North Dakota’s $500 Primary Residence Credit is getting a closer look as some taxpayers question whether they might be getting short-changed on the deal.

Ward County Auditor Marisa Haman said homeowners in the county are getting equal treatment when it comes to the $500 credit.

The confusion about whether that is so comes about because of the February early-payment discount and the timing of tax payments for manufactured homes compared to other types of homes.

Unlike other homeowners who get the credit on their bills before they pay their taxes, owners of manufactured homes pay their taxes in advance of claiming the credit. To get the Primary Residence Credit (PRC), they receive refunds through an abatement process.

Haman explained all credits – whether Disabled Veterans, Homestead or now Primary Residence – are subtracted from a taxpayer’s original bill to determine the amount to be paid. If paid before Feb. 15, the taxpayer receives a 5% discount on that amount to be paid.

For example, a homeowner with a $2,500 tax bill would owe $2,000 after the credit. If paid by Feb. 15, the discount on $2,000 would be $100, or a payment required of $1,900.

For a manufactured home owner with a $1,000 property tax bill, the owner pays $950 with the 5% discount. After applying for the $500 credit, the owner’s $1,000 tax is reduced to $500. With a 5% discount on $500, the owner owes $475. Having already paid $950, the owner receives a $475 refund, despite the expectation the refund would be the full $500 credit.

North Dakota Tax Commissioner Brian Kroshus said his office is only aware of the issue in Ward County and another county.

“I don’t believe it’s widespread. At least we haven’t heard from property owners to that effect, that it’s happening elsewhere. We’ve had several calls related to it,” he said.

Haman said concerns are coming mostly from Ward County because the county has been sending out refunds ahead of being reimbursed by the state, while most other counties are holding off on refunds until they have the state money in hand.

Kroshus said he has spoken with a number of legislators, and all agree that the PRC was intended to provide $500 to any homeowner with an original bill in excess of $500.

“We’ve received very few calls in terms of concerns, but we certainly take these seriously, because we want to make sure homeowners are getting the full amount that they are eligible for. That is what lawmakers intended,” he said. “So that is the interpretation we are going with, and our guidance to the counties across the state has been to issue the full $500 if the individual had a $500 or greater property tax obligation.”

Haman said the software program used by Ward County to calculate the tax bills is used by a number of other counties across the state. The state created the adjustment to that software that added the handling of the PRC, she said. Altering the system to ensure a $500 refund for every manufactured home owner would require her office to manipulate the tax bills – an action that would make her extremely uncomfortable, Haman said.

Changing the handling of the credit for manufactured homes also would create discrepancies with other types of homes, she said. Calculating the early-pay discount after first subtracting the PRC impacts all homeowners, which a few alert taxpayers have noticed but most never even think about.

“I feel you need to be consistent. Mobile homes should be the same as other real estate,” Haman said.

Kroshus said the best fix is to get manufactured homes off their pre-tax-year payment schedule so owners receive actual credits rather than refunds.

“I would like more conversation to take place to create a mechanism where manufactured home homeowners have the same pay schedule as stick-built homeowners, just as a matter of fairness,” Kroshus said. “Fairly often, it’s the type of housing that’s affordable for them and to lock that money up a year in advance – while some people may not think a lot about it – it does impact their their household budgets, and I think we should be as consistent as possible as a state and the political subs in terms of how they handle property taxes overall.”

As lawmakers work on a property tax credit bill for the coming biennium, the manufactured home payment schedule is one of the items on the table. Kroshus said beyond that correction, the main issue is to ensure that legislation that makes it into law is clear.

“When it comes to statute and how laws are written, words do matter,” he said. “Things that are seemingly small and perhaps more of a nuance carry a lot of weight. In terms of the program itself, as a first year program, I would like to think this is what you might call growing pains and small hurdles to cross, but important ones nonetheless.”