2013 Session Update: Tax and Revenue – Homestead Property Tax Credit Legislation

Bills have started moving fast and furious now that the “Opposite Chamber Bill Crossover Date” has come and gone.  “Crossover,” as it is more commonly referred, is the date in which each Chamber is to send bills to the opposite Chamber that it intends to pass favorably. While it is still possible for a bill still sitting in its committee of origin to pass, it is more likely that bills still in this status are not going to move and those that have moved to the opposite Chamber will continue to be worked towards final passage.

This post summarizes the status of tax and revenue bills related to the Homestead Property Tax Credit program that MACo either considered or took a position on.

Application Extension:  As introduced, HB 128/SB 158 would have extended the application deadline for the Homestead Property Tax Credit from December 31, 2012 to June 1, 2013. Extending the deadline in this manner would not provide sufficient time for the State Department of Assessments and Taxation (SDAT) to process applications and make adjustments in the tax files prior to tax bills being sent. This would have resulted in counties making mid-year adjustments, mailing reinstatement notices and possibly refunding taxes that have already been paid for thousands of homeowners. MACo supported these bills with an amendment to extend the deadline to December 30,2013 to avoid the administrative complexities associated with making changes in tax credit status mid-year. Working with SDAT, the bills sponsors and the House and Senate Committees, MACo was successful in amending both bills. Status: Both bills have been amended to extend the deadline to December 30, 2013.  HB 128 is being heard in the Senate Budget and Taxation Committee on April 3,  and SB 158 is being heard in the House Ways and Means Committee on March 28. 

Eligibility for Settlor, Grantor, or Beneficiary of a Trust: As introduced, HB 965 would have expanded eligibility for the Homestead Property Tax Credit to include a settlor, grantor, or beneficiary of a trust. The bill would have also provided for an unusual six-year refund period. MACo opposed this bill as it would have substantially expanded the meaning of “homeowner” for these purposes, well beyond the sensible notion of the property owner of a principal residence, to include a wide range of trust arrangements. MACo also objected to the bill being applied retroactively to the 2007 tax year.  Working with SDAT, the bill sponsor, and the Committee, MACo was successful in amending the bill to narrow its scope and remove its retroactive application.  Status: Bill has passed the House, amended, to address MACo’s concerns and is scheduled for a hearing in the Senate Budget and Taxation Committee. 

Residency Verification: SB 645 would require counties to provide electronic records related to abandoned property and residential rental licenses or permits to assist with establishing principal residency for a homestead property tax credit. MACo supported SB 645 with an amendment. Although the bill would strengthen the current process for verifying principal residency, it was concerned that not all counties have abandoned property registries and/or listings of residential rental licenses or permits, which would make it extremely difficult for all counties to comply with this legislation. MACo’s amendments would have required counties to provide this information only if  the county collects it.  Status: Bill is still in the Senate Budget and Taxation Committee.