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Applicants For Local Tax Credit Could Face New Asset Test

Finance Board Vice Chairman Joe Kearney believes that most applicants under Newtown’s Senior and Disabled Tax Credit program will only request the nominal benefit if they qualify. But he is hoping the town will soon require applicants to sign an affidavit promising they are not holding assets that would otherwise be hidden from officials verifying income from candidates’ tax returns.

“This is a great program, but I would like to see it improved so the greatest benefit can go to those with the greatest need,” Mr Kearney told The Bee following the board’s February 11 meeting.

During that meeting, Tax Collector Carol Mahoney was on hand requesting a $275,000 increase to the fund used to offset the annual credits, as well as an increase to three of the four credit allocations the program provides.

Prior to the meeting, Ms Mahoney said many applicants have told her that without the benefit they would not be able to afford to keep a residence in Newtown. She said the concern is escalating with the expectation of another property tax increase in the coming year.

The program benefit currently draws from a $1,215,172 fund with credits ranging from $850 to $1,976 depending on the verified income of applicants. Ms Mahoney went to the finance board requesting the fund be bumped up to $1.5 million, and that the top three credit limits be raised.

Today, 114 eligible residents receive a $1,276 credit. If approved, that credit would increase next year, to $1,300. An additional 144 residents receive a $1,476 credit, which would bump up to $1,750; and 414 receive a $1,976 credit, which would increase to $2,525.

Another 46 residents — primarily mobile home owners — receive an $850 credit for their dwellings, which are stationed on land they do not own. That benefit would not change under the new proposal.

This week, the finance board recommended that the Legislative Council continue the benefit. But the action also recommends adding the asset test affidavit as an additional layer of administration to help ensure those who may qualify for the tax credit on paper are not harboring hidden assets.

Mr Kearney cast a dissenting vote, however, because he wanted to see his board recommend specific guidelines for that affidavit, as well as an asset cap for applicants. To initiate discussion, Mr Kearney suggested that applicants should not have more than $250,000 in assets in addition to their primary Newtown residence.

“Under the program now, an applicant could have a second or vacation home that is fully paid for,” Mr Kearney said. “And that wouldn’t show up on the tax return review. Or they could own equities that do not pay dividends.”

Mr Kearney said there are qualified homeowners in town who deserve more than they would get under the program. But he is more concerned that a few may claim qualifying income because additional assets do not show up on the tax return check, and they are not required to divulge the existence of other hidden assets.

“Using just a tax return, you could be missing so much,” he said. “A lot of residents who don’t qualify for this program are unemployed, or living paycheck to paycheck. I couldn’t look them in the eye and tell them we increased this senior and disabled benefit without sufficient checks and balances.”

Finance board Chairman John Kortze agreed there should be an asset test, but said that if additional vetting of tax credit applicants is improved it will fall on the tax collectors office to administer the additional work.

He said under the current criteria, “someone could [harbor] a good chunk of change that doesn’t show up.”

Mr Kortze suggested that the tax collector canvass her peers to see what other communities are doing, while acknowledging that his board cannot make or initiate new policies related to the tax credit program.

“This falls under the Legislative Council’s purview, so we recommended continuing the benefit and looking into added protections,” he said. “The other issue is the number [tied to] the asset cap. I would want some indications of what other towns are doing.”

Finance Director Robert Tait said he believes most towns offering a tax credit do an asset test, much like his previous employer, the Town of Fairfield. He said that community allows an asset cap of $650,000 excluding the primary residence, and that Fairfield’s asset test involves signing an affidavit.

“It’s really an honor system,” Mr Tait said.

He said the $250,000 cap introduced for discussion might be too low.

“If you are a senior drawing Social Security and your only other income is, say, from a $250,000 annuity [paying out over 15 years], that is only providing an additional $20,000 annually,” Mr Tait said. And if it’s just $250,000 in savings, that interest is closer to $1,000 annually.”

If the asset test and cap are approved, the finance director said that program will go into effect for applicants as of March 2014.

First Selectman Pat Llodra said that she is very supportive of the tax credit program as proposed.

“It’s modest, but I’m told it’s very helpful,” Mrs Llodra said. “Many who receive the credit need that assistance to be able to remain living in town.”

More stories like this: taxes, senior citizens, assessor
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