No Extra Credit for Montgomery Landlords

Curiosity over rental properties in Louis Wilen's Olney neighborhood led him to a methodical search of Montgomery County tax records.
Curiosity over rental properties in Louis Wilen's Olney neighborhood led him to a methodical search of Montgomery County tax records. (By Katherine Frey For The Washington Post)
By Cameron W. Barr
Washington Post Staff Writer
Monday, July 4, 2005

Louis M. Wilen, a self-described "computer guy" who finds holes in systems, has found a big one for Montgomery County: helping it locate at least $1 million it didn't know it had. He may also have discovered an even bigger flaw in Maryland's tax system.

Wilen, 48, an information technology worker and Olney resident, spurred county officials this spring to identify owners of nearly 2,700 rental properties who received tax credits to which they weren't entitled. That's because the properties were incorrectly coded on state tax records as "principal residences." Only owner-occupied homes are eligible for the credits.

The miscoding means that the county awarded unwarranted property tax credits of $409,705.33 last year -- money it now says it will recover from the property owners. By not extending credits to owners of miscoded property in the future -- and by reviewing erroneous tax bills from past years -- Montgomery stands to gain $1 million or more of formerly lost revenue, said Montgomery Finance Director Timothy Firestine.

One such property is a five-bedroom Potomac home owned by Edward R. Zech and his wife. Unable to pay his children's tuition bills on a naval surgeon's salary, he said he moved to Washington state several years ago and entered private practice. His wife and family joined him a year and a half ago, when they rented out the Potomac house.

Zech said he was unaware that he should have notified state tax authorities that the house was no longer owner-occupied.

"If we did wrong," he said, "we certainly didn't do it with any malice." His bill for 2004, when the house was rented, shows that it was designated as owner-occupied and that the Zechs were to receive a $768.13 county tax credit, as well as a state credit of $138.14.

The county blames state officials for the coding errors, asserting that they are responsible for the tax database.

"They should make sure it's accurate," said Firestine, who helps administer an annual operating budget in excess of $3 billion.

Robert E. Young, associate director of the state Department of Assessments and Taxation, conceded that the miscoding "is probably happening in other counties, but nowhere near the degree to which it's happening in Montgomery."

He cited Prince George's County in particular for its systematic cross-checking of rental properties against tax records to ensure accuracy, something Montgomery did for the first time in May. He said state tax records are only as accurate as the information local governments provide.

Wilen first looked into the coding question last October, after seeing homes advertised for rent in his neighborhood. Curiosity, vigilance -- something drove him to use the Internet to track down tax records for the properties. They were listed as owner-occupied.

After alerting the Montgomery office of the state Department of Assessments and Taxation, he was pleased to see some days later that the records had been corrected.

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