Once upon a time, not long ago, a taxing agency overstepped its authority and attempted to penalize Taxpayers. This story is no surprise to anyone who came to this page to read this article, because this is really a tale as old as time. This one though, has a bit of a surprise ending because it deals with a long standing constitutional right, and it is happening here in Florida, circa now.
The story began in the late 1980’s, Chatham County, Georgia hired a private auditing company to do outside audits of tangible personal property tax returns. Generally, a county taxing agency, such as a property appraiser, must have their budget cleared in advance. This means there is seldom enough money to hire a whole compliance Department, or part time outside auditors to do full compliance reviews. So Chatham County cooked up an arrangement with a private auditing firm, in which the audit firm received a portion of any tax revenue
s brought in. Not just a small fee, but 35% of all revenues brought in, plus 100% of first year penalties. One Taxpayer selected for audit was Sears Roebuck. This arrangement did not sit right with Sears, so they filed suit against the county. The issue went all the way to the Georgia Supreme Court. In their 1991 decision, the Court noted that this sort of contract is void against public policy. The Court also noted that “the power to tax rests exclusively with the government.”
These audits have come under fire, not just in Georgia, but other states as well. Alabama’s attorney general said, in 2009, that a county commission has no authority to hire third party auditors, on contingent fee arrangements, to determine tax against the citizenry. The attorney general opinion which hit the nail on the head, stated that “the focus shifts from serving the public good to generating the highest revenues from the citizenry….this agreement belies a bedrock notion that the power to tax must lie solely with the assessor.”
Presently, contingency fee based audits that have been held to violate public policy in Georgia and Alabama have come to Florida. Recently, in Florida, we have seen a number of property appraisers hire third party auditors to conduct these contingency fee audits. These audits are intended to find homeowners who are currently receiving homestead tax benefits in Florida, as well as other states. The problem is, these audits are aggressive, and oftentimes overreaching. The result of these audits, besides threatening letters and privacy violations, is a loss of one of our rights as Floridians, the protection afforded to our family homes. Once names are turned over by these companies to local property appraisers, liens are placed on the homes of those who were turned in. These individuals now have their homes re-assessed at current value, meaning they lose the benefit of the cap to increases in property value. This can mean a difference of thousands of dollars a year in property taxes. This all begs the questions as to whether these arrangements are an overstep of the power of a county official in Florida where our homestead is so fundamental that it is a constitutional right.
The Legislature seems to have taken note of the occurrence. Section 196.141, Florida Statutes identifies the duty of the property appraiser in respect to homestead. This section, is both very brief, and very vague. It identifies the duty of the property appraiser is to, “examine each claim for exemption filed with or referred to him or her and shall allow the same.” Clearly there is more to being a property appraiser than the single sentence contained in the statute. Some of the members of the State Legislature though it would be best to clarify the property appraisers’ roles, and limits. Senate Bill 1324, below, proposed 4 pages of additional language to the current sentence contained in Section 196.141, F.S. Specifically, this bill proposed that the State of Florida should specifically allow property appraisers to enter into contracts exactly like the one challenged by Sears, and disallowed by Alabama. The bill died on March 11, 2016 in the Committee on Finance and Tax. Moreover, a bill was passed and presented to the Governor which would strengthen the Taxpayer Bill of Rights, specifically by strengthening the privacy right granted to Taxpayers. House Bill 499 prevents individuals, and agents, of the property appraiser from accessing taxpayer confidential information without written authorization from the taxpayer. All of this suggests that Florida does not look kindly on arrangements where homestead is under fire, and Taxpayer Rights are compromised.
Where a policy which affects tangible personal property would be void as against public policy, one which targets homestead in Florida is as egregious a campaign as an elected official could drum up. And yet, the Sarasota and Pinellas County Property Appraisers have entered into agreements similar to the one described above. The problem with these audits is because they are contingent fee, the auditors are extremely aggressive in their review. To delegate the audit function of government to private industry butts up against Taxpayer Bill of Rights. From the sales tax perspective, auditors are specifically disallowed form being paid on the basis of the amount which their audits net. While this does not specifically apply in the property tax context, there is a very serious privacy concern which would be at issue. Government agencies are specifically disallowed from sharing Taxpayer information, and without some level of information sharing, these audits could not be conducted.
Do not let a third party company deny you of your constitutional right. If you property has been levied, or you have been sent a tax bill, and your property taxes have increased, you can challenge this practice. In addition to the tax concerns, the loss of homestead makes property subject to creditor claims. No one should lose their family home because of credit card or student loan debt.
If you have been affected by property appraiser trying to take the homestead to which you are constitutionally entitled, contact us. At the Law Office of the Law Offices of Moffa, Sutton, & Donnini, P.A., our primary practice area is Florida taxes. We represent taxpayers and business owners from the entire state of Florida, from Department of Revenue to County Property Appraisers and Tax Collectors. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
About the author: Ms. Levine is an associate attorney with the Law Offices of Moffa, Sutton, & Donnini, P.A. Her primary practice area is Florida tax controversy, with focus on real property issues. Ms. Levine received a B.S. in Accounting from University of Central Florida. She spent several years working in public accounting before attending Nova Southeastern University Law School. She received her Juris Doctorate in 2014. During her time at Nova Law, Ms. Levine was the Executive Justice of Academics for the Moot Court Honor Society, as well as the Finance Chair. She was awarded by the National Order of the Barrister, a national honor society which encourages oral advocacy and brief writing skills. You may contact Amanda via email at AmandaLevine@FloridaSalesTax.com or 954-642-1088.
Authority
Sec. 193.155, F.S. – Homestead assessments
Sec. 196.141, F.S. – Homestead Exemptions; duty of property appraiser
Article VII, Section 6(a) Florida Constitution – Homestead Exemption
Sears, Roebuck & Co. v. Parsons, 401 S.E.2d 4 (Ga. 1991).
Senate Bill 1324, 2016
House Bill 499, 2016
Additional Resources
Florida Homestead Tax Exemption Case – Mary Jane, published March 15, 2015, by Amanda Levine, Esq.
Miami-Dade Property Owners Take on Tax Collector, published on Apr 11, 2015, by Amanda Levine, Esq
Burden of Proof-Persuasion: FL Ad Valorem Tax, published Aug 3, 2015, by James McAuley, Esq.