[members] RE: Tax Deductibility - Special Parcel Tax

Thu, 26 Oct 2000 09:52:14 -0700

After Proposition 13 was upheld, various rulings have held that Special Taxes, Assessments, etc. were NOT violative of Prop 13, BECAUSE they were NOT based upon the value of the property.  For Example, school bonds or parcel taxes could use a formula of so much per $100,000 of valuation, but this is based upon that increment -- NOT the value of the property.
 
  • Howard O. Kieffer
  • District Counsel
  • (714) 836-8600 x 250
  • FAX (714) 543-5890
  • [EMAIL PROTECTED]
-----Original Message-----
From: Michael Coleman [mailto:[EMAIL PROTECTED]]
Sent: Thursday, October 26, 2000 9:14 AM
To: Howard O. Kieffer
Cc: [EMAIL PROTECTED]
Subject: Re: [members] RE: Tax Deductibility - Special Parcel Tax

Howard-

Thanks for your response.  I'd like further info.  Looking at IRS publication 17, there appear to be three ways for a tax (including potentially a special tax - or parcel tax) to qualify as deductible:

1. If it is based on the value of the property.  This appears to be strictly interpretted as "ad valorem." (Are there any case rulings that clarify this?)

2. If the tax is a "local benefit tax" (could also be called an assessment or fee) in which the tax is for maintenance and repair or interest charges related to benefits.  The tax is NOT deductible to the extent it is used for capital improvements that increase the value of property (such as "streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements").

3. The tax (or fee or charge) is imposed at a like rate against all property in the taxing jurisdiction, and (2) are commingled with general revenue funds and not earmarked, and (3) expenditures on service improvements and maintenance are not limited to or determined by the amount of these fees or charges collected.

Do you have more info?

--
Michael Coleman      ���
Special Consultant
League of California Cities
[EMAIL PROTECTED]
530-758-3952 phone/FAX

"Howard O. Kieffer" wrote:

 

Special Taxes, Special Assessment, Parcel Taxes, Water Standby Charges, etc. are NOT tax deductible.  ONLY ad valorem taxes are legitimately tax deductible.  However, homeowners regularly deduct the TOTAL amount they pay the County Tax Collector for "Secured Property Taxes" (including whatever else the bill contains).  There are virtually tens of millions of dollars claimed (in California alone) that shouldn't be.  The reality is that so many people do it that no politician would ever propose clarifying the issue, nor is the IRS likely to clamp down (because of the political repercussions).  I'd be happy to provide additional information.

*       Howard O. Kieffer
*       District Counsel
*       Serving Cities, School Districts and Special Districts
*       (714) 836-8600 x 250
*       FAX (714) 543-5890
*       [EMAIL PROTECTED] <mailto:[EMAIL PROTECTED]>
 

-----Original Message-----
From: Smith, Judy [mailto:[EMAIL PROTECTED]]
Sent: Wednesday, October 25, 2000 4:49 PM
To: CSMFO Members
Subject: [members] Tax Deductibility - Special Parcel Tax

City of Palos Verdes Estates is in process
of special tax election (March 2001) for per parcel tax
to fund contract cost County fire and paramedic services.

Tax will include flat per parcel, plus cost
per sq. ft. of building improvement.

Is anyone aware of attorney opinion regarding
tax deductibility of parcel taxes - either flat or variable rate?
Has your city has obtained such an opinion?
Would appreciate answer and will post results.
Thank you.

Judy Smith
City of Palos Verdes Estates
340 Palos Verdes Dr. W.  PVE CA  90274
(310) 378-0383 Phone   (310) 378-7820 Fax
 

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