banner



Home  ›  How Much Money To Be Rich In Omaha Nebraska

How Much Money To Be Rich In Omaha Nebraska

Written By Tuesday, December 7, 2021 Add Comment Edit

More than $50 million of Nebraska's new property tax credit goes unclaimed

LINCOLN — More than $50 million set aside for Nebraska's newest property tax relief program has failed to reach taxpayers, according to state officials.

Figures provided by the Nebraska Department of Revenue show that, as of mid-October, property owners have claimed just $73 million of the new tax credits. That means about 40% of the money allocated for the program this year has been left on the table.

State Sen. Lou Ann Linehan of Elkhorn, the Revenue Committee chairwoman, called the unclaimed amount unexpected and "pretty disturbing." She said lawmakers need to figure out what happened and fix the issue next year.

Others took a more pessimistic view of the program, which seeks to ease property tax payers' pain by offering refundable income tax credits for a portion of school property taxes paid.

"To me, this just says the income tax credit program hasn't worked," said Sarah Curry, policy director for the Platte Institute, an Omaha-based think tank.

State lawmakers created the program last year as part of Legislative Bill 1107. The measure included several income and sales tax cuts, a revamped business tax incentive program and a pledge of funds for a major University of Nebraska project.

The new LB 1107 credit program is in addition to a long-standing property tax credit program, which provided $275 million worth of credits last year and will distribute $300 million this year.

Nebraska tax collections continue to roll in above projections

Under the older program, county officials calculate how much credit goes to each property owner based on their property valuation. The credits are automatically applied as a deduction on the annual property tax statement. State money fills the gap for schools and other property tax supported entities.

The new program created by LB 1107 requires property owners to claim the credit when they file their income taxes.

This year, taxpayers could get back about 6% of the school property taxes they paid, minus school bond payments, during 2020. The credits are refundable, meaning that taxpayers get money back if their property tax credit exceeds what they owe in income taxes.

Lawmakers allocated $125 million for the LB 1107 credit program this first year, but based future amounts on the growth of state tax revenue.

Healthy revenue growth during the fiscal year that ended June 30 more than quadrupled the amount that will be designated for LB 1107 credits next year. The new total will be $548 million, which should provide credits equal to about a quarter of school property taxes paid.

But Ryan Burger of Seward, chairman of the Nebraska Society of CPAs, said he is skeptical about the $548 million all getting out to property tax payers, based on his experience and the amount of credits that have gone unused this year.

He said the 58% of credits claimed this year exceeded what he expected, based on typical patterns for income tax credits. Even with the larger amount available next year, he predicted the state would fall far short of distributing 100% or even 90% of the money.

Senators hear array of proposals for reforming Nebraska's tax structure

"It's an unreachable goal," he said. "I barely see a path to achieving 70%."

Burger and Curry pointed to several reasons why people did not claim the credit. Many did not know about it, especially if they prepared their own taxes. Some electronic tax filing applications did not include the credit as an option, at least early in the tax season. Even if they learned of the credit later, they may not have wanted to go through the time and effort of filing an amended return.

In addition, property owners who live outside the state were unaware of the credit or do not file Nebraska income taxes. Other property owners decided against claiming the credit because of the additional cost for a tax preparer to calculate the credit.

"In some cases it did not make sense to pay $50 for a $28 credit," Burger said.

So-called pass-through entities had particular problems claiming the credits. Those are business structures, such as partnerships, for which income taxes are paid by individuals. That created complex situations in which each owner may have been entitled to only a small amount of credit for a property, causing some to forgo the money.

Legislation passed this year gives pass-through entities a chance to claim the 2020 credit when they file 2021 tax returns, if they passed up the credits this year. Those entities could account for a portion of the $50 million in unused credits. Burger predicted they would not make a significant difference.

Gov. Pete Ricketts' spokesman, Taylor Gage, said other Nebraskans who may have missed claiming the credit could still do so by amending their tax return.

Gage said the amount of unclaimed credits was "expected" given the newness of the program and the difficulties with the pass-through entities. He called the program a "major success," pointing to the substantial growth of money allocated for property tax relief in its first two years.

Once a novelty, residential living now drives Omaha's downtown growth

He also said the governor believes any portion of the $50 million left after taxpayers have a chance to claim it should go toward future property tax relief.

Under current law, unclaimed tax credits would remain in the state's general fund. Using those dollars as Gage suggested would require legislative action.

Burger commended state lawmakers for trying to address the thorny problem of property taxes. But he said the older tax credit program has been more effective at getting money to taxpayers.

Curry argued that the state should limit the growth of property taxes instead of using state sales and income tax revenues to pay property tax payers for some of their costs.

Linehan and Sen. Tom Briese of Albion, a fellow Revenue Committee member, defended the LB 1107 tax credit mechanism, which was adopted after proposals to give property tax relief by altering the state school aid program failed to gain political traction.

Linehan said the older tax credit system — the one adopted before LB 1107 — is not transparent, and many property tax payers are unaware that they receive relief from the state.

Briese said he thinks people will not pass up the new credits next year because they will be worth so much more.

"The lack of people claiming is going to correct itself, in my view," he said. "I like this formula. This is an effective means of getting property tax relief to all Nebraska property taxpayers."

Get Government & Politics updates in your inbox!

Stay up-to-date on the latest in local and national government and political topics with our newsletter.

How Much Money To Be Rich In Omaha Nebraska

Source: https://omaha.com/news/state-and-regional/govt-and-politics/more-than-50-million-of-nebraskas-new-property-tax-credit-goes-unclaimed/article_2d682c16-35dc-11ec-ab4e-fb444bb02529.html

Posted by: hallworgarthe.blogspot.com

0 Response to "How Much Money To Be Rich In Omaha Nebraska"

Post a Comment

Subscribe to: Post Comments (Atom)

Iklan Atas Artikel

Iklan Tengah Artikel 1

Iklan Tengah Artikel 2

Iklan Bawah Artikel