Theo tin phila.gov
For Immediate Release: February 08, 2017
Published By: Office of the Mayor
Contact: Mike Dunn, (215) 686-6210, Mike.Dunn@phila.gov
PHILADELPHIA – The City of Philadelphia Office of the Inspector General (OIG) today released a policy recommendation report that identified 558 properties for which the Homestead Exemption, a real estate tax deduction that is available for Philadelphia homeowners’ primary residences, may have been incorrectly approved.
The Homestead Exemption was introduced in 2014 as a part of the Actual Value Initiative (AVI), a tax initiative that uses updated values (including size, age, location, condition, and use) to more fairly determine property tax assessments. While this tax initiative is more accurate, the change also caused some residents’ taxes to increase significantly. The Exemption offered relief for these homeowners by reducing the taxable value of their primary residences by up to $30,000.
In February 2014, the OIG received an anonymous tip about a possible misapplication of the exemption, prompting a long-term investigation to review and evaluate the City’s administration and enforcement of the initiative. Working together, the OIG and the Office of Property Assessment (OPA) flagged 558 properties where there was evidence that the exemption may have been incorrectly awarded. Under the City’s policy, the exemption application required no documentation, and the City did not verify the information given, resulting in very liberal granting of the deduction. Had the Exemption been denied, taxpayers would have been liable for approximately $683,000 in property tax revenue from 2014 to 2016.
“We want to thank OPA and Revenue Departments for their assistance in this major policy reform effort. True reform lies in the ability to prevent a problem from recurring. We have outlined the steps we need to take to restore integrity to the Exemption application process and to discourage future attempts at fraud,” said Inspector General Amy L. Kurland.
This policy recommendation report encourages the Revenue Department to continue to screen for factors that are indicative of misapplications, such as properties owned by corporations and/or other business entities; properties with active rental or vacant property licenses; and any two properties with the same owner information. The report also recommends that the City update the Exemption application to require more information; to request supporting documentation; and to assess back-taxes, penalties and interest to recoup lost revenue from properties where the Exemption has been removed.
“The Department of Revenue shares the Inspector General’s commitment to preventing the incorrect granting of tax exemptions and we appreciate her diligence on the matter,” said Revenue Commissioner Frank Breslin. “The Administration agrees that in instances of fraudulent exemptions, the City should assess back taxes, interest and penalties when the situation warrants it. We are also committed to making relief easily accessible to all eligible households, and we believe additional documentation requirements would create a greater burden on homeowners, reducing their likelihood of enrollment. It is a strategic decision designed to encourage enrollment to keep the barriers to entry low and follow up with enforcement later to maximize the number of households taking part in the program.”
In response to the OIG report, the Revenue Department initiated its own audit of Homestead Exemption applications. To date 674 homeowners have been contacted requesting supporting documentation. Of those, 192 have responded and their documentation has been sent to Revenue for review. Revenue has completed 111 reviews resulting in 28 exemptions being removed and 83 exemptions being deemed appropriate. The Department plans to continue and expand its auditing of the Exemption applications.
To view the full policy recommendation report, visit here.
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This content was last updated on February 8, 2017 by Office of the Mayor.
https://beta.phila.gov/press-releases/mayor/oig-releases-policy-recommendation-report-on-homestead-exemption/
