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News Maryland Baltimore City

Mayor to propose relief for tax credit errors

City homeowners could receive $3 million in property tax assistance under a plan Mayor Stephanie Rawlings-Blake is scheduled to unveil today, addressing concerns over bills that skyrocketed after errors in tax credits were discovered.

Taxpayers who received historic tax credits can seek refunds to cover the difference between tax bills they had originally expected and revised bills issued in 2013, said mayoral spokesman Kevin Harris. The plan proposes allowing refunds for three years of tax bills.

The credits exempt the value of approved renovations to historic properties for 10 years.

The mayor's plan will require City Council approval. The administration is working with council members to find money to cover the refunds, which are estimated to total as much as $3 million, Harris said.

"This isn't their fault that this happened; they were given inaccurate information," Harris said of the homeowners. "It's unfair to leave the burden to them."

The Baltimore Sun has detailed problems with the historic tax credit. For example, in 2012, The Sun found the city did not collect more than $1.5 million in taxes because of historic tax credit errors on some apartment buildings and commercial properties.

In July, about 315 city homeowners saw significant increases in their property tax bills after miscalculations were discovered that previous tax breaks were larger than they should have been, according to city officials. In October the city sent revised tax bills to about 200 of the 315 property owners, and many saw their tax increases at least partly rolled back. Bills for other affected properties were under review.

City and state officials, meanwhile, have been pointing fingers at each other over who bears responsibility for the calculation errors.

In the current fiscal year, more than 1,250 taxpayers are receiving historic tax credits, and it remains unclear if there are any tax miscalculations associated with those properties.

The mayor's plan would give all tax credit recipients the chance to apply for refunds, since some mistakes may not have been found yet, Harris said. Taxpayers would be asked to provide documentation that they received inaccurate information from the State Department of Assessments and Taxation — by showing the letters they received detailing their original tax credit awards, Harris said.

If taxpayers don't have documentation, they would still be able to apply for refunds and the city would seek the information from the state, Harris said.

Rawlings-Blake is scheduled to unveil details of the plan at 11 a.m. today at City Hall.

Requests for refunds would be considered on a case by case basis, with a focus on families who made decisions to buy homes based on the erroneous information and "don't have a couple extra thousand dollars lying around," Harris said.

In one set of cases, the city discovered credits to three dozen condos that should not have been given at all. In one case, a family's tax bill for their Little Italy condo soared from about $1,800 to more than $15,400.

The city did not attempt to collect back taxes from any of the 315 owners who have been found to have received inaccurate bills, Harris said, noting it is precluded legally from doing so.

Meanwhile City Councilman James B. Kraft has pressed city officials to "grandfather" in those credits by keeping them where they were before this year. That would spare the owners from having to pay higher taxes for the rest of the 10-year credit term.

City officials have said they were exploring their legal options. They have also said they would set aside money to cover refunds for property owners whose historic credits were too low in past years, meaning they were overcharged on their tax bills.

Baltimore Sun reporter Scott Calvert contributed to this report.

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Copyright © 2014, The Baltimore Sun
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