SB226 By Senator Pittman RFD Finance and Taxation General Fund Rd 1 21-FEB-17

SYNOPSIS: Currently, residents of this state who are retired due to permanent and total disability receive a full homestead exemption from all state ad valorem taxes.

This bill would allow for a homestead exemption not to exceed $20,000 in assessed value from state ad valorem taxes for residents of this state who are retired due to permanent and total disability.

A BILL TO BE ENTITLED AN ACT

Relating to homestead exemptions from state ad valorem taxes; to reduce the amount of the homestead exemption from state ad valorem taxes for residents of this state who are retired due to permanent and total disability.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Sections 40-9-19 and 40-9-21, Code of Alabama 1975, are amended to read as follows:

§40-9-19.

"(a) Homesteads, as defined by the Constitution and laws of Alabama, are hereby exempted from all state ad valorem taxes. In no case shall the exemption herein made apply to more than one person, head of the family, nor shall the said exemption exceed $4,000 in assessed value, nor 160 acres in area for any resident of this state who is not over 65 years of age. The homesteads of residents of this state, over 65 years of age, or who are retired due to permanent and total disability, regardless of age, or who are blind as defined in Section 1-1-3, regardless of age or whether such person is retired, shall be exempt from all state ad valorem taxes.

"(b) Notwithstanding section (a) beginning in the tax year for which the ad valorem taxes shall become due and payable on October 1, 2019, the homesteads of residents of this state who are retired due to permanent and total disability, regardless of age, shall be exempt from state ad valorem taxes. In no case shall the exemption herein made apply to more than one person, head of household, nor shall the said exemption exceed $20,000 of assessed value, nor 160 acres in area.

"The state Commissioner of Revenue is hereby empowered to define and specify the condition or state of health that makes a person "permanently and totally disabled" and may issue certificates of disability to such person as he may find meets such specifications. Any person who is drawing any pension or annuity from the armed services or a company or governmental agency as being permanently and totally disabled shall automatically be granted a certificate of permanent and total disability by the state Commissioner of Revenue.

"(b)(c) For tax years beginning on and after October 1, 1981, for residents of this state not over 65 years of age, homesteads, as defined by the Constitution and laws of Alabama, are hereby exempted from all ad valorem property taxes levied, except countywide and school district ad valorem taxes levied for school purposes, by any county of this state. In no case shall such exemption herein made apply to more than one person, head of the family, nor shall the said exemption exceed $2,000 in assessed value, nor 160 acres in area for any resident of this state who is not over 65 years of age except as provided in subsection (c)(d) of this section.

"(c)(d) For tax years beginning on and after October 1, 1981, the governing body of any county, municipality or other local taxing authority may at any time grant by resolution or ordinance an exemption from any levy of ad valorem property taxes levied by such county, municipality or other local taxing authority on homesteads, as defined by the Constitution and laws of Alabama, of residents of this state not over 65 years of age. In no case shall such exemption herein allowed apply to more than one person, head of the family, nor shall said exemption, when added to any other homestead exemption applicable to the same ad valorem tax levy, exceed $4,000 in assessed value, nor 160 acres in area. Any homestead exemption granted pursuant to this subsection (c)(d) may be adjusted, rescinded or reinstated at any time by resolution or ordinance of the governing body of the county, municipality or other local taxing authority granting such exemption. Any action authorized by this subsection to be taken by a taxing authority, or the governing body thereof, shall, other than in the case of a municipality, be taken by resolution of the governing body of the county in which such taxing authority is located acting on behalf of such taxing authority; provided however, any action authorized by this subsection to be taken by a taxing authority, or the governing body thereof, which action shall affect countywide or district ad valorem taxes levied solely for the support of county or city school districts, shall be taken by resolutions of the governing bodies and boards of the school systems that are recipients of the proceeds of the ad valorem tax so affected by such action. The provisions of this subsection (c)(d) shall in no way annul or reduce exemptions provided under subsections (a), (b), (c) and (d)(e) of this section.

"(d)(e) For tax years beginning on and after October 1, 1981, for residents of this state, over 65 years of age who have an annual adjusted gross income of less than $12,000 as reflected on the most recent state income tax return or some other appropriate evidence, or who are retired due to permanent and total disability, regardless of age, or who are blind as defined in Section 1-1-3, regardless of age or whether such person is retired, homesteads, as defined in the Constitution and laws of Alabama, are hereby exempted from ad valorem property taxes levied by any county of this state, including such taxes levied for school districts. In no case shall such exemption exceed $5,000 in assessed value, nor 160 acres in area. With respect to homesteads situated in more than one county, the exemption granted herein shall be prorated between the counties in which the homestead is situated in the proportion that the area of the homestead in each county bears to the total area of the homestead claimed for exemption.

"The Department of Revenue may by regulation define and specify the condition or state of health that makes a person "permanently and totally disabled" and may issue certificates of disability to any person that meets such specifications. Any person who is drawing any pension or annuity from the armed services, a private company or any governmental agency because he is permanently and totally disabled shall automatically be granted a certificate of permanent and total disability by the Department of Revenue.

"(e)(f) The grant of any homestead exemption provided under the provisions of this section shall not be allowed if such grant shall prevent the payment of any bonded indebtedness secured by any tax to which the homestead exemption would apply.

(f)(g) Any homestead exemption under this section or Section 40-9-21 shall not be affected during any period the homestead is being repaired after being damaged by a natural disaster such as a tornado or hurricane.

§40-9-21.

"(a) In addition to the persons and property exempt from ad valorem taxation as prescribed in Section 40-9-1, the following shall also be exempt from ad valorem taxation: The principal residence and 160 acres adjacent thereto of any person who is permanently and totally disabled or who is 65 years of age or older having a net annual taxable income of twelve thousand dollars ($12,000) or less, as shown on such person's and spouse's latest United States income tax return or some other appropriate evidence acceptable to the department. In the event that such person and spouse are not required to file a United States income tax return, then an affidavit indicating that the net taxable income of such person and spouse for the preceding taxable year was twelve thousand dollars ($12,000) or less shall be sufficient proof. Proof of age shall be furnished when the exemption provided herein is claimed. On and after May 22, 2013, if a permanently and totally disabled person does not qualify for the exemption under this section, and has not previously submitted written certification of such permanent and total disability by any two physicians licensed to practice in this state, he or she may submit as proof of permanent and total disability affidavits from two physicians licensed to practice in this state, provided that at least one of these physicians is actively providing treatment directly related to the permanent and total disability of the person seeking the exemption; provided, however, this requirement shall not apply to any person receiving the exemption on May 22, 2013. As provided under this section, any person who is drawing any pension or annuity from the armed services or a company or governmental agency because he or she is permanently and totally disabled shall automatically be granted a certificate of permanent and total disability by the department. In order to qualify for exemption under this section, the property must be a single-family home owned and occupied during the tax year as the principal residence of the person qualifying under this section.

"(b) Notwithstanding subsection (a) beginning in the tax year for which the ad valorem taxes shall become due and payable on October 1, 2019, in no case shall the exemption exceed $20,000 of assessed value for the principal residence and 160 acres adjacent thereto of any person who is permanently and totally disabled.

"(b)(c) The department shall by rule establish the criteria and proof required for an exemption in this section based upon a person being "permanently and totally disabled" and shall issue certificates of disability to any person that meets such criteria and provides the required proof. The rule shall provide that any person who is drawing any pension or annuity from the armed services, a private company, or any governmental agency because he or she is permanently and totally disabled shall automatically be granted a certificate of permanent and total disability by the department."