The Department of Education reports they went in the mail yesterday.

Mary Jane Grace, Program Technician
Property Valuation and Review Division
Vermont Dept. of Taxes

From: Vermont Municipal Government Discussion Network [mailto:[log in to unmask]] On Behalf Of Debra Ouelette
Sent: Wednesday, September 17, 2008 1:32 PM
To: [log in to unmask]
Subject: Re: Property Tax Adjustment Credits and Refunds-FAQ

In your answer below you referenced the cash flow sheets that are sent out in early September. It is now September 17th and they have either not been sent or I have not received mine yet. Do you have any idea when we should expect them?
Debbie, Town of Windsor

-----Original Message-----
From: Vermont Municipal Government Discussion Network [mailto:[log in to unmask]] On Behalf Of Grace, Mary Jane
Sent: Thursday, August 28, 2008 9:04 AM
To: [log in to unmask]
Subject: Property Tax Adjustment Credits and Refunds-FAQ

Bill Johnson asked me to send you the information below.  It is the promised response to your several questions about the property tax adjustment credits and refunds.  This is also being mailed to all town treasurers.  Please share this information with officials in your town or city that have responsibilities related to this topic.

Thank you.

Mary Jane Grace, Program Technician
Property Valuation and Review Division
Vermont Dept. of Taxes

Vermont Department of Taxes - August 28, 2008

1.  Why do some taxpayers receive refunds? It doesn't seem fair that someone has a "negative" tax.

The credit a person receives is based upon the property taxes and income of the person from the prior year.  The individual's income and/or valuation may have changed.  The tax rate may have gone down.

As an example, in the year of a reappraisal it is not unusual for some property values to increase much less than others.  Mobile homes, for example, may show a lower value after a reappraisal if the listers have not been routinely depreciating them.  Say a mobile home is appraised at $40,000 in tax year 2007.  A reappraisal takes place and it is determined that the mobile home is worth $25,000.  Most other properties increased in value.  The tax rate for the town also dropped considerably.  The property tax adjustment credit for the mobile home property is based on the inflated 2007 value and tax bill.  It can result in a property tax adjustment credit that is more than the current year tax bill.

Additionally, taxpayers may apply all or a portion of their income tax refunds to their property tax bills.   There is a monetary incentive to do so.  If they apply $1,000 of their refund to their property tax bill, the state adds an additional 1% and it becomes a $1,010 credit to the tax bill.

2.  When am I required to make a refund to one of my taxpayers and what money can I use to do this?

The law requires that Town treasurers make refunds no more than 20 days after a municipality's first tax due date or 20 days after the Education Department has sent out its "cash flow sheets" in early September, whichever date is later.  32 V.S.A. 6066a(f)(4).

On August 1st and again on September 15th, the Tax Department sends Towns checks for the amount of the municipal taxes in the property tax adjustment.  You can use some of these funds to pay refunds.  You will also be receiving tax payments from taxpayers from which to draw money.

3.  The Tax Department only sent me a check for the total amount of the municipal taxes within the credits but didn't provide a breakout of the total by taxpayer.  How do I know that the check is the right amount?

The Tax Department can only provide numbers in the aggregate.  We cannot provide figures on an individual taxpayer basis because of confidentiality rules.  You will see that it balances when cash flow sheets go out.

4.  How do we know if the refund to a taxpayer caused by a State property tax adjustment results from municipal or education taxes?

You don't know that on an individual basis.  It will be shown in the aggregate for the town on the cash flow sheets distributed by the Dept. of Education.

5.  Will the netting sheets from the Dept. of Education have the property tax adjustment information?

Yes.  The Department of Education receives a file from the Tax Department that shows the total property tax adjustment credit for each school district's education taxes.  That credit amount is deducted from the amount to be raised.  Let's look at a simple example.  In this example, the town has only three parcels.  They are all homestead parcels.  The homestead tax rate is $1.00.

Owner A has an education grand list of 700.  The education tax is therefore $700 prior to any tax credits.  Similarly, Owner B has a grand list of 1,500 and a tax of $1,500 and Owner C is listed at 2,500 and has a tax of $2,500, both prior to any credits.

The total homestead education grand list that is reported to the Department of Education is 4,700 for a total tax of $4,700 ($1.00 x 4,700).

The three owners have an education property tax adjustment credit of $1,000, $400, and $500, respectively for a total credit of $1,900.  This total of $1,900 is reported to the Department of Education by the Dept. of Taxes.

The town will bill Owner B for $1,100 and Owner C for $2,000.  The town will issue a check to Owner A for $300.  The total net tax collected will be $2,800.  That $2,800 plus the $1,900 credit is the total homestead education tax of $4,700.  The Dept. of Education will be asking the Town to send only the $2,800 to the school district.

Tax rate

 $  1.00

 Owner A

 Owner B

 Owner C


 Collected by the Town

 Owed by the Town


Data received by DOE[1]

 Hmstd Ed GL





 $ 4,700

 Hmstd tax

 $ 700

 $ 1,500

 $ 2,500

 $ 4,700

 $ 4,700

 Education Portion of Property Tax Adjustment Credit

 $ 1,000

 $  400

 $    500

 $ 1,900

 $ 1,900

 Amt billed by Town

 $  (300)

 $ 1,100

 $ 2,000

 $ 2,800

 $  3,100

 $ (300)

 $ 2,800

 $ 2,800

6.  Will your school district make any of the refunds to taxpayers?

Indirectly.  There will be a few instances where excess funds will be in the school district account and will need to be sent to the town.  This will become clear in the final version of the cash flow sheets which will go out in early April.  That file will include reconciliation between the State, the town, and the school district when necessary.

7.  There is a village and a fire district in my town.  Are their taxes affected by this netting process?

No-- with very few exceptions.

The exceptions would be the few cases in which a village bills for an incorporated school district.



[1] The Department of Education only receives these aggregate figures.