SB85 By Senator Orr RFD Finance and Taxation General Fund Rd 1 02-FEB-16

SYNOPSIS: Under existing law, if a Class III property qualified for assessment based on its current use value is sold or disposed of and is converted within two years to a property no longer qualified for assessment based on its current use value, a tax assessor is to compute additional ad valorem taxes for the three preceding ad valorem tax years upon conversion using either the sales price or the fair and reasonable market value, whichever is greater.

This bill would remove the levy of the additional state ad valorem taxes computed for the three preceding ad valorem tax years upon conversion on landowners receiving economic incentives granted by the state and authorized through a state project agreement or state contract.

This bill would allow any county or municipal governments, by election of the respective county or municipality, to also waive the levy of the additional local ad valorem taxes computed for the three preceding ad valorem tax years upon conversion on landowners receiving economic incentives granted by the state and authorized through a state project agreement or state contract.

A BILL TO BE ENTITLED AN ACT

To amend Section 40-7-25.3 of the Code of Alabama, 1975; regarding exempting certain landowners from the additional state ad valorem property taxes assessed after a Class III property qualified for assessment based on its current use value is converted and is no longer qualified for such value assessment; and allowing county and municipal governments, upon election, to exempt certain landowners from the additional local ad valorem taxes assessed after a Class III property qualified for assessment based on its current use value is converted and is no longer qualified for such value assessment.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Section 40.7-25.3 of the Code of Alabama 1975, is amended to read as follows:

§40-7-25.3.

"(a) If the sale or other disposition of taxable property qualified for assessment based on its current use value results in or is followed by the conversion of such property, within two years from the date of sale or other disposition, to a use that is not so qualified, then with respect to such property, there shall be levied and collected, in the ad valorem tax year beginning on the October 1 next succeeding the conversion of such property, an amount of additional taxes to be computed in the manner provided by this section. If taxable property qualified for assessment at its current use value is converted to a use not so qualified, then the tax assessor shall thereupon appraise such property in accordance with the provisions of Section 40-7-15 and Section 40-7-25, as amended, and shall compute the amount of additional taxes payable with respect to such property in the manner provided in this section. The owner of taxable property qualified for assessment at its current use value which is converted to a use not so qualified shall so notify the tax assessor of the county in which such property is located, on and after October 1 but not later than January 1 in the taxable year next succeeding the taxable year in which such conversion is made. Except as provided for in subsection (b), the The tax assessor shall compute the amount of ad valorem property taxes that would have been payable with respect to such converted property if the sales price or the fair and reasonable market value of such property at the time of its conversion, whichever is greater, had been used instead of the current use value of such property in computing the amount of taxes payable with respect to such property for each of the three ad valorem tax years preceding the tax year beginning on the October 1 next succeeding the conversion of such property. Such amount shall be additional taxes to be levied and collected on the first assessment lists prepared subsequent to such conversion in the same manner and at the same time as other taxes and shall constitute a lien on such property to the same extent as other taxes, as provided in Section 40-1-3. If such converted property constitutes only a portion of a parcel so qualified on the assessment lists, the tax assessor shall apportion the assessment of such parcel on the first assessment lists prepared subsequent to the conversion and enter the apportioned amount attributable to the portion converted as a separately assessed parcel on the assessment lists. Such apportionment shall be made for each of the years to which additional taxes apply.

"(b) Notwithstanding any other provision of law, landowners receiving economic incentives granted by the state and authorized through a state project agreement or state contract shall not be subject to the additional state ad valorem taxes levied pursuant to subsection (a). The aforementioned landowners may not be subject to the additional local ad valorem taxes levied pursuant to subsection (a) upon election made by the respective governing body of the county or municipality."