Over 100 households in Johnson County this month received corrected property tax bills telling them they owed up to thousands in back taxes.
These corrected bills were sent as a reaction to correct an error in the prior software system the Johnson County Auditor’s Office used to collect property taxes, Auditor Elizabeth Alvey said. The rollover to a new system revealed an error in the old software that didn’t remove the Over 65 Circuit Breaker credits from approximately 100 properties that were sold to new owners and no longer qualified for that deduction.
In some cases, affected property owners went years without noticing this error and were not paying the correct amount of property taxes to the county. The longest the error dated back to 2011 for one property, Alvey said.
Affected residents in the county began receiving their corrected bills in early August, and some went to social media questioning why they were suddenly being asked to pay hundreds, sometimes thousands, in back taxes for an error they didn’t know about.
Franklin resident Sharon Shepard said she felt like she almost had a heart attack when she and her husband received a corrected bill saying they owed around $3,800 in back taxes. They bought a duplex five years ago from a daughter and her older mother, who had been receiving the Over 65 circuit breaker while living there. The Shepards did not know they were still receiving the deduction after they bought the property.
“Nobody told us, you know, we assumed they were giving us information of what the actual estimated calculation of the property tax was, not with the previous owner’s deductions,” Shepard said.
Because this was an error on the county’s part, Alvey — who is in her first term as county auditor — used her discretion to not require the affected taxpayers to pay back taxes.
The Indiana Department of Local Government Finance has a longstanding policy of putting the taxpayers who support local communities first, Alvey said. No one who was unknowingly receiving the tax credits broke the law, therefore they should not have to pay for the county’s mistake, she said.
“My office simply didn’t believe it was fair or reasonable to retroactively penalize those taxpayers, who, through no fault of their own, received the modest benefit of the over 65 deduction carrying over from previous property owners,” Alvey said.
Alvey believes her office resolved the issue with a common sense approach that will benefit all county residents in the end, and she is proud of her team, she said.
She does not view this error as “costing the county money” because now Johnson County will see a modest increase in property tax revenue starting next year since the error was caught and corrected. The financial impact from not asking those residents to pay back taxes is “fairly minimal” to the county’s finances, Alvey said.
The over 65 deduction can reduce a taxpayer’s assessed value by a maximum of $14,000, she said. For example, if an over 65 deduction is removed on a homestead, the difference in tax on that property could at most be approximately $140 per year due to Indiana’s 1% cap on property taxes.
“The auditor’s office does not view this matter as ‘costing the county money,’ but rather as correcting an error with the county’s prior software system in a way that is fair and equitable to the taxpayers involved,” Alvey said.
This adjustment for affected properties goes into effect for taxes to be paid in 2024, so those residents should expect their next tax bills to be higher than in years prior. For those who may qualify for the Over 65 Circuit Breaker, they can contact the auditor’s office on the steps to ensure they can continue to receive the credit.
