Legislative Council Ordinance Committee Chair Ryan Knapp has released a draft of the revised senior tax relief proposals going to a planned public hearing May 7 before the regularly scheduled council meeting. Officials could deliberate and act on those changes and endorse the revised ordinance following the hearing.
According to the draft provided to The Bee, one significant change is the proposed addition of a fourth tier of benefit, which is already being funded at $150,000 as a result of the 2014-15 budget passage earlier this week.
If approved by the council, that new tier would apply a maximum credit of $800 to otherwise qualifying applicants whose household income falls between $65,001 and $70,000.
If the number of applicants in that new tier exceeds the number of households each qualifying for a maximum $800 benefit, all applicants will receive an equal, pro-rated benefit until the $150,000 is fully utilized. If funds are left over in the fourth tier allocation after each qualifying applicant receives the maximum $800 credit, the balance will revert to boost lower tier allocations, according to the draft.
Similarly, if the number of lower tier applicants exhaust the maximum available tax credit allocation of $1.5 million, their individual benefits will be pro-rated.
If the program provides the maximum benefit to all qualified applicants, and funds remain, they will roll into the 2015-16 budget to reduce that year’s required allocation.
For example, if every applicant receives their maximum credit leaving $100,000 in the tax relief account, next year's replenishment - if all other factors remain the same - would require $1,550,000 instead of $1.65 million.
During a recent Q&A session on the tax relief plan at the Senior Center, Mr Knapp, Finance Board Chair John Kortze and Council Chair Mary Ann Jacob discussed how it could take two fiscal years before officials have a good idea if the total amount being funded, the new tier structure and asset test are appropriate.
Because the senior tax credit program exists through an ordinance, the procedure to adjust aspects of it is much more flexible than if it were stipulated in the Charter Ms Jacob said.
In the lower tiers, households earning $0 to $45,000 may qualify for a maximum benefit of $2,000; those with an income of $45,001 to $55,000 may qualify for a maximum benefit of $1,500; and those earning $55,001 to $65,000 may qualify for a maximum benefit of $1,300.
According to local officials, these senior tax credits are among the most generous in the state.
If approved among the ordinance revisions, beginning with the application period for 2015 (next year), applicants will not only have to apply an earnings criteria to their request, but an asset test as well.
New Asset Affidavit
The draft revision states: “Qualifying total asset value shall consist of any and all assets of the applicant individually, if unmarried, or jointly, if married, as of the date of the application but shall specifically exclude the value of the applicant’s primary legal residence and all tangible personal property contained therein.
“Each applicant shall make a sworn statement in a form satisfactory to the Tax Collector that such applicant’s qualifying total asset value does not exceed the qualifying total asset value limit. The QTAV Limit … is subject to change upon resolution by the Legislative Council, and the current QTAV Limit shall be made available to the public in the office of the Tax Collector.”
Additionally, the tax relief benefit “shall not be available to any residence with an assessed value in excess of two hundred percent of the median assessed value of residences assessed during each of the prior assessment years, October 1 to September 30, since the inception of the last townwide revaluation as calculated by the Assessor (the Assessed Value Limit).”
Beginning next year, applicants will be required to apply for their tax credit annually versus bi-annually.
The total of all tax credits granted under the provisions of this article shall not in any taxable year exceed an amount equal to 10 percent of the total real property tax assessed in Newtown in the preceding tax year. Whether married or single, a credit may only be applied to a single residence, and no person’s normal real estate tax shall be reduced by more than 75 percent by virtue of the credit.
An applicant will be disqualified if he/she owes taxes in the Town of Newtown more than six months delinquent.
All applications and supporting information filed with the town shall be treated as confidential documents.
Who Can Qualify?
Benefits are available to individuals, if they and/or their spouse is age 65 or over as of July 1 of the application year. A surviving spouse age 60 or over as of July 1 of the application year may apply provided they survived an already qualified applicant.
Residents under age 65 who are certified as permanently and totally disabled may also qualify for the benefit.
In any benefit year, an applicant must have resided at and paid real estate taxes on a residence located in Newtown for a period of one year prior to his or her application for tax relief. And the property for which the exemption is claimed must be the legal domicile of such person and is occupied more than 183 days of each year by such person, according to the ordinance.
To qualify, modified income shall be calculated based on the tax year ending immediately preceding the application for tax relief benefits. Applicants would take their federal adjusted gross income (AGI), plus:
*Social security/railroad retirement benefits not included in AGI
*Tax-exempt interest income
*Net losses per Form 1040 (used to arrive at AGI)
*Business losses per Form 1040
*Capital losses per Form 1040
*Other losses per Form 1040
*Schedule E losses per Form 1040
*Farm losses per Form 1040
*Net operating losses per Form 1040
*Disability income not included in AGI
Then, they must deduct all unreimbursed gross medical expenses qualifying as and included on a federal income tax return of the calendar year immediately preceding the year of application as an itemized deduction in excess of 7.5 percent of AGI (per form 1040, Schedule A).
This story was amended April 27 to correct a description of how benefits would be pro-rated, and adding information from a recent senior forum on the new benefit proposals.