Tax form extension granted

LIHUE — The Kauai County Council on Wednesday passed a trio of measures that seek to correct current tax laws and assist some property owners who saw substantial increases on their real property tax bills this year. 

“It’s a new gauze on the mummy,” said Council Chair Jay Furfaro, who expressed some reservations about repairing specific areas within the current real property tax system instead of overhauling it.

The first measure passed unanimously by the seven-member board, Bill 2560, will create a new real property tax class for those with multiple actual uses, such as commercial or rental ones, that will be applied during the next tax year and called “commercialized home use.” In order for a property to be placed into this tax class, it must be used as the property owner’s primary residence. 

“I continue to believe it is not the right solution, but it’s a better solution than we have now,” Councilman Gary Hooser said. 

When real property tax bills were mailed out earlier this year, some properties with multiple actual uses were taxed at its highest and best use — a property that serves as a taxpayer’s primary residence and business, for instance, might have been placed into the county’s commercial, rather than homestead, tax class even if they have existing home use exemptions.

In some cases, this process of placing properties into tax classes with higher rates resulted in a substantially higher balance on property tax bills. 

“I’m a proponent for overall tax reform that really looks at everything and incorporates all aspects instead of passing amendments here and there,” Councilman Ross Kagawa said. “We’re at a point where we’re patching up areas where there is a need to be fixed, and this is one of them.”

Councilman Tim Byum agreed and said the creation of new tax class, although imperfect, was a step forward.  

”It really does resolve a lot people’s concerns and issues about the use of their homes,” he said.

The new rate for this real property tax class will be determined during the county’s next budget session. 

Relief for this tax year, some council members said, will come from Bill 2558, the second measure passed on Wednesday that will allow residents to resubmit county tax forms that officially declare the proper use of their homes.

These forms, called Use Survey Forms, were mailed to residents early this year and later used by Real Property Assessment Division staff to determine the proper tax class for properties with questionable or unknown uses. In some cases, Department of Finance officials said residents who misunderstood or marked incorrect information on the forms were placed into tax classes with higher rates, resulting in a substantial hike in their real property tax bills. 

Affected property owners have until Dec. 31 to resubmit the forms to the county’s Real Property Assessment Division with the correct information. Those property owners who were placed into an incorrect tax class will have the tax credit applied retroactively for the current tax year and have it apply to next year’s tax bill.

The County Council also approved the allocation of $1.93 million from the county’s general fund to subsidize real property tax relief initiatives that have passed or are being considered.

Council Vice Chair Mason Chock was absent from the meeting and did not vote on any of the three tax bills.   

Darin Moriki, county government reporter, can be reached at 245-0428 or dmoriki@thegardenisland.com. Follow him on Twitter at @darinmoriki.

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