Chapter 313 - Limitation Appraised Value

Created by Mark Gould, Modified on Wed, 11 Nov 2020 at 10:32 AM by Mark Gould

Pre-requisite reading


Essentially a Chapter 313 limitation limits the M&O to a certain amount but charges the entire I&S portion.

How is a 313 Limitation entered into the system?

Let's say we have an account with 100,000,000 of taxable value, and an M&O limitation of 30,000,000. To support this we would create a Limitation Appraised Value exemption for 70,000,000. This brings the taxable value of the account down to 30,000,000 and calculates the Levy, this effectively locks the M&O at 30,000,000.

Because we need to charge the full I&S, this then creates a special 313 receivable type by taking the exemption amount and multiplying it by the I&S rate.

What if we have a Federal Tax Credit on top of the 313?

To enter a Federal Tax Credit into the system, you need to add it as an exemption. The exemption amount is calculated by dividing the Federal Tax Credit by the tax rate and then multiplying by 100. If the Federal Tax Credit is $100,000 and the tax rate is 1.32 then you would take 100,000/1.32*100 which would give you an exemption value of 7,575,757.

If the Federal Tax Credit is higher than the Levy (after entering the Limitation Appraised Value Exemption), you will need to put the taxable value of the account as the Federal Tax Credit exemption amount, to ensure that we do not calculate any Levy. Using the above example if the Federal Tax Credit is for $100,000 but the Levy is only $90,000, then we have to adjust the 313 receivable down by $10,000. Because the 313 receivable is only calculated on the I&S rate, we now need to take the remaining credit amount, divide it by the I&S rate and then multiply by 100.  Assuming a I&S rate of 0.87, you would take 10,000/0.87*100 which gives you a value of 1,149,425. You would then reduce the Limitation Appraised Value exemption by that. 

After the above steps, you can confirm in the Receivable Audit tab that the dollar amounts have correctly changed.

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