Vermont Standard
November 6, 2014
By Curt Peterson
Standard Correspondent
Every year, more than 100,000 Vermonters fill out a homestead declaration tax credit form — whether it’s on time and whether to charge a late-filing penalty is a source of consternation for town officials.
Most of the local officials feel that the homestead declaration is difficult to get their heads around, and there are differing understandings of how it works.
Carolyn Trombley, Hartland town treasurer, says the town decided in 2013-2014 to waive the penalty because it was too confusing for homeowners.
“At one time, once you filed your declaration you didn’t have to file again. Then they changed it so you had to file annually, which confused a lot of people,” Trombley said.
The actual formula for calculating the credit, which has been in effect since 1997, is convoluted, but it applies to the state education tax on properties that are resident-occupied. The maximum rebate is $8,000, and only households with income of less than $105,000 are eligible for the rebate. The HS-122 Homestead Declaration form must be filed on or before April 15 (or an adjusted filing date) regardless of any extensions for actual state and federal income tax filings. According to Judy Descoteaux of the state Department of Taxes, all resident homeowners are required by law to file the declaration.
And there are at least two possible penalties missing the April 15 filing deadline.
“Sixty percent of Vermont property owners filed for homestead adjustments for last year, which is just about everyone who is eligible,” said Mary Peterson, commissioner of the Vermont Department of Taxes.
“We used to provide the towns with printed inserts reminding homeowners about the Declaration for mailing with their tax bills,” Descoteaux said. “Now we provide a PDF format by email and ask the towns to print it on the back of the tax bill itself.” Though there’s a $15 penalty for late filing printed on the bottom of the homestead declaration worksheet, that is a minor element. The real issue is the income and tax-rate sensitive statutory late filing penalty.
The state legislature created the tax credit as a way to tax nonresidents and commercial property owners at a higher effective rate than residents. This was at a time when
education costs for prison inmates, continuing education programs and programs for school drop-outs were shifted from the general state funds to the education fund, causing a sig nificant increase in the education tax rate. It was intended to provide relief for moderate-income families from that burden, according to Lucrecia Wonsor, Killington's town clerk. The homestead declaration late filing fee, instituted in 2004, was intended to give municipalities an opportunity to get more revenue through applying a surcharge, originally 1 percent of the education tax rate, if the HS-122 form was not filed by April 15. The penalty was added in the data downloaded to the New England Municipal Resource Center, who then included it in the taxpayer billing information sent to towns for printing their tax bills. NEMRC uses proprietary software to produce data for the tax bills. The penalty was mandatory, imposed by the state on behalf of the towns, which ultimately receive the funds. 'In 2009, 'Judy Descoteaux said,' one word in the statute changed how the penalty was treated. 'The towns shall levy a penalty' was changed to 'The towns may levy a penalty, 'and the authority to charge or waive it transferred from the state to the municipalities.' The tax collector is asked to 'tog gle 'a box indicating whether or not to include the penalty on all the town tax bills for which it is applicable according to state records. At that point the homestead declaration late-filing penalty policy of each town is applied and that policy can fit one of three general categories: waive any and all pen alties, apply any and all penalties at the municipality-determined rate on a 'must pay' basis, or apply the penalty and advise taxpayers they can appeal case-by-case. The town rate has also fluctuated according to Descoteaux. In 2010 the towns' options were two: charge a 3 percent penalty if the homestead rate was higher than the non-homestead rate (for non-resident homeowners and non-residential proper ties), or 8 percent if the homestead rate was the lower of the two. 'This was an incentive for people to file as homestead homeowners rather than as non-homestead status because it was cheaper, 'Descoteaux said. To make this more confusing, the recent legislative session changed the wording in this choice, adding the words, 'up to '3 percent and 'up to' 8 percent. In 2010 the legislature attempted to simplify the Homestead Declaration process by creating a 'one-time' filing starting in 2011 that would remain ineffect until the taxpayer rescinded it. 'This created an unforeseen problem,' said Descoteaux. 'Many people failed to rescind the Homestead status when they sold their property, and the Grand List became degraded as the percentage of properties with Homestead status rapidly became inflated.' 'Our goal was tor each 172,000 resident homeowners signed up under the Declaration,' Descoteaux said. 'That is our fairly accurate estimate of eligible homes. Under the one-time declaration system we had reached 178,000 by 2012 and we knew that was unrealistic.' For 2013 the legislature was forced to return to annual filing of the homestead declaration, including for those taxpayers who thought they had signed up for the tax credit permanently. By this time taxpayers were understandably confused. Statutes direct taxpayers who wish to appeal the penalty to the listers of their town. Failing to get satisfaction, the appellant may take the matter to the Board of Civil Authority, then, ultimately, to the courts. Barnard and West Windsor charge the 8 percent late-filing penalty, but will consider case-by case appeals. West Windsor has had no appeals, and Barnard refused the one they heard this year. Plymouth takes the hardline, charging all penalties and considering no appeals. Killington charges the penalty, and has not established an appeal policy. Bridgewater, Hartford (Quechee), Hartland, Pomfret, Reading and Woodstock have all waived the late-filing penalty across the board. During the hearings regarding a resident's paid late-filing penalty on the grounds of illness, the Barnard Board of Civil Authority wondered whether the town ended up with the penalty funds, or if the money was ultimately forwarded to the state. 'The money stays with the town,' Ernie Saunders, president of NEMRC, said. 'So if they choose to rebate a paid penalty, they do not have to get it back from the state or pay it out of their own budget.' Killington's resident tax rate is higher than the non-resident rate. Wonsor says some people calculate that it is less expensive to forgo the homestead declaration rebate and pay the non-resident rate instead. 'The entire tax system in the state is unfair,' she said.' And because the state controls so much of it from Montpelier, people here feel they can't do anything about it.'
By Curt Peterson
Standard Correspondent
Every year, more than 100,000 Vermonters fill out a homestead declaration tax credit form — whether it’s on time and whether to charge a late-filing penalty is a source of consternation for town officials.
Most of the local officials feel that the homestead declaration is difficult to get their heads around, and there are differing understandings of how it works.
Carolyn Trombley, Hartland town treasurer, says the town decided in 2013-2014 to waive the penalty because it was too confusing for homeowners.
“At one time, once you filed your declaration you didn’t have to file again. Then they changed it so you had to file annually, which confused a lot of people,” Trombley said.
The actual formula for calculating the credit, which has been in effect since 1997, is convoluted, but it applies to the state education tax on properties that are resident-occupied. The maximum rebate is $8,000, and only households with income of less than $105,000 are eligible for the rebate. The HS-122 Homestead Declaration form must be filed on or before April 15 (or an adjusted filing date) regardless of any extensions for actual state and federal income tax filings. According to Judy Descoteaux of the state Department of Taxes, all resident homeowners are required by law to file the declaration.
And there are at least two possible penalties missing the April 15 filing deadline.
“Sixty percent of Vermont property owners filed for homestead adjustments for last year, which is just about everyone who is eligible,” said Mary Peterson, commissioner of the Vermont Department of Taxes.
“We used to provide the towns with printed inserts reminding homeowners about the Declaration for mailing with their tax bills,” Descoteaux said. “Now we provide a PDF format by email and ask the towns to print it on the back of the tax bill itself.” Though there’s a $15 penalty for late filing printed on the bottom of the homestead declaration worksheet, that is a minor element. The real issue is the income and tax-rate sensitive statutory late filing penalty.
The state legislature created the tax credit as a way to tax nonresidents and commercial property owners at a higher effective rate than residents. This was at a time when
education costs for prison inmates, continuing education programs and programs for school drop-outs were shifted from the general state funds to the education fund, causing a sig nificant increase in the education tax rate. It was intended to provide relief for moderate-income families from that burden, according to Lucrecia Wonsor, Killington's town clerk. The homestead declaration late filing fee, instituted in 2004, was intended to give municipalities an opportunity to get more revenue through applying a surcharge, originally 1 percent of the education tax rate, if the HS-122 form was not filed by April 15. The penalty was added in the data downloaded to the New England Municipal Resource Center, who then included it in the taxpayer billing information sent to towns for printing their tax bills. NEMRC uses proprietary software to produce data for the tax bills. The penalty was mandatory, imposed by the state on behalf of the towns, which ultimately receive the funds. 'In 2009, 'Judy Descoteaux said,' one word in the statute changed how the penalty was treated. 'The towns shall levy a penalty' was changed to 'The towns may levy a penalty, 'and the authority to charge or waive it transferred from the state to the municipalities.' The tax collector is asked to 'tog gle 'a box indicating whether or not to include the penalty on all the town tax bills for which it is applicable according to state records. At that point the homestead declaration late-filing penalty policy of each town is applied and that policy can fit one of three general categories: waive any and all pen alties, apply any and all penalties at the municipality-determined rate on a 'must pay' basis, or apply the penalty and advise taxpayers they can appeal case-by-case. The town rate has also fluctuated according to Descoteaux. In 2010 the towns' options were two: charge a 3 percent penalty if the homestead rate was higher than the non-homestead rate (for non-resident homeowners and non-residential proper ties), or 8 percent if the homestead rate was the lower of the two. 'This was an incentive for people to file as homestead homeowners rather than as non-homestead status because it was cheaper, 'Descoteaux said. To make this more confusing, the recent legislative session changed the wording in this choice, adding the words, 'up to '3 percent and 'up to' 8 percent. In 2010 the legislature attempted to simplify the Homestead Declaration process by creating a 'one-time' filing starting in 2011 that would remain ineffect until the taxpayer rescinded it. 'This created an unforeseen problem,' said Descoteaux. 'Many people failed to rescind the Homestead status when they sold their property, and the Grand List became degraded as the percentage of properties with Homestead status rapidly became inflated.' 'Our goal was tor each 172,000 resident homeowners signed up under the Declaration,' Descoteaux said. 'That is our fairly accurate estimate of eligible homes. Under the one-time declaration system we had reached 178,000 by 2012 and we knew that was unrealistic.' For 2013 the legislature was forced to return to annual filing of the homestead declaration, including for those taxpayers who thought they had signed up for the tax credit permanently. By this time taxpayers were understandably confused. Statutes direct taxpayers who wish to appeal the penalty to the listers of their town. Failing to get satisfaction, the appellant may take the matter to the Board of Civil Authority, then, ultimately, to the courts. Barnard and West Windsor charge the 8 percent late-filing penalty, but will consider case-by case appeals. West Windsor has had no appeals, and Barnard refused the one they heard this year. Plymouth takes the hardline, charging all penalties and considering no appeals. Killington charges the penalty, and has not established an appeal policy. Bridgewater, Hartford (Quechee), Hartland, Pomfret, Reading and Woodstock have all waived the late-filing penalty across the board. During the hearings regarding a resident's paid late-filing penalty on the grounds of illness, the Barnard Board of Civil Authority wondered whether the town ended up with the penalty funds, or if the money was ultimately forwarded to the state. 'The money stays with the town,' Ernie Saunders, president of NEMRC, said. 'So if they choose to rebate a paid penalty, they do not have to get it back from the state or pay it out of their own budget.' Killington's resident tax rate is higher than the non-resident rate. Wonsor says some people calculate that it is less expensive to forgo the homestead declaration rebate and pay the non-resident rate instead. 'The entire tax system in the state is unfair,' she said.' And because the state controls so much of it from Montpelier, people here feel they can't do anything about it.'
No comments:
Post a Comment