BALTIMORE – If you make a mistake with your taxes, there is a good chance you will learn about it, but the state of Maryland had miscalculated property tax credits for years and this went unnoticed until recently.
In the previous session, the General Assembly passed a new law requiring the State Department of Assessments and Taxation to identify homeowners who may be owed a refund.
An audit found that this miscalculation affected thousands of people and falsely reduced property tax credits by millions of dollars. And while the bug goes back at least to 2005, the law only requires the state to go back to 2017.
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The auditors found that SDAT incorrectly deducted other tax credits prior to calculating the Homeowner Property Tax Credit (HTC). HTC helps homeowners by capping the amount of property tax someone has to pay based on their income. However, not everyone received full credit.
For example, Montgomery County homeowners 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 withdrew the ITOC or other local property tax credit before calculating the homeowner’s tax liability.
SDAT told lawmakers and auditors that this was not a mistake. The trial was based on a 2011 decision by the Tax Court. However, a 1996 memo by the Assistant Attorney General advised the ministry not to deduct local tax credits.
A spokesman for SDAT said the memo wasn’t rediscovered until 2018. And in 2020, they changed their procedures to no longer deduct local property tax credits other than the Homestead tax credit.
If you have been affected by this situation, you could get money back from the state before the end of the year, but probably not in the next few months.
In an email to WMAR-2 News, an SDAT spokesman wrote:
“SDAT is still working to ensure that affected homeowners receive their refunds. You should receive a letter from SDAT outlining the funds due within the next several months and a refund by the end of the year.
We have made significant progress since the bill was passed, but for the past month and a half we have focused on the annual tax filing process. Now that this is almost complete, we can turn back to this project as an ongoing priority. “
If a homeowner is no longer at this address, SDAT has been given access to the MVA database and will try to notify the homeowner at the new address.
If they cannot find the homeowner, the funds are transferred to the Auditor’s Lost and Found Fund and can be retrieved at a later date.
The bill goes back three years because that’s the deadline by which a taxpayer has to change their declaration.
It was unanimously approved by the General Assembly. Governor Hogan did not sign the law, but it became law nonetheless. The law came into force on June 1st, 2021.
WMAR-2 News Mallory Sofastaii will provide additional updates on the status of these refunds.