Tax-Property Article, new Section 9-105(n) now provides for a 25% penalty to be added to the repayment of the County and State Homestead Tax Credits going forward from the 2012 tax year where the homeowner has “willfully misrepresented” his or her qualification for this tax credit.

The local Supervisor of Assessments and/or the central office Homestead Application Processing Manager will need to make an individual determination of the willful misrepresentation. Examples of where a homeowner has “willfully misrepresented qualification” for the Homestead Credit include the submission of a false Homestead application to the central office or the homeowner has made a false written or over the telephone statement to the local Assessment Office (documented in our administrative records). Any Supervisor who has a question about whether the action of the homeowner constitutes a willful misrepresentation should consult with the Homestead Tax Credit Processing Manager in the central office.

The following procedures will be utilized regarding the determination and collection of this penalty:

1. The local Supervisor of Assessments will have the responsibility of submitting an “addition” form to the Finance or Treasurer’s Office to indicate that a particular property is subject to the penalty.
2. It is the responsibility of the local Finance or Treasurer’s Office to calculate the penalty, collect the penalty, and then remit the State’s recaptured Homestead Credit and penalty amount to the Comptroller’s Office on their regular monthly report.
3. The penalty is equal to 25% of the amount of the County Homestead Credit that year, 25% of the municipal Homestead Credit, and the State penalty amount is equal to 25% of the amount of the State Homestead Credit, if any.
4. The revised tax bill from the County Finance or Treasurer’s Office to recapture the Homestead Credits and penalties also must separately itemize the penalty. It is up to the local County Tax Collector to decide how to display the penalty by individually preparing a bill or making a data system change to print the penalty directly on all bills.
5. The earliest tax year to which the penalty applies is the July 1, 2012 tax year. If Homestead Credits are removed for years prior to July 1, 2012, then no penalties are applied to those earlier years.
6. The earliest time a penalty can be applied for the current 2012 tax year is October 1, 2012 because the homeowner must actually have “received” the Homestead Credit this year and that is deemed not to have occurred until the tax bill is due on September 30, 2012.
7. The unpaid penalty constitutes a lien on the property. It becomes a personal liability of the person against whom penalty was levied if the property is sold in a foreclosure action.
8. The homeowner whose property is subject to the penalty may appeal the determination to the Department. When the Supervisor of Assessments first determines the penalty is appropriate, the local Assessment Office should send to the property owner the attached letter prepared by the central office that advises the person of the penalty. The letter will advise the homeowner he or she has thirty (30) days to appeal the determination to the Department. If the Supervisor determines that the imposition of the penalty was proper after hearing the appeal, a final notice should be sent to the property owner advising the person of his or her right to further appeal the matter within thirty (30) days directly to the Maryland Tax Court.

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