BETHEL — “You’re arguing about not doing something that the law says you are supposed to do … you are not allowed to create an exemption,” said Attorney Zachary Brandwein of Bernstein Shur Law Firm at a June 29 Bethel board of assessors meeting.

“We are following the state’s guidelines,” said Board of Assessor’s Chair Robert Everett in jest. “Because when they don’t want to do something they don’t do it.”

Attending the town office meeting were board members Michele Cole, Bob Blake, and Ron Savage.  Town Manager Natalie Andrews was in the audience with Brandwein and town Assessor Rob Duplisea.

The board elected Everett as chair and Cole as vice chair. Everett welcomed  new member Savage and recognized that Neil Scanlon had resigned.

Brandwein was invited for his legal opinion on personal property tax.

Bethel has not assessed or collected personal property tax since 2008 or 2009 when Scott Cole was town manager. The former board discussed implementing personal property tax at an April meeting and decided to table a decision. They tabled it again at this meeting.

Brandwein said 602 and 603 are the state statutes.

“602 basically says all personal property in the state has got to be taxed to the town in which the owner resides.” He said it is a state law set by the legislature.

Statute 603 says there are some carve outs or exceptions: livestock, furniture, grain, jewelry, and others. Except for those things, all business property must be taxed, he said.

The BETE is an exemption for business equipment. The business owner has to apply for the exemption and it has to be assessed but they will get 100% of the tax exempted.  The exemption is for equipment that is used in the furthering of the business. The state reimburses the town 50%.

“That’s the state law it is set by the legislature…It is difficult to assess but there is a general requirement that all municipalities go through the motions and at least make an effort to identify it, tax it as of April first, and collect it,” he said.

Further, he said, nobody except the legislature has the legal authority to create carve outs other than what’s already in the law.

Brandwein explained that revenue sharing is based on a formula that, in part, is calculated on personal property assessment collection. If the state says,  “you’re not actually collecting personal property … we [the state] think we are sending too much money back to you because you are not collecting personal property tax… [we, the state] are going to reduce revenue sharing until you start pulling your fair share.”

He said he knew of another town that chose not to collect. “They did start [to collect personal property tax] at the end of an expensive and drawn out process that I don’t think benefited the town,” said Brandwein.

“So you’ve only had one town so far that’s had an issue?” asked Savage

“How would this affect the average, non-business taxpayer. What would they pay?” asked Savage. “Nothing,” said Brandwein.  Personal property tax is not named well. It is confusing, but it does not affect homeowners. Brandwein and Duplisea explained that homeowners are not taxed even if they chose to buy a $10,000 lawnmower, for example.

A landscaper buying that same lawnmower would face a personal property tax.

“The standard default here is it’s taxable,” said Brandwein. It is on the business owner to apply for the exemptions. He explained that there is another exemption for BETR (Business Exemption Tax Reimbursement). If the equipment predates 2007, the business owner pays the tax then applies for the reimbursement.

Asked if the process is complicated, Brandwein said, “That’s why you hire qualified assessors.” The assessors administer the paperwork to the business owners.

“This board [of assessors] has the authority, when we have an issue like this, I let you know what the statute is … I can tell you what the law says and you as a board decide what you want to do,” said Duplisea.

The state puts a “full value” on every town, a state valuation. “Whatever Bethel’s number is, that determines what Bethel pays for education for the school and the county tax… The town of Bethel should have about $5M based on other towns of this size,” said Brandwein, noting that was a rough estimate.

Blake said several town managers since 2007 have not implemented personal property tax. He had asked the town’s former assessor how many complaints they had received and the response was none. He said the tax discouraged people from going into business.

Duplisea said most, but not all, of the 70 towns they represent collect personal property tax.

“The first step is actually sending out an information request of what’s in town,” said Zachary.

“Are we spending dollars to chase pennies?” asked Savage.

Everett said when he was a selectman some personal property bills would come before the board over and over and they [the selectmen] would eventually release them from their obligation to pay.

“There’s a difference between assessing and collecting… The obligation to assess that’s an obligation of all towns,” said Brandwein.

Blake asked what is the cost of sending 706-A’s out. “It’s adding work as you know,” he said.

Businesses are required to itemize and report all assets used in the operation of their business every year. Filers use the Property Schedule Form 706-A.

“You could be leaving tens of thousands of dollars of tax revenue on the table,” said Brandwein.

Duplisea confirmed that compiling names and addresses could be challenging.

“We don’t have business licenses for all businesses,” said Cole.

Brandwein and Duplisea discussed how a business owner’s residence plays into the law and the history of personal property tax in Maine.

Moving off subject, Blake said taxpayers in Bethel have to make up for 5013-C’s [lost revenue]. Savage said, “we definitely have an issue with too much land being taking off of taxes. You’ve got a road with houses on one side, land trust on the other side, taxpayers are paying for that road … if you ever saw a map of this town how much is already conserved, you’d be shocked … they are putting a big [tax] burden on this town. Forever is a long time”

Duplisea said the state has initiated a pilot program where non-profit’s pay back a certain amount of money.

Back to personal property tax, Blake asked, “What about the small person scratching out a living?”

Everett responded, “But if he’s smart he’ll take his equipment and put it under the the BETE program.”

“It doesn’t cost him anything. We [the town] get 50%,” said Duplisea.

“It’s not costing him [the business owner] anything but the town isn’t getting anything,” added Andrews.

The board decided (again) not to make a decision until a future meeting.

It tentatively scheduled their next meeting for July 27 at 8 a.m. The following meeting is Sept. 13. In July members will attend a workshop to discuss payment in lieu of taxes (PLOT). They plan to meet monthly going forward.