January 8, 2009
City sends bills to recoup improper property tax breaks
Baltimore officials mailed bills yesterday to owners of 200 city properties who are accused of improperly receiving property tax breaks. In the coming weeks, the state will send letters to the owners of about 1,400 other city properties who might also be abusing the tax system.
The effort could net the cash-strapped city almost $2 million, officials said.
Owners are being targeted because city and state officials have evidence that they are applying a homestead property tax credit to rental or vacant properties, improperly receiving a tax break that is supposed to apply only to a principal residence.
"This had been in the works for months," said Deputy Finance Director Helene Grady. "It came out of all of the abuse within the homestead tax credit program."
The program limits city tax assessment increases to 4 percent a year, a benefit to homeowners who live in rapidly developing neighborhoods. Last year, in an effort to prevent abuse of the program, the General Assembly passed a law requiring homeowners to submit an application to maintain their tax break.
Several state lawmakers had claimed the credit last year on properties that were not their primary residences, a Baltimore Sun investigation found.
Baltimore officials worked with state assessors to compare databases of rental properties with lists of owners who received the tax credit, finding 1,600 overlapping properties. In June, they took a first crack at the list, sending letters to the owners of 200 properties who owed the most to the city. Bills for the $590,000 those property owners owe were distributed yesterday, Grady said.
Next, the state will send letters to the owners of 1,400 additional properties, giving them time to appeal the finding. Within a few months, most of those property owners will receive bills from the city, Grady said.
The tax revenue could help a cash-strapped city that has recently extended a hiring freeze and reduced police and fire overtime.
"All through the budget process, we kept saying, 'We are flipping over the couch looking for change,'" said City Council President Stephanie C. Rawlings-Blake. "We are trying to maximize what receipts are coming in."
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