James Hinson overpaid his property taxes for two years before catching a mistake made by a tax appraiser. Now, he's upset New Hanover County is refusing to refund his money.
Hinson moved into his South Wilmington town home three years ago. But it wasn’t until the recent property value reassessment that he caught an error used to calculate the value of his home.
Hinson first noticed on the county tax website that his neighbors’ homes, which had the same square footage and the same amenities, were valued far lower than his. He then realized that his home was listed as all brick by the tax office, even though it was actually combination brick and siding, just like his neighbors.
Hinson appealed to the tax office, and they agreed his house had been coded incorrectly. They dropped the valuation on his home from $334,300 to $325,600, saving him almost $100 on his property tax bill. But when Hinson appealed for a refund for what he overpaid in 2015 and 2016 due to the coding error, his appeal was denied.
“They openly admit there’s an error. And they’re standing behind this legal loophole so they don’t have to refund your money. And they know it’s not right,” Hinson said.
New Hanover County Tax Administrator Allison Snell confirmed that other than a few limited exceptions, they cannot refund property taxes for previous years even if taxpayers overpaid.
“It is the taxpayers’ responsibility to review their information every year. If you see something that you don’t agree with, you must appeal it in that year,” Snell stressed, explaining it is against state law to process refunds for prior years. “We certainly sympathize. But we have to follow the law, and we take the oath to do that and we can’t bend it, however much we might want to.”
Taxpayers can file an appeal anytime after they receive a tax valuation they have concerns about. Those appeals are heard by the county tax board during a one month window each year, which typically begins in April. This year, that window closed on May 12.
After the appeals period closes, Snell says North Carolina law only allows property tax refunds if someone at the tax office made a clerical error transcribing the tax appraiser’s assessment of your property, or if they taxed you twice on the same piece of property, or if they illegally taxed you for property outside of their jurisdiction.
If the appraiser recorded the information about your house incorrectly, and you don’t catch their error before the one-month appeal window closes, you’re out of luck. Late appeals will be automatically denied at the county level, although property owners still have the option to appeal to the state property tax commission in Raleigh.
County officials said that the county must set an operating budget each year based on tax revenue, and they can’t be liable for potential refunds years after the fact. But critics say that’s exactly what the IRS routinely does to taxpayers, demanding payment for back taxes if they find mistakes during an audit.
“That’s all on the legislative side of things so your lawmakers are where you need to go, if you want to get the law changed,” Snell suggested to residents who thought the state law limiting refunds was unfair to taxpayers.
“It’s concerning when an organization will step across that line, and know they’re not right and know they’re not doing the right thing, and maybe the people in [the New Hanover County] office don’t have the authority to make that decision but somebody does. Somebody has the authority to make it right,” Hinson said.
We reached out to several of New Hanover County’s elected leaders in the state legislature to see if they thought the law limiting refunds for property owners who overpaid in taxes is fair.
State Representative Deb Butler said it’s a tough call, but said she understood the need for the law because of the huge potential expense for counties if they had to provide refunds for mistakes indefinitely.
“Although we all recognize it violates our sense of what seems fair, I think I understand the practicality of why it is why it is this way,” Butler explained. “A one year look back period seems like a reasonable time for a tax payer to adequately review his records…. The lesson there is you do have to review those things carefully, because they are generated by human beings.”
State Senator Michael Lee said he’d like to take a closer look at the law limiting refunds.
"I am still researching the issue but it would seem fair for taxpayers to have a longer window of time to appeal than is currently allowed. I will be reviewing the issue next year as we head back into the short session,” Lee told us after we brought Hinson’s concerns to his attention.
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