Rollback taxes affect for how many years?

• A. 1 Year
• B. 2 Years
• C. 3 Years
• D. 4 Years

Answer: (B)

Rollback taxes come into play when a property that had an exemption or a different qualifying use changes to a taxable use. In that situation, the taxing authority recaptures revenue that was reduced due to the exemption by imposing back taxes for a fixed look-back period. That period is two years, meaning the owner may owe the higher tax that would have applied in the two previous tax years, plus any interest or penalties, to restore the tax base to what it would have been without the exemption.

This two-year window is chosen to fairly recover revenue while not imposing an excessively long retrospective burden. The options of shorter or longer look-backs don’t fit the standard practice in many jurisdictions, which is why two years is the correct duration.