Property owners who could be cheating Baltimore City out of millions of dollars in taxes by taking a tax credit they are not entitled to may soon be facing stiff penalties.
Council Member Mary Pat Clarke plans to introduce a bill at Monday?s City Council meeting that would charge fines and possibly criminal penalties to any property owner who received a Maryland Homestead Tax Credit by falsely claiming they live in the property.
“It?s tax fraud, essentially,” Clarke said Friday. “We want to collect the money from people who are not eligible for the cap.”
The Homestead Tax Credit caps increases in property taxes at 4 percent per year for owner-occupied properties. Thousand of city homeowners have used the credit to forestall dramatically rising property assessments in the wake of the real estate boom.
But Clarke said the city Department of Finance has uncovered cases in which owners claiming the credit do not live in the homes ? a stipulation for qualifying for the tax break.
“I?m sure at the least it is costing the city millions of dollars,” she said.
The real teeth of the measure, Clarke said, would be the city?s ability to file a lien against the property for a maximum of three years of underserved tax breaks.
“If they don?t pay, they could lose the property,” Clarke said.
The effort to collect from tax scofflaws was prompted by recent reports of a city budget deficit revealed in an interim report given to budget chair Councilman Jack “Bernard” Young. The report estimated the city would run a deficit for the current fiscal year due to cost overruns at the police and fire departments totaling $28 million.
“We?re projecting a $10 million to $12 million deficit, based on deficits at those two departments,” said Councilman Jack Young, D-District 12, chairman of the City Council budget committee.
Dixon administration officials said it was unclear if the mayor would support the measure.
“Finance has not had an opportunity to review the bill, so it is premature for us to comment,” said Sterling Clifford, spokesman for Mayor Sheila Dixon.
Clarke, though, said the current fiscal crisis needs to be addressed now.
“We are in a deficit situation and we?ve got people out there who aren?t paying their taxes.”
