BALTIMORE — The Maryland State Department of Assessments and Taxation is notifying thousands of homeowners that they will receive payments due to a property tax credit miscalculation.
SDAT has identified 5,393 homeowners with total payments amounting to $7,947,531.01. The payments range from $1.61 to $2,076.
At the end of August, SDAT will send these homeowners a letter explaining what these payments are for, and letting the homeowners know to expect a check in the mail around the end of September.
"The Department is working on an easy-to-use online service that will allow Montgomery County homeowners to search for whether they are due a payment, and we expect to have that released on our website before the letters go out," Meghann Malone, Public Information Officer for the Maryland State Department of Assessments & Taxation, wrote to WMAR-2 News Mallory Sofastaii.
A handful of people in Baltimore City were also impacted.
The payments are the result of a new law requiring SDAT to reimburse homeowners shortchanged on property tax credits.
Louis Wilen, a computer programmer in Montgomery County spotted the error in 2016. He notified the state and Montgomery County Council but nothing came of it.
He tried for a second time to report the miscalculation to the Office of Legislative Audits. Last October, auditors confirmed his finding. Their audit revealed the state incorrectly reduced property tax credits by millions of dollars since atleast 2005.
Auditors found SDAT had incorrectly subtracted other tax credits before calculating the Homeowners Property Tax Credit (HTC).
The HTC helps homeowners by setting a limit on the amount of property taxes someone must pay based on their income. However, not everyone had been receiving the full credit.
For example, homeowners whose principal residence is in Montgomery County automatically qualify for the Income Tax Offset Credit (ITOC) for $692. Homeowners who also qualified for the HTC had their credit reduced because the state was deducting the ITOC, or a different local property tax credit, before calculating the homeowner’s tax liability.
SDAT told legislators and auditors that this wasn’t an error. The procedure was based off of a tax court decision from 2011. However, a memo written in 1996 by the State’s Assistant Attorney General advised the Department not to deduct local tax credits.
As of last year, SDAT is no longer deducting local property tax credits, with the exception of the Homestead Tax Credit.
Wilen is pleased to see homeowners will be reimbursed, however, the law only applies to homeowners overtaxed between June 30, 2017 and July 1, 2021.
Delegate Al Carr (D-Montgomery County), the lead sponsor of the bill, said it's a fairness issue. If a taxpayer were to make a mistake, the state would only go back three years.
It was also a compromise so the bill didn't come with too big of a price tag.
"In this case, unfortunately, the losers are the homeowners," Wilen said.
However, they'll also be gaining money that would've otherwise been lost without this legislation.
Wilen also hopes this spurs homeowners to take a closer look at their bills.
"The actual calculations are on the Homeowners' Property Tax Credit worksheet and you're entitled to see those calculations but you have to ask for it," said Wilen. "These errors are just out there in many places and it just seems like everyone just trusts computer-generated bills and a lot of times they're wrong."
If the state is unable to locate homeowners owed a refund, then the funds will be transferred to the Comptroller’s lost property fund and can be obtained at a future date.