HB19 Alabama 2013 Session

Under existing law, certain homestead exemptions provided for persons age 65 or over and persons permanently and totally disabled were amended by Act 2012-313

Prior to Act 2012-313, a person age 65 or over or permanently and totally disabled was exempt from all state ad valorem taxes. This exemption was not changed by Act 2012-313

Prior to Act 2012-313, a person age 65 or over was entitled to two other exemptions from other local ad valorem taxes based on income limits. If the person age 65 or over had net taxable income for federal income tax purposes of $7,500 or less, the homestead was exempt from all ad valorem taxes

Act 2012-313 increased the income limit on this exemption to $12,000

In addition, if the person did not qualify for the above exemption, but had an adjusted gross income of $12,000 or less for state income tax purposes, the homestead was entitled to a special exemption of $5,000 in assessed value on the county portion of taxes instead of the regular exemption of $2,000 in assessed value on the county portion of taxes

Pursuant to Act 2012-313, this special exemption was deleted

Under existing law prior to Act 2012-313, based on an opinion of the Attorney General in 2005, a person permanently and totally disabled was exempt from all other ad valorem taxes without regard to any income limit. Prior to the opinion, the exemption was subject to the same federal income tax limitation as discussed above for persons age 65 or over

Act 2012-313 specified that the exemption was subject to the same income limits as provided for persons age 65 or over

This bill would amend the existing code provisions providing exemptions as discussed above as amended by Act 2012-313 to restore the provisions in the exact same form as they existed prior to Act 2012-313 with two exceptions: the net federal income tax limitation for persons age 65 or over would continue to be $12,000 and the Department of Revenue would be authorized to further provide for evidence of eligibility other than a tax return for the exemption

The above provisions of this act would be retroactive to August 1, 2012, the effective date of Act 2012-313. As a result, no person will have a higher local ad valorem tax liability as a result of Act 2012-313

This bill would also prohibit a person from falsely claiming a homestead exemption and provide criminal penalties. This prohibition and these penalties were not addressed in Act 2012-313

Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, prohibits a general law whose purpose or effect would be to require a new or increased expenditure of local funds from becoming effective with regard to a local governmental entity without enactment by a 2/3 vote unless: it comes within one of a number of specified exceptions; it is approved by the affected entity; or the Legislature appropriates funds, or provides a local source of revenue, to the entity for the purpose

The purpose or effect of this bill would be to require a new or increased expenditure of local funds within the meaning of the amendment. However, the bill does not require approval of a local governmental entity or enactment by a 2/3 vote to become effective because it comes within one of the specified exceptions contained in the amendment

Relating to ad valorem tax exemptions on homesteads and principal residences; to amend Sections 40-9-19, 40-9-21, and 40-9-21.1 of the Code of Alabama 1975, as last amended by Act 2012-313 (2012 Regular Session), relating to homestead exemptions and exemptions on principal residences, to restore the code sections in the exact same form as the sections existed prior to the enactment of Act 2012-313, except retaining the income limitation on federal taxable income for certain exemptions for persons age 65 or over and authorizing the Department of Revenue to provide for evidence other than a tax return for the exemption; to provide for the retroactive application of the above provisions and for the implementation of this act; to add Section 40-9-21.2 to the Code of Alabama 1975, to prohibit a person from falsely claiming a homestead exemption and to provide penalties; and in connection therewith would have as its purpose or effect the requirement of a new or increased expenditure of local funds within the meaning of Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended.