County assessor baffled by state's calculation for ag ownership
Hubbard County Assessor Ginger Woodrum expressed frustration with how the
Minnesota Department of Revenue (DOR) is interpreting "percentage of ownership" to calculate agricultural tax credits.
"We've also been asking about resorts and other ownership interests," she told the Hubbard County Board at Tuesday's meeting. The state property tax compliance officer advised Woodrum to look at those as well.
During Woodrum's nine years with the county, she said her office has used actual ownership interest to determine tax credits. If, for example, someone records a deed and there are two owners on it, then one submits another deed and transfers half of their ownership to a third person, the county assessor would compute a 50, 25 and 25 percent interest among the three parties.
"We'd follow that through for agricultural credits and homestead credits, percentage-wise," Woodrum explained.
DOR says that percentage of ownership should be based strictly on the number of owners and divided equally. If there are four owners on a parcel, for example, each would receive 25 percent ownership.
"Now they are all going to get equal shares," Woodrum said.
"How can you do that?" asked County Commissioner Char Christenson. "How can they justify this? If I put in $10 and the rest of you put in $5, why would I not have more of an interest?"
"You hold more interest in the property; we're just not going to recognize that for property tax purposes," replied Woodrum.
"The public must not know this or there would be an outcry," Christenson said.
"This will be another lawsuit," predicted County Commissioner Cal Johannsen.
"I'm upset. This is a lot of work for us. I feel it's going backwards because we're actually undoing accurate information," Woodrum said.
DOR is asking that all necessary changes be done by September 2018 for taxes payable in 2019.
Woodrum said her staff will need to pull deeds, court judgments and related ownership documents to determine the number of owners per property. If the relationship between owners is not obvious, they'll need to contact the parties involved. In Minnesota, spouses count as one ownership entity, Woodrum explained, whereas siblings are treated as individuals.
"We don't necessarily know how everyone is related and people aren't necessarily forthcoming with that information," she said.
"And what are they going to tell you if you call? 'It's none of your business,'" Johannsen said.
"Generally, that's a response we do get sometimes. Hopefully it's in their best interest to provide accurate information," Woodrum said.
She anticipates a need for either a temporary worker or overtime to complete the "tedious task."
After speaking with her counterparts in the region, Woodrum reported they determine ownership like Hubbard County does.
"Apparently the larger counties near the Cities, that's how they've been doing it because it's too much work for them to look at all the deeds. They look at the number and divide it out like the DOR is suggesting," she said.
If the county fails to comply, Woodrum's compliance officer told her there likely would be an audit and the DOR commissioner would get involved.
DOR is planning to ask for a technical fix and exclusion language during the 2018 legislative session, Woodrum added.
"People spend thousands and thousands in estate planning and pay attorneys for specific property ownership and interests. To just decide to do it however we want, is just wrong. It's not in the best interest of the public. Why would we purposely do something that we know is incorrect? If we already have correct information in the system, why would we go forth and do it wrong? I don't understand that," Woodrum said.
Christenson recommended contacting legislators about the issue.
Woodrum plans to review a 47-page bulletin from DOR before moving forward.
"I hate to make some big change, then the legislators say, 'No, we're not going to do that,' and then it all goes to the wayside," she said.