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OIO - Audit of OTR Management of the Homestead and Senior Citizen Exemptions for Real Property Taxes

Office of the Chief Financial Officer

Executive Summary for In Progress Reports

As of September 16, 2013

Original Report

Report No. OIO 12-1-06-OTR: Audit of the Office of Tax and Revenue’s Management of the Homestead and Senior Citizen Exemptions for Real Property Taxes, dated September 5, 2013.

Current Status

In Progress. 

Chief Risk Officer’s Risk Assessment

The Office of Tax and Revenue (OTR) takes seriously its fair collection of real property taxes, including the fair administration of tax exemptions.  While the accurate assessment of eligibility of tax exemptions for homestead and senior citizens is extremely important, the overall impact of the tax implications to the entire real estate portfolio aligns with an inherent risk rating of Medium.  However, the Homestead Unit (HSU) continues its effort to improve as demonstrated by the progress cited in the report, and ten of the recommendations from OIO are being pursued.

Overview of Recommendations

OIO offered eleven recommendations and seven have been successfully completed. 

  • OTR began the capture of social security numbers on February 22, 2013 through the automated report received from the Tax Systems Group (TSG).  As a result of having this vital and unique piece of information, the HSU has been able to accomplish the following: (a) verification of Federal AGI requirement; (b) verification through Schedule E that the property is not renting property and receiving multiple homestead exemptions; (c) more efficient search of the Voter Registration database; and (d) verification of age for seniors, ownership of other properties, voter information, vehicle registration, drivers license information and deceased persons.
  • TSG can now provide OTR with the expiration date of a driver's license as part of the portfolio 6-month data bounce.  This is now taken into consideration when reviewing the data in ITS.
  • OTR has rewritten the policies and procedures for the Homestead Unit (which also manages the senior citizen credits).   These policies and procedures ensure that non-matches are reviewed for eligibility. 
  • OTR will continue to review the senior citizen exception report and remove the deduction from ineligible recipients.  In addition, OTR continues its practice of sending courtesy letters to potential recipients who have not applied urging them to fill out the enclosed form.
  • Beginning the current fiscal year, OTR is verifying the households receiving the Senior Citizen Tax Relief.  The verification will be done annually since OTR receives reports of income only annually.
  • The Real Property Administration's Assessment Services Division management has completed updates of the Homestead and Senior Citizen Credit Policies and Procedures Manual (P&P Manual).
  • OTR will require that managers regularly review notes entered by HSU staff to ensure compliance with documentation standards.  These procedures are now in place.

Of the eleven recommendations offered by OIO, three are still In Progress. 

  • The automated matching program was recently fine-tuned by clarifying the search criteria for TSG.  For example, TSG can now provide OTR with the expiration date of the driver's license as a part of the portfolio 6-month data bounce.  TSG is reviewing our requirements to provide us with a monthly report that will give SSLs where the premise address in ITS differs from the address used to file income taxes.  A date for implementation is pending TSG review.
  • The Homestead Unit currently engages in the following efforts to identify rental properties which may receive the homestead credit:  (1) manually reviews a report quarterly from the Metropolitan Regional Information System (MRIS), which identifies properties listed for rent; (2) reviews Schedule E in ITS to identify taxpayers who claim rental income; and (3) is working with DCRA to streamline a report that would list name, address and other key indicators to identify an exemption recipient as owning rental property.  The streamlined report due date is pending.
  • OTR has prepared an RFP to procure a vendor with an automated solution to make it easier to submit data batches containing homestead and senior citizen input information for cross-matching against public and proprietary databases, including access across jurisdictions in the United States.  This match also cross-checks for duplicate homestead deductions within the District.  The procurement of the vendor will follow normal procurement protocol, including procurement timelines. 

OTR will not be implementing one of the OIO recommendations.

  • OTR has discussed penalties if the taxpayer does not answer the homestead application questions truthfully.  Penalties and Interest are currently applied and billed when the Homestead Unit revokes the credit (Homestead and/or Senior).  The current practice for revoking the referenced above credit(s) is “current-plus-three”, which means that the credit will be removed effective this tax period plus three years back.  No additional action will be pursued.

To view the full report, click Audit of OTR's Management of the Homestead and Senior Citizen Exemptions for Real Property Taxes, dated September 5, 2013.