A tax relief bill that aims to help Missouri senior citizens by freezing their real estate taxes went into effect on Aug. 28. Many counties around the state — including Greene County — are seeking clarity on the bill’s “vague” language.
Senate Bill 190 has created confusion around its implementation — leaving many wondering who is eligible for the tax freeze, what taxing entities will be impacted and when the freeze will go into effect.
“There are some pretty significant items that, to me, are fairly very straightforward, but there's a legitimate question and those sorts of things need to be clarified just again, so there's consistency across the board,” Greene County Collector of Revenue Allen Icet told the Hauxeda.
What does Senate Bill 190 do?
SB 190, sponsored by Sen. Tony Luetkemeyer, R-Parkville, allows counties or voters to approve a freeze on real property taxes — or real estate taxes — for an “undetermined” number of senior citizens, and allows all taxpayers to deduct retirement and Social Security benefits from their gross incomes.
The bill received widespread support, easily clearing both chambers in the Missouri General Assembly. SB 190 was signed into law by Gov. Mike Parson on July 6.
The tax freeze, or tax credit, must be equal to the difference between the real property tax liability on the property in a given year minus the real property tax liability on the property in the year in which the taxpayer became an eligible taxpayer.
The credit only applies to one property per taxpayer, and the property is required to be their primary residence.
The bill allows either the county to impose the tax relief credit, or for a proposed freeze to be put on voting ballots through a referendum petition, requiring signatures from registered voters of at least 5 percent of the votes cast in the last Missouri gubernatorial election.
The ballot language laid out in the bill language, which any ballot measure is required to be substantially similar to, reads:
“Shall the County of _______ exempt senior citizens from increases in the property tax liability due on such senior citizens’ primary residence?”
In addition to the property tax credit — the main headache for counties around the state — the bill eliminates a previous threshold in order for certain taxpayers to deduct 100 percent of certain retirement and Social Security benefits from their adjusted gross incomes. Beginning Jan. 1, 2024, all Missouri taxpayers, no matter their filing status or gross income, can deduct 100 percent retirement and Social Security benefits.
Law fails to clarify who and what is impacted
The same day the bill became effective, Aug. 28, the Greene County Commission voted 3-0 in approving the tax freeze amid ongoing uncertainty.
Until the “ambiguity” of the bill is cleared up by either the legislature or a court, Icet is leading a Missouri Association of Counties task force — launched a few weeks ago — in developing solutions to address “where the law is silent or vague.”
Unlike the ballot language, the counties’ authorization to grant the property tax relief is not for all “senior citizens,” but for “eligible taxpayers,” who are required to be Missouri residents who:
- Are eligible for Social Security retirement benefits;
- Owns or has a legal or equitable interest in property that is their primary residence;
- Pays property taxes on said property.
“It’s contradictory,” Greene County Presiding Commissioner Bob Dixon told the Hauxeda. “Those are the things that we really need the legislature to clean up.”
Additionally, SB 190 doesn’t clarify when the property tax freeze becomes effective.
“When they became eligible? This year? When they retired? We don’t know,” Dixon said.
All taxing entities or counties only?
The bill also fails to specify how much of someone’s real estate taxes can be frozen, leaving uncertainty as to whether it’s just the 2-5 percent of revenue that goes to any given county, or the entirety of the property taxes collected. Approximately 70 percent of property tax revenue in Greene County goes to public schools, with the remainder going to the county government, the parks and library systems and fire protection districts, among other agencies.
“I could see how people could read the bill and interpret that there's only the county portion of the tax, but my opinion is it applies to all taxes that I, as the collector, collect on everyone's taxes for real estate,” Icet said.
Dixon said that he interprets the freeze to impact all relevant taxing entities because of a provision in the bill that says the county has to consider revenues credited back to the taxpayer as received, even though it wasn’t.
“So, in other words, all the taxing entities, if they get a windfall, they have to roll their levy back,” he said. “But with this mechanism in the bill — it kind of supersedes that. It's really strange, but that is clearly intended for anybody that can roll a levy back.”
at the Relics Antique Mall, Event Center. (Photo by Jym Wilson)
While Dixon said they can’t yet quantify the impact the tax freeze will have on all the affected taxing entities, he anticipates it to be “significant.” Dixon said that he’s been reminded by those potentially impacted taxing entities that the county did not have to impose the tax relief measure, but that he essentially thought its passage was inevitable.
Had it not been approved by the Greene County Commission, Dixon anticipated the freeze or tax relief would go to a vote, costing Greene County a minimum of $250,000 to run an election.
“Based on the feedback we've received from citizens and the intensity of that feedback, this thing is extremely popular and it would be, I predict, placed on the ballot by initiative petition… and most likely it would be adopted by the voters so it makes no sense to put it off and spend a quarter of a million dollars that we don't need to spend,” Dixon said.
Uncertainty if real estate tax can be raised based on circumstances
Icet needs clarity as to whether or not real estate taxes for eligible seniors can increase if improvements are made to a property. For example, SB 190 provides the county no direction if a property owner eligible for the tax credit were to add a two-car garage to a structure, effectively increasing the property value.
Additionally, if voters passed a tax levy for a new fire department, Icet said there’s no “clear-cut answer” as to whether that levy can be added to eligible property owners’ existing tax bills.
While Icet does not interpret the tax credits in SB 190 to be retroactive, he noted the law fails to mention if the tax freeze applies to senior citizens who would have previously been eligible for all of the years that they were qualified before 2023.
“If I’m an 80-year-old and I qualify in every other way possible and I apply and I'm granted the credit, does that mean I get my money back for 28 years?” Icet said.
Greene County aims to implement the freeze beginning on Jan. 1, 2024, and while Dixon said the county commission would be able to revisit moving up that date if the task force discovers a way to do so. Dixon doesn’t see how it would be possible, because Icet’s staff has already started calculating tax bills, which are required to be mailed out by Nov. 1.
With a Jan. 1 implementation — and a Dec. 31, 2024 due date for paying property taxes — the delay would give state lawmakers another session to “try to answer some of these questions.”
“It also allows us time to implement, digest and implement the recommendations of the task force,” Dixon said. “But I think primarily it's the legislature's opportunity to meet again and then some of this stuff may actually be hashed out in the courts.”
Task force provides Missouri counties guidance until bill is clarified
Another component of the law that has left Missouri counties looking for answers is that it didn’t assign any agency to provide answers. SB 190 does not grant rulemaking authority to any government department, effectively requiring modifications to be made by the legislature, or interpretations by the courts.
In the meantime, counties have to follow the law as it is written and can take varying approaches based on their interpretations, though many are looking to each other and the task force to provide consistency around the state.
“Counties could do, I suppose, whatever they want,” Dixon said. “But the problem with that is you're going to have a flood of lawsuits, which and that's what I think will happen is you'll have the courts speaking and then you'll have law being made from the bench rather than the legislature…that's one reason I'm really grateful for these people serving on this task force because if we can at least kind of figure out how to make this be implemented roughly the same across the state, it serves the citizens better too.”
Icet concurred with Dixon, saying he would be “surprised” if a lawsuit isn’t filed, particularly by a political subdivision that would be impacted, to stop the implementation of the tax freeze.
The assignment of the task force is to provide recommendations to the Missouri Association of Counties, which will then issue a resolution asking for the legislature to address the issue. As a part of those recommendations, the task force is providing suggested changes to the law’s language to address their concerns in hopes that the legislature will shore up SB 190.
Some county governments have requested for Parson to call for a special session in September to provide further clarity on law, according to a press release from Greene County.
“There's all sorts of different things that can happen,” Icet said.
Icet said that they are trying to involve as many counties as possible to contribute toward a solution, but that they’re ultimately just not getting started.
