Audit Management letter - page five of 31

De minimis property tax assessments

The Town annually assesses property taxes for each tax entity for which the Town has reported taxable personal property. A large number of these personal property tax accounts have valuations of less than $10,000.00. At the current  enacted personal property tax rates, these personal property tax accounts have minimal annual assessments.

In many instances, the cost to assess, collect and follow-up on these de minimis accounts can exceed the actual property tax assessment.

"We recommend that the Town consider including an article at the next Town Meeting asking voters to exempt property up to $10,000.00 from being taxed. There are over 100 communities currently employing this practice. It is important to note that the elimination of these assessments would not reduce the amount of total property tax assessments in any given tax year; the remaining property tax accounts would absorb these de minimis accounts, which will likely amount to an insignificant additional amount (pennies) to these tax payers, but will greatly increase efficiency within the collector's office.

My take on the above is the Town writes off some small personal property accounts and those dollars (pennies) are picked up by the rest of the taxpayers. - Jeff Bennett

Which is the reason I believe for the following;

The Town administrator reports that the Board of Assessors has requested a warrant article for the 2017 Annual Town Meeting to exempt from taxation personal property with an assessed fair cash value of less than $5,000.00. This amount was chosen by the Board as that which was politically feasible on the Town Meeting floor given the exempted amounts are shifted to the real estate levy. This exemption, if successful, would apply beginning with the FY '18 tax year.

So, to write off the personal property tax accounts, all of the real estate tax bills increase to cover those lost dollars (pennies) hence the "politically feasible" comment.

While the auditors did recommend the adoption of the mentioned MGL that allows for the personal property exemption and not the $5,000.00 dollar amount, the fact that the decision of the Board of Assessors was included in the management letter, shows the decision was already made and hence the comment by the presenter of the audit report. I believe what is more troubling is that Town Meeting voted to accept a Town spending plan of $8,277,318.00 with nary a question.


posted by Jeff Bennett