Rush to pay and save on taxes
Douglas County property owners appear hopeful that a new tax law regarding prepaying property taxes will benefit them when paying their 2017 taxes.
At the end of last year, the Douglas County Auditor/Treasurer office received $3.7 million in prepaid taxes, a huge jump compared to the previous year's $40,000.
Property owners, in some cases, are hopeful that they can use the prepayment as a deduction on their 2017 federal tax return. According to the Internal Revenue Service's website, whether a taxpayer is allowed a deduction for the prepayment of state or local property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the property taxes are assessed prior to 2018. A prepayment of anticipated real estate property taxes that have not been assessed prior to 2018 are not deductible in 2017, according to the IRS.
According to Char Rosenow, Douglas County auditor/treasurer, there were a total of 1,231 parcels prepaid by 758 taxpayers. Of those, Rosenow said 1,129 were paid in the last four days of the year.
"We had no warning until people started showing up at the counter, so we had no way to plan for the amount of traffic and phone calls we received," Rosenow said. "Some tax accountants, including mine, mailed out letters to their clients and some called the clients to tell them to prepay their property taxes. With the holidays, we only had three staff available each day. The phones rang continuously and the lines were down the entryway stairway."
Rosenow also stressed that her office appreciated the patience Douglas County taxpayers showed by allowing her staff to do the best they could with those conditions.
Because of the unusual circumstances, Rosenow asked the Douglas County commissioners to put a policy in place just in case taxpayers had a change in heart.
At the Jan. 16 board meeting, commissioners approved a policy that stated, "No refunds will be issued for the voluntary prepayment of property taxes prior to property tax statements being released. Once the statements are released and the prepayment has been applied to the current year's taxes, any overage will be applied to the following year unless a refund has been requested in writing."
Rose said the resolution allowed her to invest the funds until needed at settlement time in May when property taxes are due.
Douglas County Assessor Keith Albertsen sent information to Rosenow about other counties in the state and amount of money each received in prepaid property taxes, the county's annual levy and the percent annual levy paid by the prepaid taxes. Douglas County was second-highest for the amount of prepaid taxes.
Here's a look at the counties:
• Otter Tail — $5 million (12.7 percent of $39.5 million annual levy)
• Douglas — $3.7 million (14 percent of $26.4 million annual levy)
• Hubbard — $1.8 million (12.9 percent of $14 million annual levy)
• Becker — $1.3 million (6.3 percent of $20.6 million annual levy)
• Todd — $1 million (6.5 percent of $15.5 million annual levy)
• Clay — $816,400 (2.6 percent of $31.1 million annual levy)
• Pope — $766,000 (8.1 percent of $9.4 million annual levy)
• Wadena — $421,700 (4.8 percent of $8.8 million annual levy)
• Grant — $270,000 (4 percent of $6.8 million annual levy)
• Wilkin — $224,848 (3 percent of $7.6 million annual levy)
• Traverse — $105,000 (2 percent of $5.2 million annual levy)