Expect more in taxes; how much not yet known

Union County Assessor Mindy Schaefer told her conference board last week property owners should expect an increase in property taxes but it’s too soon to determine even an estimated amount since information is still being collected and reviewed.

The conference board is representation from taxing entities within the county, mainly towns and schools, that work with Schaefer. Not every member was present but there was a quorum. The board scheduled to meet Jan. 26 to approve its fiscal year 2024 budget.

According to the Iowa Department of Revenue, the property tax cycle takes 18 months from start to finish. It begins with the assessor determining the assessed values and classification for individual parcels of property Jan. 1 of the assessment year. The first half payment for property taxes related to this assessment is due in the fall of the next year and the second half payment is due in the spring of the year following the first half payment. As an example, the assessment for January 2023 would have the associated taxes due in fall 2024 and spring 2025.

“Ag land is a hard one to explain,” Schaefer said. “Ag is not market value as ag is valued on productivity. That formula is done every two years. Just because ag land goes up does not mean ag land will go up for value.”

Schaefer said agriculture land owners will have another factor.

“Expect to see a large increase in agriculture land value for 2023 because its based on productivity and single farmer that accepted PPP payments from COVID is being figured into that formula as income. Whoever accepted it and reported it as income,” she said.

According to the U.S. Department of Agriculture, as part of its response to the (COVID-19) pandemic, the federal government implemented the Paycheck Protection Program (PPP) to aid consumers and businesses, including agricultural producers. Agricultural producers could use forgivable loans from this program to help keep employees on payroll and offset some of their operating costs. The maximum PPP loan amount was 2.5 times the monthly average profit plus payroll and eligible overhead expenses (such as the employer’s share of insurance payments and unemployment taxes). PPP loans were forgivable if used within 24 weeks after the first disbursement of the loan on eligible expenses.

Data from the U.S. Small Business Administration (SBA) showed more than $525 billion in PPP payments were disbursed through more than 5.2 million loans in 2020.

Schaefer said another categorized section of land is also being noted.

She is reviewing forest reserve exemptions and if they still meet the guidelines. There are 350 parcels with such exemption.

“It completely wipes out the taxable amount. If you have forest reserve, no taxes paid. There are other regulations,” she said. “A lot of it did not meet requirements anymore. County conservation has the forest reserve list and we’re going through changes.”

Schaefer said property owners can’t have livestock on forest reserve. Properties that have livestock on the reserve will have the exemption waived and it will be taxable.

“A lot had been cleared; acres that had been put in once is in it for life. If you clear your forest, you are not paying taxes but it’s not longer forest reserve. We are making those changes and portions cleared will be taxable,” she said.

Schaefer said clearing forest reserve should be self reported, but it should not be cleared in the first place.

“You can collect back taxes; one of the few times when you can,” she said. “I’m not going to do that. There are other things that are involved; like if the property sold, did they know? A lot of things I don’t think would be fair. What I am going to do after changes made is notify reserve (owners) with a letter to inform them of rules. People who have forest reserve will know what the law is.”