Montgomery County Council Press Releases & Statements

Property Tax Compliance Efforts Initiated by Montgomery Council Could Save County $3.4 Million Each Year $2.9 Million Already Saved Since Early 2012
 
  • Release ID: 14-220
  • Release Date: 7/21/2014
  • Contact: Neil Greenberger 240-777-7939 or Delphine Harriston240-777-7931
  • From: Council Office
Property tax compliance efforts initiated by the Montgomery County Council have generated $2.9 million in savings for the County since early 2012 and have the potential to save $3.4 million more each year in the future. The savings were outlined in a July 3 memo from County Finance Director Joseph Beach to Councilmember Nancy Navarro, Chair of the Council’s Government Operations and Fiscal Policy Committee. The committee also includes Councilmembers Hans Riemer and Cherri Branson.

The savings result from heightened tax credit monitoring by the County’s Property Tax Compliance Office, which was set up in 2012 at the urging of the Government Operations Committee. The Tax Compliance Office identifies absentee owners of residential property who are incorrectly receiving tax credits that only owner-occupants are eligible for, including the County's Homestead Credit and Income Tax Offset Credit. Many ineligible property owners have received these credits—for example: owners of rental housing and second homes. Some of the owners have received the credits for years.

By reviewing Multiple Listing Service data and the list of rental housing maintained by the County's Department of Housing and Community Affairs, the Tax Compliance Office has already identified nearly 4,900 ineligible accounts. The office works with the State Department of Assessments and Taxation (SDAT) to verify that the accounts are improperly claiming the credit. Once an account is verified, SDAT corrects its status.

Collections dating back to 2012 for properties with incorrect tax status have produced revenue of $2.9 million. County staff estimates that continued tracking could result in added annual revenue of $3.4 million in future years. The office's ability to increase the number of corrected properties depends on SDAT's ability to keep pace in updating its records.

The State's Homestead Credit was created to ease the impact of large assessment increases on owner-occupied principal residences. In Montgomery County, the credit limits any eligible property's taxable assessment increase to 10 percent each year. The County's Income Tax Offset Credit also applies only to owner-occupied principal residences. For the 2014 tax year, the credit is $692.

"In 2012, the Government Operations and Fiscal Policy Committee wanted to protect the County from losing needed revenue because of the incorrect tax status of too many properties," said Committee Chair Navarro. "The Tax Compliance Office we initiated has shown that it can save the County millions of dollars each year by assuring that our property tax credit programs will benefit all eligible homeowners—but not ineligible ones."



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