--> On August 1, 2007 I wrote to Congressman Lamborn using his web based e-mail procedure. I had already sent the contents of the message to the USIRS website but I really didn't expect a reply directly from them.
The Honorable Douglas Lamborn
U. S. House of Representatives
Washington
I have prepared a question for the US Internal Revenue Service and I ask your help in getting it answered. Below is the question framed as a letter to the IRS. Please forward it to the correct office at the IRS or, if you prefer, modify the request so that it can go out over your signature for the benefit of your constituent landowners in Colorado Springs.
U. S. Internal Revenue Service:
Washington
I would like to request an early opinion on the deductibility of real estate assessments beginning in calendar year 2007 made by the city of Colorado Springs. Those assessments will collect about $15 million for use in the city's infrastructure that handles runoff water. They are collected quarterly from property owners by a city-owned "Stormwater Enterprise" More information is available at http://www.springsgov.com/ under the tab: http://www.springsgov.com/page.aspx?navid=456 (edited Oct 2008). The assessments are payable under penalty of law and liens can be placed on property in the event of non-payment. I believe that $15 million per year is large enough to justify an advance determination of deductibility.
The overall effect is a tax on real estate that sounds as though it should be deductible on schedule A of form 1040 in April of 2008 or on equivalent forms used by apartment owners, commercial establishments, and churches. But is it? A decision prior to the end of tax year 2007 and distributed to residents would be valuable for tax-planning.
From: http://www.irs.gov/taxtopics/tc503.html "Deductible real estate taxes are generally any state, local, or foreign taxes on real property. They must be charged uniformly against all property in the jurisdiction and must be based on the assessed value. Many states and counties also impose local benefit taxes for improvements to property, such as assessments for streets, sidewalks, and sewer lines. These taxes cannot be deducted. However, you can increase the cost basis of your property by the amount of the assessment. Refer to Publication 551, Basis of Assets, for more information. Local benefits taxes are deductible if they are for maintenance or repair, or interest charges related to those benefits."
These assessments are not used for improvements to specific properties and do not change the cost basis for individuals. The city sanitary sewer system is paid for through the wholly owned utilities company that bases sewer charges on water usage.
Quarterly statements are based on an assessment of a value made by means of aerial surveys that measure the amount of impermeable surface, roofs and pavement, installed on the property. Once the assessed value, expressed in square feet, is determined a uniform formula is used to calculate the payment.
It appears that my question boils down to the meaning of "assessed value" in the quotation above. But that quote is an IRS interpretation of the original law passed by Congress. It's reasonable to apply the word value to the 1 gigawatt power output of a generating plant. Did the Congress mean to include assessed square footage in the word?
--> Mr. Lamborn answered thusly:
From: "Congressman Doug Lamborn"
Subject: Reply from Congressman Doug Lamborn
This is a note to let you know that I received your email, and I
appreciate you taking the time to share your concerns.
As always, it ís good to hear from my constituents. Once again, thank you for your insight. Rest assured that I will keep your comments in mind. Should you have additional questions or concerns about this or any other legislative issue, please do not hesitate to contact me in the future.
Sincerely,
Doug Lamborn
Member of Congress
--> Nothing happened. With recent changes to the tax code, real estate taxes up to $2k or so, can be deducted even if you don't itemize your other deductions. That makes the determination of the stormwater "fee" worth 25% of it's amount to residents of Colorado Springs who are also federal taxpayers.
Your comments are welcome and might appear here depending on how I feel. Send them to Doug McNutt. Include "Stormwater" in the subject line to get by spam filters.