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State's clerical error will result in $3.9M property tax refund in county

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Phyllis Vest works in the Hancock County Treasurer's Office, which will be sending out tax bills at the end of March or early April. Tax credits will be reflected on that bill. (Tom Russo/Daily Reporter)
Phyllis Vest works in the Hancock County Treasurer's Office, which will be sending out tax bills at the end of March or early April. Tax credits will be reflected on that bill. (Tom Russo/Daily Reporter)

GREENFIELD — A $3.9 million state error in property taxes will mean more money in the pockets of nearly 22,000 local homeowners this spring.

Managing the problem, however, will be a headache for Hancock County officials who have to confront a mistake that wasn’t theirs.

Hancock County Auditor Robin Lowder told the county council Wednesday that the state auditor’s office made a mistake in calculating homestead exemptions on Hancock County’s 2013 property taxes. A spokeswoman for the state auditor characterized the mistake as a clerical error that affected Hancock County and three other counties.

The problem affects everyone who claims a homestead property tax credit. That’s about six out of every 10 properties in the county.

Lowder said she was floored when she received the phone call in late December about the error. She said she’s been working with the county treasurer, attorney and the vendor that prints tax statements on how to remedy the problem.

The solution: Give each homeowner a credit on this year’s property tax statements. The average credit will be $175.41, though the range for each property is wide, from 12 cents to $2,394.

Hancock County Treasurer Janice Silvey said tax bills are set to go out on time, at the end of March or early April. The credit will be reflected on that bill, but the 70 percent to 80 percent of homeowners who pay their bills through their mortgage companies will not see the credit amount on their forms.

“If they get their tax statements, they will see (the reimbursement),” Lowder said. “But if a mortgage company gets their tax statements, they will need to call us to find out (the reimbursement total).”

Lowder said officials had considered sending out a letter to taxpayers explaining the error but decided it would be too time-consuming and costly.

“This was not a statewide error,” Lowder added. “It only affected four counties, and Hancock County got hit the worst.”

Others affected by the error were Tipton, Montgomery and Pulaski counties, said Erin Sheridan, deputy state auditor. Because Hancock has the most properties, it had the largest error total.

The total amount to be reimbursed is $6,269,236.85, Sheridan said.

The problem was caused by a mistake on a spreadsheet used to calculate credits, but Sheridan did not know why the four counties in particular were affected.

“It was a simple clerical error,” Sheridan said.

Both Lowder and Silvey are expecting their offices to be inundated with phone calls and visits from confused taxpayers because of the glitch. While the error is positive news for taxpayers for now, fall tax bills will go back to normal, and next year’s tax statements will also not have the adjustment. Officials worry that people will see the one-time adjustment and conclude it is permanent, only to be confused all over again when bills return to normal.

“The problem with this is, taxes will go down this year and then it’ll look as though their taxes were raised,” Councilman Kent Fisk said.

Another paperwork problem for local officials is how to deal with property owners who have since sold their homes.

Lowder said 782 properties have changed hands since last spring.

“Finding these people will be difficult, because we don’t have addresses,” Lowder said.

So, the county will take out a legal advertisement in the newspaper listing all the people who have sold their homes.

“(On the ad) there will be explicit instructions on what they are to do,” Lowder said. “They need to come in… we’ll give them a claim right then. They will fill it out, and it will go through our claim process and we will mail them a check. It usually takes two weeks.”

Any money that is unclaimed will be turned over to Indiana Unclaimed, a database maintained by the Indiana attorney general that lists assets owed to Indiana residents.

Lowder hopes the county can be reimbursed the paperwork expense of the state’s mistake, but she doesn’t know how much money the county will request or whether the state will give a reimbursement.

Lowder said people can call her office at (317) 477-1105 with questions, but right now officials don’t know the amount each homeowner will receive. It’s best, she said, to wait for property tax statements to arrive in a few weeks and then call if the statement doesn’t answer their questions.

“We didn’t create this problem,” Lowder said. “We’re going to fix it as best as we can, but it’s not going to be perfect.”

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