Late filing fees upheld

MANCHESTER - A bid by one town resident to get a waiver for local residents who were hit with a homestead declaration late fee failed to pass muster at Tuesday's Select Board meeting.

By a 3-2 vote, with Wayne Bell, Lisa Souls and Carol Lattuga voting in the majority, the select board opted to leave the penalties and the new rules adopted by the state legislature last year in place, at least for now.

The motion the board members defeated would have given late filers who were assessed penalties of up to 8 percent of their tax bill a 5 percent credit on the next installment of their property taxes due next spring, effectively reducing the size of the penalty to 3 percent, closer to their former level. "It would keep a penalty in place but would keep it reasonable," said Ivan Beattie, the chairman of the board, who, along with board member Steve Nichols, voted in favor of it. While state law sets the penalties at 8 percent, towns were given some leeway about how aggressively they can enforce it, and some towns, such as Dorset, Arlington and Bennington, have waived or adjusted the penalty fee.

Orland Campbell, a local attorney and former state legislator, was hoping to get late filing fees waived from this year's property tax payment, arguing that a change in the state law on filing homestead declarations and the size of the penalties that could be assessed created an "egregious" situation. Campbell paid his taxes, but after the April 15 filing date, and incurred an $860 penalty. He came before the Select Board about six weeks ago to seek an adjustment, and returned Tuesday to plead the case again and get a decision from the select board on the question.

A staute enacted by the state legislature which took effect this year requires that homestead declarations - which homeowners are supposed to file in order to claim a property tax adjustment under Act 68, the state's education financing law - must be filed annually. Prior to 2013, the law required that property owners only had to declare the homestead exemption once until the property was sold or their was a change of use, such as a residential property no longer becoming a "homestead," according to the Vermont Department of Taxation's website.

But this change was not well-advertised, Campbell said, and played a role in filing his homestead declaration late and incurring what seemed to him an out-sized penalty. It was a fairness issue, and he was only seeking a one-time fix during a transition period, he told the select board Tuesday night. "You (should) forgive everyone who filed late this year and never do it again," Campbell said, adding that when he was on the select board, he too held a no-compromise view on waiving fees and penalties that were set at Town Meeting. "It's not a question of individual favoritism."

Only a small number of local tax filers were tripped up by the new filing requirement, but because of the increase in the penalty fee, the amount of revenue involved is about $40,000, a significant jump from the $2-3,000 that was the case a year or two earlier, Beattie said at one point.

However, David Fielding, the town's treasurer, argued against making a retroactive waiver, saying that tinkering with the rules at this point risked creating more problems and an unleveling of the playing field.

The overwhelming number of taxpayers did file the homestead declaration on time, and creating a precedent for waiving a fee here raised fairness issues for the town as a whole, he said.

"Either we assess it or we don't assess it across the board," Fielding said. "If you waive this you're waiving 5 percent from getting a penalty - you're not applying it evenly."

Fielding was supported in his case by Ruth Woodard, the town's finance director, who said that backtracking on what has been in place at this point would risk major administrative headaches.

In trying to fashion a compromise of sorts that would address Campbell's concerns about the fees and the change in the law, but would not penalize those who did file their homestead declaration on time, the idea of the 5 percent credit on the next tax installment arose for discussion. The revenue the town obtains from the late fees is not earmarked for helping finance specific municipal operations, so returning part of it through a credit wouldn't throw the town's budget out of whack, Beattie said.

The select board appeared to hesitate on whether on not a vote up or down on the idea was needed, but Steve Nichols eventually made a motion to adopt the 5 percent credit idea, and it was seconded by Beattie.

But in the end, a majority of the board turned thumbs down on it, and left the status quo as is, for now, at least. Beattie said that the board could conceivably reconsider the question if a different solution was proposed.

Afterwards, Campbell said that he had noted the language of the legislation which re-set the homestead declaration to be an annual filing stated that towns "may" collect penalties, but did not explicitly require them. That could mean the town or the select board would have had to have taken an affirming vote on the question, he said.

"It seems to me that requires an action on the part of the town," Campbell said.

Earlier in the meeting, the select board also voted to pursue a "Designated Village" status, which under Vermont law would enable the town to be in a priority position to obtain state grants for civic improvements, and commercial property owners become eligible for tax credits for building improvements. Currently, 23 other communities in Vermont have qualified for the program, which is run by the state's agency of commerce and community development.

Lee Krohn, the town's planning director and zoning administrator placed the proposal before the select board, arguing there was no downside risk. If successful, the initiative would cover a relatively small slice of the downtown core, mostly along Main Street.

The board voted unanimously to have Krohn proceed with the application.

In other business, the select board approved the appointment of Hannah Goepel, a student at Burr and Burton Academy, to the Design Review Board.


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