Latah County and the Idaho State Tax Commission head back to court for a status conference Thursday, in a case that could affect millions of dollars in property valuations across the state.
The lawsuit deals with Idaho’s homeowner exemption, which reduces the taxable value of an owner-occupied home by $125,000 or 50%, whichever is less.
Taxable values are used to calculate an individual’s property tax bill, so the timing and amount of the exemption directly affects what they own.
In 2020, the Legislature amended the law to allow homeowners to apply for the exemption at any point during a year. At the same time, they added language saying the exemption “shall be effective upon the date of application.”
Latah County believes that means the exemption should be prorated, so homeowners only get a portion of it based on the date of their application.
The tax commission disagrees. It says the full exemption should be granted, beginning in whatever tax year someone first applies.
Latah County and Lincoln County are the only two counties in the state that prorate the exemption. The tax commission recently ordered them to stop. Both subsequently filed lawsuits asking that the commission’s order to be stayed and requesting judicial review of the matter.
In other words, they want the court to decide which interpretation of state law is correct.
After spending the last month hashing out some procedural differences, Latah County and the tax commission recently asked 2nd Judicial District Administrative District Judge Gregory FitzMaurice to rule on two issues: Did the 2020 bill provide for prorating of the homeowner’s exemption, and did the tax commission exceed its authority when it ordered the counties to stop prorating?
The parties also asked that Lincoln County’s lawsuit be combined with Latah County’s, since both raise substantially similar questions.
FitzMaurice will hold an online status conference in the case at 9 a.m. Thursday.
TL;DR
Latah County and the Idaho State Tax Commission are in court over the interpretation of Idaho's homeowner exemption law, which affects property tax calculations. The outcome could influence property valuations statewide.
- The lawsuit centers on whether the homeowner exemption should be prorated based on the application date or granted fully from the first application year. Latah County argues for prorating, while the tax commission disagrees.
- Both Latah and Lincoln Counties are currently the only counties in Idaho that prorate the exemption, and the tax commission has ordered them to cease this practice.
- The court will address two key issues: the interpretation of the 2020 law regarding the exemption and whether the tax commission overstepped its authority in its directive.
The lawsuit centers on the interpretation of Idaho's homeowner exemption, specifically whether the exemption should be prorated based on the date of application or granted in full from the first tax year of application. This dispute could significantly impact property valuations and tax bills across the state.
The homeowner exemption reduces the taxable value of an owner-occupied home by either $125,000 or 50%, whichever is less, directly influencing the amount of property tax a homeowner must pay. This exemption is crucial for homeowners as it can lead to substantial savings on their tax bills.
In 2020, the Idaho Legislature amended the law to allow homeowners to apply for the homeowner exemption at any time during the year, and it specified that the exemption would be effective from the date of application. This change has led to differing interpretations between Latah County and the Idaho State Tax Commission.
Latah County and Lincoln County are the only counties in Idaho that prorate the homeowner exemption, meaning they calculate the exemption based on when a homeowner applies, rather than granting the full exemption from the first tax year. This has led to legal challenges from both counties against the tax commission's directive to stop this practice.
The next step involves a status conference scheduled with Judge Gregory FitzMaurice, where the court will address two key issues: whether the 2020 bill allows for prorating the exemption and whether the tax commission overstepped its authority in ordering the counties to cease this practice.