Disqualified for Natural disaster credit

[Badhabitz]

  We amended our tax return to claim the 2020 natural disaster tax credit. I attached a copy of our escrow statement showing taxes were paid for 2019, 2020, and 2021.

  We received a message on the Oklahoma Tax Commission (OTC) portal 07/18 that our credit was denied, the letter stated to refer to return instructions. We could not figure out what the issue was, so we called and spoke to the OTC.

  I was informed that escrow statement was not efficient to show as property tax payment, we needed to submit property tax bills, and receipt of payment, who paid and when it was paid. I called the county assessors office, who quickly is mailed me property tax bills and receipts, I uploaded the documents to the OTC portal. I was told it would take 2 weeks to review, I call at 2 week mark and told it would take 4 weeks. I called for update on 8/17, I was told they would send a internal message to the processors. I called today to inquire, and found out on 8/17 there was an internal note added to the file, that the we were disqualified for the natural disaster credit due to  2020 property taxes being lower then 2019,  ($36.66 lower then 2019). I asked for reference where I could read this qualification and was told they did not know where to find it. 

I asked why a letter wasn’t posted to the portal or mailed, I was informed they do not send out letters after supporting documents have been reviewed.
This makes no sense, there is a dead line to handle this and they offer no updates.

 Is there anyone who can give insight on this, it doesn’t make sense. First it was because I had to submit property taxes bill and proof they were paid, now it’s denied for another reason. I can not find anything stating having property tax lower then the year prior disqualifies a home owner the natural disaster credit.

Year/property tax 

  2019   $1477.53

*2020    $1440.37* Amended disaster yr

  2021   $1495.38

[tagteam · Accepted solution]

See https://oksenate.gov/sites/default/files/2019-12/Tax_Incentives_Presentation_8-9-17.pdf

The amount of the credit is the difference between the property tax paid on the property prior to the damage or destruction and the property tax paid the first year after the improvement is complete.

[NCperson]

@Badhabitz what was the "first year" the improvement was complete? 

[Badhabitz]

The repairs were completed the same year (2020), insurance came out, denied our claim, we moved forward with paying for repairs out of our pocket. 

[NCperson]

@Badhabitz so based on what @tagteam posted, the credit is the difference or $55? 

*2020    $1440.37* Amended disaster yr

  2021   $1495.38

if the state is comparing 2020 to 2019, then there is no credit, right? 

2019   $1477.53

*2020    $1440.37* Amended disaster yr

[Badhabitz]

There is a form that is not on turbo tax that has to be submitted with the return, or amended return, form 576 State of Oklahoma Natural Disaster Credit. 

Line 1: “Enter only the allowed ad valorem property tax paid on the property (and improvements) the first year after the improvement is complete. “

Line 2: Enter only the allowed ad valorem property tax paid on the property (and improvements) the first year after the improvement is complete.“

the cost of improvement is added as well. I do not have the form i filled out in front of me, turbo tax agent walked me through how to fill it out, with the cost of improvements. 

[Badhabitz]

Cost of improvements is also factored into the 576 worksheet along with property taxes for requested years. 

the issue is 2020 property taxes were $36.66 cheaper then 2019, the state of Oklahoma is claiming this disqualifies me for the disaster credit 

[NCperson]

@Badhabitz that is what page 13 says: 

• Natural Disaster Tax Credit
– Allowed for owners whose primary residence was damaged or destroyed
in a natural disaster. The amount of the credit is the difference between the
property tax paid on the property prior to the damage or destruction and
the property tax paid the first year after the improvement is complete.
Eligible taxpayers will be entitled to claim this credit for 5 consecutive
years. After the first year the credit is claimed, the amount of the credit
will be 80% of the previous year's credit.

the form is quite simple-  the 'cost of improvements' is a wash as it is in both lines 1 and 2, so it doesn't appear to have any impact on the final result as long as the square footage is the same in both instances 

https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/tax-credits/576.pdf

[Badhabitz]

The form 576 was filled out correctly, if you Review the instructions on line 1 and line 2, it states to enter the Al valorem property tax AND improvements, it’s not a wash out. 

My questions isn’t in regards to how to fill out this form, the OTC specifically told me, the problem is 2020 property taxes are $36.66 less then 2019 property taxes.