.

“We’re asking the state Department of Revenue to consider that this is just an entry mistake and it doesn’t affect anyone else,” said Chris Swartz.

Source: Shorewood Patch »

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