With spring tax season upon us, we want to review the topic of abatements on first issue tax bills and the impact those abatements may have on the second issue tax bill. If your municipality calculates two property tax warrants each year, there are a few things to remember regarding first issue abatements.
For the brief version, skip to the “In Summary” section at the end of this blog post, or continue reading for a complete description.
It is rare that one would need to process abatements on first issue property tax bills (i.e. invoices due in July) before second issue property tax bills are issued. However, in certain situations, your municipality may decide to process a first bill abatement:
- To correct a sizable error in the taxable value of a parcel at the time its first bill was calculated.
- To reduce the amount of the first issue bill due to a payment plan, settlement agreement, or debt forgiveness.
A problem arises when your municipality decides to abate a first issue bill amount for a reason other than to rectify an incorrect taxable value on a first issue bill, for example as part of a payment plan, settlement agreement, or debt forgiveness. If you process a standard abatement on a first issue bill amount before the second issue bill is calculated and the assessment does not change, the amount abated on the first issue bill effectively comes back to life on the second issue bill when typically this was not the intention. Recently, we’ve seen this most commonly due to PSNH settlement agreement abatements.
In Tax Collect update 6.9.9, we added a checkbox to both the Beginning Balance and Ending Balance abatement options labeled “This Abatement is to Forgive an Outstanding First Issue Due Amount and NOT BECAUSE the Invoice was Based on an Incorrect Assessment.” You can use this when abating a first issue tax bill for any reason other than to correct a bill calculated on an incorrect assessment. The checkbox will only be visible if:
- You are abating a first issue bill (e.g. “2022P01”);
- And the second issue bills have not been imported yet;
- And your municipality calculates two property tax warrants each year.
When an abatement is processed on a first issue bill in Tax Collect with the checkbox checked, you will see an asterisk symbol next to the abatement in the Abatements Report to indicate as such. Additionally, when someone calculates the second issue warrant in Assessing, the abatement will not appear on the report of abatements made against first issue bills in Tax Collect.
If you’re posting an abatement to a first issue tax bill before second issue tax bills are created, there will be a checkbox “This Abatement is to Forgive an Outstanding First Issue Due Amount and NOT BECAUSE the Invoice was Based on an Incorrect Assessment” available at the bottom of the dialog box.
USE the checkbox when:
- You are posting an abatement due to a previous year’s settlement agreement.
- You are posting an abatement because the selectmen decide to give the owner a break on their bill and not because there is an issue with the current assessment.
DO NOT USE the checkbox when:
- You are posting an abatement due to an incorrect first issue tax bill amount and the assumption is that the assessment will be changing for the second issue tax bill.