TAX PENALTIES AND USE-VALUE SYSTEM
What is use value?
The use-value assessment of farmland is essentially a tax break for owners of
agricultural land. Rather than assessing the farmland based on its fair market
value like most other land, the use-value assessment assesses farmland based on
its agricultural productive value. The program was intended to allow farmers to
continue farming their land without incurring significant tax burdens due to
increased value of their land. The system also assesses a penalty when the land
is converted to a non-agricultural use.
What is the tax penalty?
The penalty is assessed to the person who owns the property when the use of
the land changes to a non-agricultural use. This assessment may or may not be
placed upon the person who sells the land because a sale does not necessitate a
change in use. The state Legislature believed it was necessary to include
disclosure requirements upon the sale of the property because this information
and potential penalty is obviously important to prospective buyers.
What disclosures are required?
REALTORS® should advise sellers of agricultural land to include the
disclosures required by Wis. Stat. § 74.485(7) in the real estate condition
report if the land is assessed under the use-value system. To assist REALTORS®
and sellers meet the disclosure requirements, the current versions of the
Wisconsin REALTORS® Association real estate condition reports contain the three
disclosure requirements:
- The land has been assessed as agricultural land under the use value law
– Wis. Stat.§70.32(2r)
- Whether the seller has been assessed a penalty – Wis. Stat. §74.485(2)
- Whether land has been assessed a penalty which has been deferred – Wis.
Stat. §74.485(4)
REALTORS® should be sure to use real estate condition reports which contain
the proper disclosures.
Who issues the penalty and how is it determined?
The county treasurer is responsible for the administration of the penalty.
The penalty is determined by multiplying the number of acres converted to
non-agricultural use by the amount of the difference between the average fair
market value of an acre of agricultural land in the county and the average
equalized value of agricultural land in the county multiplied by a percentage
depending on the amount of land converted. See Wis. Stat.§74.485(2) at
www.legis.state.wi.us/statutes/Stat0074.pdf. The Wisconsin Department of
Revenue (DOR) calculates the figures annually per county and provides them to
the county treasurer. A listing of the figures is available at
www.dor.state.wi.us.
Detailed information is available at: Wisconsin DOR use-value assessment
frequently asked questions and answers:
www.dor.state.wi.us/faqs/slf/useassmt.html; Agricultural Use-Value Penalty
Worksheet at
www.revenue.wi.gov/slf/useval/uvinst.pdf and WRA REALTOR® Resource Page at
www.wra.org/UseValue.
IDENTITY THEFT AND TAX RECORDS
How can identify theft impact income tax records?
Oftentimes we think of identity theft in terms of the thief using our
personal data to open credit card accounts or apply for loans. An additional
form of identity theft is an undocumented worker using a taxpayer’s social
security number, resulting in additional income reported to the unknowing
taxpayer. Each taxpayer receives a yearly Social Security Statement containing a
record of earning history and an estimate of social security benefit
eligibility. A review of the Social Security Statement allows a taxpayer to
reconcile the amount of income earned and the amount reported. Social Security
Statements are automatically mailed once a year, three months before the
taxpayer’s birthday. Additionally, reports may be requested online from
www.ssa.gov/mystatement. Any discrepancies should be reported
immediately – visit
www.ssa.gov/pubs/10064.html#using for instructions.
A broker believes she may be a victim of identity theft, what steps
should be taken?
The FTC offers comprehensive guidance on how to deal with incidents of
identity theft. The FTC maintains the Identity Theft Data Clearing House and
provides an ID Theft Affidavit to assist in processing and minimizing liability
for debts incurred by fraud for both individuals and businesses. Key actions to
take include:
• Close accounts that have been opened fraudulently.
• Place a fraud alert on your report with the consumer reporting companies,
Equifax, Experian, and TransUnion. Review and monitor your credit report for
unauthorized activity.
• File a complaint with the FTC Identity Theft Data Clearing House.
• File a report with local law enforcement.
• Contact any financial institutions, government agencies and credit card
companies at risk.
To learn more about identity theft, read Legal Update 06.10, “Protecting
Against Identity Theft” at
www.wra.org/LU0610, visit the FTC Web site at
www.consumer.gov/idtheft or the IRS Web site at
www.irs.gov/individuals/article/0,,id=136412,00.html.
Published: 2/13/2007
