Homestead Declaration Late Filing Penalty

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Thursday October 10, 2013

Did you remember to file your Homestead Declaration on April 15th this year? If not, you are one of the 196 people (as of October 7, 2013) in South Burlington who have been subjected to an 8% penalty applied to the Education Tax (not the municipal) portion of your tax bill. This fee has caught many off guard and 10 individuals have already contacted the City Assessor to let him know of their desire to appeal.    

Interim City Manager Kevin Dorn explained that the State of Vermont requires all residential property owners to file a Homestead Declaration confirming that the property is their primary residence. So, why so many late filers? It’s a complicated matter compounded by a number of factors. First, the way the State has required individuals to file their declarations has changed over the past few years. Currently, the form must be filed with the state each year by April 15th, but for at least the two years prior to this year, the law required that property owners file this form only once. Confusion and lack of communication around the change in practice could be one reason for the late filings. Although a letter was sent from the State to residents, regarding the upcoming payment, nowhere did it mention that some municipalities would be implementing a late penalty. The Tax Department gave authority to municipalities to determine whether or not to apply the penalty. The statutes allow for a 3% penalty to apply to those who fail to file their Homestead Declaration and who own property in municipalities where the Homestead Education Rate is lower than the Nonresidential rate. The much less common situation occurred in South Burlington’s case where the nonresidential education rate is lower than the Homestead Education Rate which resulted in an 8% penalty as opposed to the 3% penalty. 

The Tax Department states that appeals can be filed with the listers or assessors of municipalities. The first step in the process is to appeal to South Burlington’s assessor, Todd LeBlanc. However, LeBlanc has never been extended the authority to grant a waiver of the penalty, so he must deny requests. Residents who wish to appeal LeBlanc’s decision must then go to the Board of Civil Authority. 

What can the Council do? At the October 7 council meeting, Interim City Manager Kevin Dorn was charged with researching several matters. One is to see if the City can apply a 3% penalty rather than 8% or acquire the authority to waive penalties. The Council was also curious to know if the funds collected actually stay within the city. In addition, next year at some point prior to April 15, 2014 the City Council will need to decide whether or not a penalty will be applied to the tax bills of those residents who do not file their Homestead Declaration on time. The Council also made it clear that it is of the utmost importance that residents are made aware of the penalty far in advance of taxes being due so that this surprise can be avoided in the future. 

SOURCE: Corey Burdick, Correspondent