Some Senators Getting D.C. Tax Break by Mistake

"There is an honor system involved here, and [the homestead exemption] is printed on the bills," D.C. Council member Jack Evans said. (By Preston Keres -- The Washington Post)
By Debbi Wilgoren and Eric M. Weiss
Washington Post Staff Writers
Friday, May 13, 2005

Many senators who own homes in the District but maintain residency in their home states have been given a property tax break for which they don't qualify, an error the D.C. government blamed on an expensive computer system installed three years ago.

The glitch could also affect members of the House of Representatives, congressional staffers, diplomats and others who live in Washington but vote or pay taxes elsewhere.

The system automatically gave a "homestead exemption" to all owner-occupied properties, city tax officials said. That exemption allows homeowners to deduct $38,000 from the assessable value of their home and caps annual property tax increases at 12 percent. It is not supposed to be available to those who live in the District but do not claim the city as their primary residence.

"It was simply a mistake that was made by the government," said Daniel L. Black Jr., deputy chief financial officer for tax and revenue. "We're going to fix the mistake, [and] we're going to collect the money that's owed."

Officials at the D.C. Office of Tax and Revenue said they became aware of the magnitude of the problem after being told of an investigation by the Kansas City Star, which reported Monday that 22 senators were receiving the tax break -- 13 Republicans, eight Democrats and James M. Jeffords, an independent from Vermont.

They include Edward M. Kennedy (D-Mass.), Joseph I. Lieberman (D-Conn.), Arlen Specter (R-Pa.), Kay Bailey Hutchison (R-Tex.) and Frank R. Lautenberg (D-N.J.).

The Star said that another 22 senators own homes in the District but do not get the tax break.

Some Senate aides contacted yesterday said that their bosses had been unaware that they received the tax break. Some of the senators had explicitly declined the break on property tax forms, their aides said.

In interviews and in letters already sent to some senators, city finance officials took full responsibility. But D.C. Council member Jack Evans (D-Ward 2), who chairs the council's finance committee, said the exemption is noted on the property tax bills homeowners receive twice a year, as well as their annual assessment.

"The system is not fail-safe," Evans said. "But there is an honor system involved here, and [the deduction] is printed on the bills."

It is difficult to say exactly how much the errors are costing the city. The $38,000 credit translates into $364.80 in tax savings. The 12 percent cap means that an owner's tax bill can rise no more than 12 percent even if the value of the home has soared higher in the District's red-hot property market.

City officials were told last September that former senator Frank H. Murkowski (R-Alaska) was getting the tax break by mistake, and the city's tax office told the Anchorage Daily News that it would investigate to determine whether others fell into the same category. But city tax officials interviewed yesterday said that they were unaware of any specific probe stemming from that incident.

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