The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading real realtor has branded the real property tax appeals system as “flawed” because complainants first have to pay the sum they are disputing for the process to launch.

David Morley, Morley Realty’s principal, told Tribune Business his concerns with the existing set-up were “two-fold” because homeowners could end up paying an “exorbitant” tax bill for several years while the challenge to the Department of Inland Revenue’s (DIR) valuation of their property awaited resolution.

And, instead of repaying the sum in dispute should the ruling go against it, he said the government merely gives successful claimants a credit towards future real property tax bills rather than a simple cheque or other payment form.

“In order to lodge a challenge you’re required to give proof that you’ve paid that assessment in full,” Mr Morley explained. “To me, that’s flawed because in every case everybody’s challenging it not because the assessment is too low but that the assessment is too high.

“For example, if you think you paid two times’ what you think it’s worth, they won’t give you the cheque back - they’ll give you a credit towards it. How long is it going to take to resolve? It may take two years. You’ve paid two years at an exorbitant rate before the ruling, and they give you a credit, but they’re happy to charge you if you’re delinquent in paying.”

The Auditor General’s Office, in its recent performance assessment of real property tax’s performance, said a swift and impartial appeals process was critical to upholding taxpayer perceptions that the system is fair and that they have the ability to challenge Department of Inland Revenue (DIR) valuation assessments and billings.

“An important aspect of assessment is fairness. Property owners must perceive that the process of property valuation is fair,” the report added. “When taxpayers have a grievance on their property assessment, then they can launch a query...

“Department of Inland Revenue has a process to manage appeal caseload, including the Tax Appeal Commission Act 2020 and the courts.” However, while the Tax Appeal Commission has been given the authority of statute law, the Auditor General’s Office said the appeal process is being impacted by a lack of staffing and training, as well as a likely increase in cases.

Calling for the appeals process to be “streamlined” via automation, and timelines for the processing of complaints to ensure it “flows smoothly and efficiently”, the report added: “The system requires the Department of Inland Revenue to establish a preparation framework to address the influx of cases due to the revaluation of existing properties and valuation of additions to the tax roll.

“We recommend streamlining the objection and appeals process for tax efficiency through adequate staffing and training; processing objections within a specified timeframe and public awareness of the same, and automation to streamline cases through the system and improve user experience.”

Mr Morley, meanwhile, recalled another bureaucratic obstacle he encountered recently when seeking to obtain a Tax Compliance Certificate on behalf of a commercial property that Morley Realty manages,.

“On December 30 I requested a Tax Compliance Certificate,” he said. “They responded back ten days later saying the Business Licence had expired and denying it. Yes, by the date you replied to us the business licence had expired, but it was valid when we made the request.”

Mr Morley wrote back requesting “leeway” because the Business Licence was valid when the Tax Compliance Certificate submission was made, “and you have to give us the certificate at the date we requested. They complied”.

Tribune Business reported last week how up to 40 percent of real property tax bills go astray, and never reach the intended taxpayer, because of incorrect mailing addresses that lead to them ultimately being returned to the Department of Inland Revenue.

Failure to receive their bills, the Auditor General’s Office added, encouraged homeowners and businesses to believe they were relieved of their obligations to pay and thus resulted in “loss of revenue” that was contributing to massive real property tax arrears now exceeding an estimated $600m.

The report, which was submitted to Gaynell Rolle, the Department of Inland Revenue’s chief valuation officer, on December 14, 2020, also argued that the process of creating real property tax bills is too long as it takes two years for penalty surcharges for non-payment to be added.

“According to our review of the Bill creation process of the real property tax, we noted that it is lengthy,” the Auditor General’s Office found. “The length of time from bill creation to early discount to surcharges being added for non-payment is two years. The nature of the billing process contributes to taxpayer confusion and the accumulative arrears.

“The mode of issuing bills also needs to be revised as 30 percent to 40 percent of bills mailed are returned for incorrect addresses. However, homeowners that do not receive a bill must understand that the property tax is still due. When persons do not receive a bill, they think that they are not obligated to pay. Unpaid tax bills result in a loss of revenue.”

To address the situation, the Auditor General’s Office urged: “We recommend that the Department of Inland Revenue streamline the bill creation process to reduce the lengthy turnaround time. The mailing address issue should be resolved to reduce the large number of returned bills. Consideration should be given to using other mail delivery mediums, such as automated notification.”

The high cost of non-compliance was reinforced by the Auditor General’s audit of the Government’s accounts for the 2017-2018 fiscal year, the first in the Minnis administration’s five-year term in office. It revealed that real property tax arrears increased by a further $78.21m during those 12 months to end the year above $600m.