Often applicants will claim they have no income and they are living off money given to them by relatives or friends. In these cases, the total of all such sums are reported as gifts over $300. (Note that the tax credit law itself allows the applicant to exclude from reporting the first $300 of gifts received to cover such things as birthday presents.) If someone is supporting himself in this manner, the aggregate of these sums certainly must be in excess of $300. The heading "expenses paid by others" has been included on the application form to make it clear that such sums are treated the same as gifts.

In cases where applicants report receiving zero or little income and you have not yet ascertained that the persons are supporting themselves by means of gifts from family or friends, a form letter (HTC-13) has been provided which simply states the applicant must personally telephone the office to discuss the application. When the applicant telephones the office and explains to your satisfaction the means of support, you should then send a blank affidavit form to the applicant for a written record of the statements made concerning support. You should not proceed with the processing of the application until the completed affidavit form has been returned by the applicant.

The policy determination also has been made that applicants who claim for a second year that they are supporting themselves by means of loans from family and friends and which have no regular schedule for repayment shall have such loans treated as gifts and therefore, countable as income for purposes of the property tax credit program. The policy of treating such highly personal loans as gifts in the second year is consistent with recent Internal Revenue Service interpretations in this area. The policy is specifically directed at those applicants who claim from one year to the next that their only means of support are the personal loans. When an applicant claims he is supporting himself by this means, a check should be made against any prior year's application. If the applicant has not previously cited such personal loans as the means of support in a prior year, then the application should be processed without the loan amounts being treated as income.

At the same time, applicants who are only temporarily supporting themselves by the means of loans from recognized commercial banks or other formal lending institutions shall not have such loans treated as income, even if the loans began in a prior application year. Applicants in this latter category of commercial loans must execute an affidavit form showing the name of the formal lending institution, the amount borrowed, and the specific schedule for repayment.

Turning to the subject of inheritance, the full amount of inheritances are treated as income in the year in which the person receives them. Often the inheritance is large enough in itself to make someone ineligible for a tax credit for the one year in which the inheritance was received. Nevertheless, the controlling federal gift tax law says that the full amount of the inheritance must be counted in that one year. The only exception to this rule involves a lump sum insurance policy often used by the recipient to pay the deceased person's burial expenses [COMAR 18.07.02F(2)]. A single lump sum insurance policy is not included as income for purposes of the Tax Credit Program. However, the amount of insurance annuity payments received in a given calendar year are to be included in gross income for that year.