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FY2011-07 Amending Personal Property Tax 1 Introduced by: Borough Manager 2 Requested by: Borough Assessor 3 Drafted by: Borough Assessor Introduced: 11/04/2010 4 Public Hearing: 12/02/2010 5 Adopted: 12/02/2010 6 7 KODIAK ISLAND BOROUGH 8 ORDINANCE NO. FY2011 -07 9 10 AN ORDINANCE OF THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH 11 AMENDING TITLE 3 REVENUE AND FINANCE 12 CHAPTER 3.40 PERSONAL PROPERTY TAX 13 14 WHEREAS, AS 29.45.050 (b) (2) allows a municipality to classify as to type and exempt 15 or partially exempt some or all types of personal property from ad valorem taxes; and 16 17 WHEREAS, KIBC 3.40.070 was written with the intention of exempting personal property 18 belonging to a head of a family or householder from ad valorem taxes; and 19 20 WHEREAS, the Borough Assembly wishes to exempt personal property up to an 21 assessed value of $20,000; and 22 23 WHEREAS, it is the intent of the Kodiak Island Borough Assembly to include private, non - 24 commercial aircraft in the exemption of personal property; and 25 26 WHEREAS, KIBC 03.,40.030 sets penalty rates for failure to file personal property returns 27 as required by KIBC 03.40.10 and KIBC 03.40.020; and 28 29 WHEREAS, the penalties set by KIBC 03.40.030 do not adequately encourage non - filers 30 to comply with state and borough code and the cost to administer non -files are higher than 31 the current income from the penalty fee; and 32 33 WHEREAS, the following suggested changes in the Personal Property Ordinance will 34 clarify the ordinance to better state the intention of the borough. 35 36 NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KODIAK ISLAND 37 BOROUGH THAT: 38 39 Section 1: This ordinance is of a general and permanent nature and shall become a part 40 of the Kodiak Island Borough Code of Ordinances; 41 42 Section 2: Title 3 Revenue and Finance Chapter 3.40 Personal Property Tax is hereby 43 amended as follows: 44 45 Sections: 46 3.40.010 Property subject to taxation 47 3.40.020 Exemptions 48 3.40.04830 Assessment return. 49 3.40.01540 Tax situs of personal property. 50 3.40.02050 Liability for and collection of. 51 3.40.03060 Penalties. 52 3.40.08870 Classification of boats and vessels. Kodiak Island Borough Ordinance No. FY2011 -07 Page 1 of 6 53 3.40.080 Classifcation of aircraft 54 3.10.060 Bucinoss invontorios oxompt. • 55 .4 to e - • - --e :•:- • = :-.e 56 3.10.080 Commorcial fishing goar oxompt. 57 ..... 58 59 *For statutory provisions granting the power to assess and collect taxes, see AS 29.35.170; 60 for provisions governing municipal assessment and taxation generally, see AS 29.45. 61 62 3.40.010 Property subject to taxation 63 Except as otherwise provided in this chapter, a personal property which has a tax situs 64 within the borough is subject to taxation. Business personal property is taxable to the extent 65 that a taxpayer's total assessed value for all business personal property within the Borough 66 of Kodiak exceeds $20,000. Business personal property includes all personal property 67 including, but not limited to, furniture, furnishings, fixtures, machinery, and equipment used 68 by a business or in a business capacity. 69 70 3.40.020 Exemptions 71 A. Individual personal property utilized solely and exclusively for personal, non - business, 72 non - commercial, non - agricultural and non - income producing uses or purposes is exempt 73 from taxation under this chapter. This includes aircraft, boats and vessels used for non - 74 business, non - agricultural, non - commercial and non - income producing purposes. 75 B. The first $20,000 of assessed valuation of business personal property owned by each 76 taxpayer shall be exempt from borough property taxation. For a taxpayer with more than one 77 business personal property tax account, the $20,000 exemption shall be distributed pro rata 78 among all of the taxpayer accounts, based on the proportion of the assessed value in each 79 account to the total assessed value of that taxpayer's business personal property. 80 C. Pursuant to AS 29.45.050(b), the inventories of businesses possessing a valid business 81 license from the state of Alaska are exempt from the tax imposed by this chapter. As used 82 herein, "inventories" means personal property in the hands of a retail or wholesale merchant 83 held for sale or personal property held in the form of raw materials or component parts for 84 the manufacture or production of goods. 85 D. Pursuant to AS 29.54.025(b), fishing gear (i.e., nets, seines, crab pots, long lines, trawls) 86 and any or all associated paraphernalia utilized for commercial fishing is exempt from 87 property tax. 88 89 3.40.04030 Assessment return. 90 Every person with ownership in business personal property shall submit to the borough 91 assessor a personal property return of any property owned by him, or in which he has an 92 interest, and of the property held or controlled by him in a representative capacity, in the 93 manner prescribed, which return shall be based on property values existing as of the first 94 day of January of the year for which the return is made. The person making the return in 95 every case shall state an address to which all notices required to be given to him under this 96 section may be mailed or delivered. The return shall show the nature, quantity, description, 97 amount, value, purchase price new or used, depreciable basis, and current condition of all 98 personal property, the place where the property is situated, and said return shall be in such 99 form and include such additional information as the assembly may prescribe, and shall be Kodiak Island Borough Ordinance No. FY2011 -07 Page 2 of 6 100 signed and verified under oath by the person liable, or his or its authorized agent or 101 representative. Said return shall be filed on or before the fifteenth day of January of each tax 102 year. The borough assessor may, by notice in writing to any person by whom a return has 103 been made, require from him a further return containing additional details and more explicit 104 particulars and, upon receipt of the notice, that person shall comply fully with its 105 requirements within 30 days. 106 In the event of any person failing, refusing, or neglecting to make or file said personal 107 property return of property owned by him, as required herein, the assessor shall make an 108 assessment which shall be as fair and equitable as he is able to make from the best 109 information in his possession concerning said property. 110 111 3.40.04540 Tax situs of personal property. 112 A. Tax Situs. All personal property which has a tax situs within the borough on January 1st 113 of the tax year is subject to taxation. "Tax situs" means the principal place where an item of 114 personal property is located, having due regard to the residence and domicile of its owner, 115 the place where it is registered or licensed, whether it is taxed by other municipalities, and 116 any other factors which may indicate the principal location of the property. 117 118 B. Tax Situs, Conclusive Presumptions 119 1. Tax situs shall be conclusively presumed to be within the borough when the property, 120 although not within the borough on January 1st of the assessment year, either: 121 a. Has been or is usually, normally, or regularly kept or used within the borough; 122 b. Has been or is kept or used within the borough for any 90 days or more in the 12 123 months preceding the January 1st assessment; or 124 c. Has been or is kept or used within the borough for any length of time preceding 125 January 1st of the assessment year if such presence or use is intended to be permanent; 126 "permanent" in this subsection means for a period of 90 days or more. 127 2. Tax situs shall also be presumed conclusively to be within the borough where the 128 ownership, maintenance, or use of such property requires a license or permit, and a license 129 or permit has been issued by the state of Alaska or the borough or any other political 130 subdivision within the borough, and: 131 a. The property is so licensed or permit so issued and either the actual residence 132 address or the mailing address of the licensee or permittee, or of the permissive user 133 thereunder, is within the borough; or 134 b. The property is so licensed or the permit so issued and the domicile of the 135 licensee or permittee, or the permissive user thereunder, is in the borough; this subsection 136 is to apply expressly to, but is not limited to, situations wherein the subject property is in the 137 custody of persons in educational institutions outside of the borough; or 138 c. The property is so licensed or the permit is issued and the property is 139 permanently outside the borough when such licensing frees the owner, user or custodian of 140 liability for similar taxes in any other country, state, or political subdivision thereof. 141 3.40.02050 Liability for and collection of. 142 A. The owner of personal property assessed is personally liable for the amount of taxes 143 assessed against the property. The tax, together with penalty and interest, may be collected 144 in a personal action brought in the name of the borough. Kodiak Island Borough Ordinance No. FY2011 -07 Page 3 of 6 145 B. If the tax on personal property is not paid when due, the borough may, in addition to other 146 remedies available, enforce the tax lien by distraint and sale of the property after first 147 making demand of the person assessed for the amount of the tax, penalty, and interest. The 148 demand shall be in writing addressed to the person whose name appears on the last 149 assessment roll as the owner of the property, describing the personal property assessed 150 and the amount of the tax, penalty, and interest and demanding that the total be paid within 151 10 days after service of the demand personally or by registered mail. 152 C. If the tax has not been paid after the expiration of 10 days from service of demand, the 153 clerk may issue a warrant directing a peace officer to seize the personal property for which 154 the tax was levied and to sell it at public auction after at least 15 days' notice of the sale by 155 posting and publication. If the proceeds from the property sold are not sufficient to satisfy 156 the tax, penalty, interest and costs of sale, the warrant may authorize the seizure of other 157 personal property sufficient to satisfy the tax, penalty, interest, and costs of sale. 158 159 3.40.03060 Penalties and Interest. 160 A person who fails, refuses, or neglects to file a personal property return in accordance with 161 KIBC 3.6540.010 and 3.6540.020 shall, in addition to other penalties provided by law, be 162 liable for a penalty of e t: _ _ - 163 accoscod by tho assoccor, in accordance with KIBC 3.65.010 20% of the tax assessed, in 164 accordance with AS 29.45.250. Said person shall pay interest at the rate of 12 percent per 165 year, exclusive of penalty, from the due date until paid in full. This section shall apply to all 166 persons having personal property within the borough, irrespective of residence. However, 167 when such penalty and interest amount to $1.00 or less, there shall be assessed a minimum 168 penalty of $1.00. A person who files a completed return after the filing deadline, but before 169 the mailing of the assessment notices shall, in addition to other penalties provided by law, 170 be liable for a penalty of five percent of the tax assessed against said personal property for 171 that tax year. 172 173 3.40.06070 Classification of boats and vessels. 174 Pursuant to AS 29.45.050(b)(2), boats and vessels are classified for purposes of taxation as 175 a special category and shall be taxed at the rate determined annually by the assembly 176 during the budget adoption process for a boat or voscol of moro than fivo not tons for boats 177 with an overall length longer than twenty (20) feet, measured bow to stern, rather than on an 178 ad valorem basis. 179 180 3.40.080 Classification of aircraft. 181 A. Pursuant to AS 29.45.050(b)(2), for purposes of taxation, commercial aircraft that have 182 been issued an N number by the Federal Aviation administration ( "FAA") by January 1 of the 183 tax year and are less than 12,500 pounds takeoff weight shall be totally exempted from ad 184 valorem taxes and shall be taxed at the rate determined annually by the assembly during 185 the budget adoption process. 186 B. The owner of record of an aircraft that has been dismantled, destroyed or crashed and 187 the FAA N number has been retained by the aircraft's owner of record may submit to the 188 assessor proof of condition that would allow for taxation of that aircraft, if approved by the 189 assessor, at a rate determined by the assembly during the budget adoption process. Kodiak Island Borough Ordinance No. FY2011 -07 Page 4 of 6 190 Aircraft for which such registration or licensing has lapsed or that has not passed the annual 191 inspection required by the FAA shall not qualify on this basis alone for ad valorem taxation 192 unless it has been dismantled, destroyed or crashed. 193 C. Commercial aircraft with a gross takeoff weight of more than 12,500 pounds shall be 194 taxed on an ad valorem basis and in accordance with the Kodiak Island Borough landing 195 schedule formula. The KIB landing schedule formula provides for the prorated calculation of 196 scheduled aircraft by dividing the total hours in a year into the total time aircraft operated by 197 a scheduled carrier are in the Kodiak Island Borough, and multiplying the result by the 198 assessed value of each aircraft. 199 D. Definitions. For purposes of this section: 200 Aircraft means any engine powered contrivance invented, used, or designed to 201 navigate, or fly in, the air and that is capable of being manned and is required by the FAA to 202 be registered and certified in order to be manned. 203 Commercial aircraft means any aircraft transporting passengers and /or cargo or is 204 employed for fish spotting, agricultural, aquacultural or other purposes for some payment, or 205 other consideration, including money or services rendered. 206 Crashed means aircraft for which only parts remain that, due to their condition, can 207 no longer be assembled to create any contrivable aircraft. This shall be evidenced by an 208 FAA accident report and /or copy of an insurance claim that determines the aircraft to be a 209 total loss. 210 Destroyed means aircraft that have been damaged by age, weather, neglect and /or 211 external influences outside the owner's control, and only unusable parts remain that, due to 212 their condition can no longer be assembled to create any contrivable aircraft. This shall be 213 evidenced by photographs and a physical inspection by the borough Assessing staff 214 appraiser if deemed necessary by the borough assessor. 215 Dismantled means aircraft that have been voluntarily disassembled and only parts 216 remain that can no longer be assembled to create any contrivable aircraft. Evidence such as 217 photographs and a physical inspection by the borough Assessing staff appraiser shall be 218 provided or allowed if deemed necessary by the borough assessor 219 220 E. An aircraft owner may appeal the determination of the borough assessor under this 221 sections B and C above using the same procedures for appeal of real and personal 222 property assessments as set out in KIB 3.35.040 (C) (3) and 3.35.050 (C). 223 224 225 - -.' ' -- e --• _ _ - - - - --- --- 226 •- •- - • 227 t. . ' - ---- •- - - - -- -- - - - - •- -- - - - - - 228 at o ••_ •• ._ e e e tr. -e.- e ee ,. •- - • •- e . e - - - e 229 ,e—et ... • e •_ .. . e e ee...e• a - - -• . 230 232 All houcohold furnituro and offocts (i.o., snow machinos, unlicensed ATVs, TVRO earth 234 personal proporty of tho hood of a family or householder is oxompt from proporty tax. This Kodiak Island Borough Ordinance No. FY2011 -07 Page 5 of 6 235 - - -e - -et - •- ..e•- e e-- • - e.• - • ' -• e - 236 e •_ - .'ee .•e •• - ee _se e et -• e - - - -- -- e: -e• 237 - e e-- - - • - - - - • ' • . ' - - , " ; ' e, _ - e , ...:A. 238 Formorly §3.24.0701. 239 240 241 Pursuant to AS 20.54.025(b), fishing guar (i.o., nots, seines, crab pots, long line, trawls) 242 -• e ...._ 243 property tax. 244 245 246 . •• e A - -' -' e et -e-- • et:- 247 ce .e: et 248 249 Section 3: This ordinance shall take effect on January 1, 2011. 250 251 ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH 252 THIS SECOND DAY OF DECEMBER 2010 253 254 KODIAK ISLAND BOROUGH 255 256 ` 257 4aliaidi ` - 258 Je :me M. Selby, Borg._. . .r 259 �/ 260 ATTEST: 261 262 / 263 Lai C!L t ' & 264 o • M. Jay' -F, MMC, Borough Clerk Kodiak Island Borough Ordinance No. FY2011 -07 Page 6 of 6