Facing Financial Squeeze, D.C. Tax Collector Goes On Prowl Hunting For Homeowners Claiming Fraudulent Homestead Exemptions

In Washington, D.C., The Washington Post reports:

• Perhaps the most important lesson about tax breaks is this: You have to know when you are eligible, and then you have to ask for them.



• The D.C Official Code contains two popular real-property tax exemptions: the homestead exemption and the senior-citizen real-property tax exemption. These exemptions can save a homeowner many thousands of dollars annually. Understanding the eligibility rules is key because the tax savings are significant — and there are serious penalties for those who receive these tax benefits despite being ineligible.



• In these times of tight municipal budgets, you’d better believe the District is aggressively auditing these valuable tax exemptions. In 2006, the Office of Tax and Revenue established a separate Homestead Audit Unit. According to the office’s spokeswoman, Natalie Wilson, the audit unit conducts approximately 10,000 “annual” audits and up to 3,000 “daily” audits.



• This unit has been quite successful. In fiscal year 2010, it collected approximately $6.6 million in additional revenue for the District’s coffers. There is no statute of limitations on how far back the District can audit, bill and seek to collect delinquent taxes, penalties and interest.

For more, including homestead eligibility, filing requirements, and penalties for gaming the system, see D.C. property tax exemptions: Know when you’re eligible, and know when you’re not.