Philly watchdog says city’s property tax crackdown may have missed thousands of fraudsters — and $30 million more in revenue
Brady’s report suggests the city is still not recovering the millions of dollars in tax revenue it is owed. Her report says that the city should review an additional 36,000 properties.
Philadelphia’s fiscal watchdog said this week that a recent city review identifying thousands of property owners cashing in on tax relief programs they aren’t eligible for may have only scratched the surface of the problem.
In a report released Wednesday, City Controller Christy Brady said investigators in her office identified about 58,000 properties that are receiving the city’s popular homestead exemption tax break and may not be eligible.
That’s far more than the 22,000 properties that Mayor Cherelle L. Parker’s administration reviewed in a two-year probe that officials said last week led to more than 13,000 property owners being kicked off of tax relief programs they were fraudulently enrolled in. Parker’s Department of Revenue said those owners will be charged back taxes totaling about $30 million in additional property tax revenue for the city and the cash-strapped School District of Philadelphia.
But Brady’s report suggests the city could recover millions more in owed tax revenue. Her report says that the city should review an additional 36,000 properties, an investigation that could double the money the city is owed annually to $60 million.
“Over a five-year budget, that’s a remarkable $300 million for our schools and vital city services,” Brady said in a news release.
A city spokesperson did not immediately respond to a request for comment.
» READ MORE: A sweeping audit of the Philadelphia School District’s management and operations is coming
The city’s homestead exemption is by far the most popular tax break offered. The free program allows for property owners who live in their homes to deduct the first $100,000 from their property’s assessed value, saving homeowners up to $1,400 a year.
About 250,000 property owners receive the exemption, which residents must enroll in to take part. Investigators in the Office of the City Controller found that more than one in five participants may not be eligible, including some with mailing addresses differing from the address of the property receiving the tax break.
The review identified properties with other red flags, including more than 8,000 property owners receiving the exemption whose mailing addresses are listed as outside Philadelphia.
Some were even more brazen: for example, 67 properties legally deemed vacant were receiving the exemption, totaling nearly $100,000 in annual lost revenue, Brady’s office said. In another case, one business owner received an exemption on 15 different residential properties.
» READ MORE: 13,000 Philly homeowners have been kicked off tax break programs that they weren’t eligible for
Parker administration officials have said that recovering lost revenue is a priority, especially given the School District of Philadelphia’s financial position. The public school system is facing a $300 million structural deficit and the school board recently voted to close 17 schools.
The district is the only one in Pennsylvania that cannot legally increase taxes to generate revenue. Property tax revenue in the city is split, with 56% going to the school district and the remainder into the city’s accounts.
The current property tax rate is 1.3998% of assessed value.
Homeowners who were removed from the homestead exemption program as part of the city’s review were mailed two notices and provided an opportunity to produce evidence of their eligibility. They may still appeal the decision.
