HomeMy WebLinkAboutIR 7540 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7540
'."OTIA'o July 30, 1991
(9 V i To the Mayor and Members of the City Council
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Subject: PROPERTY TAX EXEMPTIONS
Internal Audit has completed a review of property tax exemptions which indicates that as many
as 1,000 residences may not be qualified for the homestead and/or over-65 exemptions which
are currently on the tax rolls. Based on the value of these residences, Fort Worth could recover
as much as $195,000 this year (and each succeeding year) by removing the unqualified
exemptions from the tax rolls.
The Tarrant Appraisal District (TAD) is responsible for valuing property and monitoring
exemptions for land in Tarrant County. Fort Worth currently allows a homestead exemption of
20% of the property value with an additional $40,000 exemption for residents who are over 65
years of age. The property must be eligible for the homestead in order to be eligible for the
over-65 exemption. TAD has an efficient system to verify the validity of homestead exemptions
annually. However, by using resources which are not available to TAD, Internal Audit was able
to identify addresses which appear to have exemptions for which they are not qualified (these
represent approximately 3% of the total exempted property value).
Using a statistical sample of the addresses, Internal Audit physically visited the locations and
determined that, in most cases, different persons resided at the locations than were listed as the
property owners on TAD's records. In the sample, Internal Audit found locations that had no
houses on the property, and houses that were rented or vacant. The review also identified
instances where one person had as many as three homestead exemptions in Fort Worth.
Texas State law allows the City to go back as much as ten years to recover underpayments of
tax where exemptions were in place which shouldn't have been. Internal Audit is currently aging
all identified accounts to determine the total amount of back taxes which would be due if the
City Council decides to try to recover all back taxes due. Preliminary projections indicate that
this amount will be significant.
The City has two alternatives for dealing with the exemptions for the upcoming tax year. One
alternative is to have TAD research each location and reach a conclusion (probably by about
January 1992) as to whether the exemption is qualified. Property owners of those locations for
which the exemptions were disallowed would then be sent revised tax bills after the exemptions
were removed. The second alternative would be to have TAD mail a letter similar to the one
attached and to ask TAD to remove the exemptions if a reply is not received by the date
specified in the letter. If this could be done before October, the City could avoid the expense
of preparing and mailing revised tax bills.
David Ivory
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
DATE
ADDRESSEE
RE: PROPERTY LOCATION
Tan-ant Appraisal District has reason to believe that the homestead exemption allowed on the
subject property is no longer valid. Ordinarily, a property tax exemption need not be filed again
once it is allowed. However, our records indicate that no longer lives at this
address. In accordance with Texas State Property Tax Code 11.43 (c) and (h), the Chief
Appraiser will remove the exemption(s) on this property by August 30, 1991 if this office has
not received a properly completed Exemption form (enclosed).
According to the Tax Code, an exemption no longer qualifies when the owner stops occupying
the property and establishes a different principal residence. If your primary residence was the
subject property above as of January 1, 1991, please complete and return the enclosed
Exemption from by August 30, 1991.
Please be aware that for all exemptions which do not require annual application, such as the
homestead, the applicant has a duty to notify the chief appraiser when his entitlement to the
exemption ends. Also, please know that any person who presents any record or document with
knowledge of its falsity commits an offense under Texas State Penal Code Section 37.10. This
offense is a Class A misdemeanor unless the actor's intent is to defraud, in which event the
offense is a felony of the third degree.
Thank you for your cooperation.