Enacted in 2011 after AOC convened a workgroup of local taxing district representatives, Deferred Billing Credits (DBC) provide the county assessor with the authority to, at their discretion, issue a DBC to taxpayers when the tax assessment is appealed and the dollar amount in dispute exceeds $1 million. The assessor is allowed to provide DBC in any amount deemed necessary to address the risk presented by an appeal. The issuance of a DBC mitigates the risk to the county tax collector, and in effect local taxing districts, from being required to refund taxes previously collected, with 12 percent interest in instances where final resolution of appeal results in a refund of taxes paid. When a DBC has been issued, the taxpayer is not required to pay taxes extended equal to amount of the deferred billing credit. If final resolution of appeal results in taxes being owed by the property owner, taxes are due within 45 days following the date on which the county assessor mails the notice of tax due. Taxes paid within 45 days of notice are payable without interest and after application of the three percent discount for prompt payment. Interest charge and collected on delinquent property taxes accrues at the rate of one and one-third percent per month (ORS 311.505). Refund interest paid accrues at a rate of one percent per month (ORS 311.812).
After the Comcast central assessment appeals extended for years, a flaw in current law was exposed. A taxpayer-appellant has free use of the money otherwise to be paid in taxes to extend the life of appeals.
On May 11th, the House Revenue Committee sent to the House floor “do pass” House Bill (HB) 2407A, intended to correct the flaw.
The bill would eliminate deferred billing credit statutory language following its effective date. (DBCs issued before the effective date of measure are unaffected by changes in measure). HB 2407A would allow the county assessor to issue a potential refund credit in instances where DBCs are allowed under current law. It would require the taxpayer to pay the amount of taxes included in the potential refund credit. Upon issuance of the potential refund credit, the county treasurer would withhold the amount of taxes included in the potential refund credit and deposit withheld amounts in an investment pool or any other investment account. The county treasurer would have to provide for proper accounting of any interest accruing on the withheld amount. Upon final resolution of the appeal to which the potential refund credit relates, the amount withheld and interest accrued would be refunded to taxpayer or deposited into the unsegregated tax collections account depending upon the outcome of the appeal. The bill would eliminate the assessor’s quarterly reporting of DBCs, but require the assessor to annually report potential refund credits.
Contributed by: Gil Riddell | AOC Policy Director