July 14, 2010|By Jamie Smith Hopkins, The Baltimore Sun
An error in the state's computerized property records prompted Baltimore tax collectors to send incorrect bills to nearly 8,000 city homeowners in the last few weeks — including some who were told they were overdue to the tune of thousands of dollars.
Owen C. Charles, supervisor of the state Department of Assessments and Taxation office in Baltimore, said a programming mix-up in his office's database of city properties changed the dollar amount of tax credits the homeowners were due. Once the wrong information got to the city, it was automatically used to generate bills.
Some homeowners received past-due notices for the tax year that ended June 30. Others were sent incorrect bills for the current year, with an amount owed that was either too high or too low.
"Believe me, this certainly was not intended," said Charles. "Most of these accounts should be rectified early next week."
Daniel Motz, who owns a Roland Park rowhouse, received one of the incorrect bills. He knows the property taxes were paid last year. So when he got the bill last week that said he still owed $3,310, plus late fees, he did a double-take.
"Are they trying to create some revenue because they're short on money?" he wondered at the time. Motz has since had his account corrected.
Homeowners who received the wrong bills for this tax year were sent corrected bills last week, said Henry J. Raymond, director of the city Bureau of Revenue Collections. No-money-due notices will be mailed next week to those incorrectly told that they still owed for last year. All told, he said, about 7,900 homes were affected.
"We regret that the error occurred," Raymond said.
Robert E. Young, the state assessment department's deputy director, said the billing problem hasn't popped up in other parts of Maryland.
The affected Baltimore homes represent a fraction of the city's more than 200,000 residential properties. Charles said the foul-up was limited to two groups: certain new buyers and some residents who get a low-income tax break.
The Homeowners' Property Tax Credit, aimed at keeping taxes at an affordable level for lower-income owners, rises or falls in dollar value for individuals as their home's assessed value changes. But the state accidentally applied the credit amount from last tax year to the current year's account for thousands of homeowners, Charles said.
Those who got the past-due bills, meanwhile, bought homes in the city after the start of the last tax year in July from sellers who had been collecting a different tax break called the Homestead Tax Credit, which in the city limits property tax increases for owner-occupiers to 4 percent a year regardless of increases to the home's assessed value.
New buyers can qualify for the credit after living in their homes for one full tax year. They can end up paying much higher taxes than the previous owner, especially if that owner lived in the home for a long time. But the increase doesn't kick in until the new homeowner's first July 1 in the property — because any taxes before that point are calculated based on the previous owner's liability.
Here's what went wrong: The Homestead credit amount for the last tax year was somehow erased from the property accounts for at least some of the more than 5,000 people who bought in the city during those months. Suddenly, it looked as if they'd underpaid.
"It seems to have affected those accounts only in which we have to manually apply the credits," said Charles, the assessment supervisor.
That's what happened to Motz. He bought his home in September from a couple whose property-tax responsibility for that tax year was $6,220, $3,310 less than what they would have owed if they'd had no Homestead credit. Last week, the city Bureau of Revenue Collections sent a notice demanding Motz pay that $3,310 in city and state taxes — plus $456 in interest and penalties.
Motz, a real estate agent who knows the ins and outs of the Homestead credit, quickly figured out how the city had arrived at that figure. But he didn't know why. He wondered whether officials had made a mistake or decided to retroactively collect full-market-value taxes from new buyers.
Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors, was alarmed enough by the possibility that he called the city Department of Finance to try to find out.
"It would just put a complete monkey wrench in everything," said Landers, a former city councilman.
Motz checked on all his clients who bought homes during the tax year. Thirteen — about three-quarters — were wrongly sent past-due bills. They were confused rather than outraged, figuring it was a billing mistake or a problem with the mortgage escrow account their lenders use to pay taxes.
Motz, hoping to track down an answer, said he got nowhere when he called the city collections office last week.
