Maryland shortchanges taxpayers millions of dollars, according to state audit

MONTGOMERY COUNTY, Md. (FOX 5 DC) - Maryland has been shortchanging people millions of dollars on their tax returns according to a new state audit.

Auditors found the state has been miscalculating a tax credit for homeowners for years, and last year alone, just in Montgomery County, the error led to thousands of taxpayers losing out on a total of $4.4 million.

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The miscalculation was for the Homeowners’ Tax Credit (HTC) which benefits low-income families, seniors and people who may have lost their job. Auditors didn’t calculate additional losses to taxpayers in other jurisdictions or for prior years. They said the calculation error has happened since 2005.

Louis Wilen, a retired computer programmer from Montgomery County, discovered the problem four years ago. It’s not the first time he’s found a tax flaw in Maryland.

“Taxes are sort of bedtime reading for me actually,” Wilen said.

He created a program to calculate HTC in an effort to help people see what they would receive. But the numbers would not add up. He said he thought his program had a bug until he realized his math wasn’t the issue. He found the State Department of Assessments and Taxation was deducting other tax credits from the HTC, and year after year, people weren’t getting what they were owed.

“In many cases, we could be talking about thousands and thousands of dollars,” Wilen said.

Emails he provided FOX 5 show Wilen alerted the taxation department, tipped off state auditors and called lawmakers. A bill was introduced in 2017 to correct the issue, but it didn’t move forward.

”Earlier this year I just decided, you know, I’m just not gonna let this thing die,” he said. “It’s not right.”

This time, state auditors listened to him. His tip to them is even mentioned in the new audit.

Auditors recommend the state consult with legal counsel “on how to proceed regarding any refunds resulting from the HTC miscalculations including the $4.4 million noted.”

The State Department of Assessments and Taxation refused an on-camera interview with FOX 5 Thursday but answered questions via email. The department said it would adjust how the tax credit is calculated starting this tax year, but would not offer refunds.

“Any 2020 tax credit application, which were made available in February, will not have local credits deducted. The only credit presently deducted is the Homestead Tax Credit, which is required to be deducted by law. The department anticipates moving forward with this methodology for future years,” said SDAT spokesman Jason Davidson.

He said the department changed how these credits were calculated “before it was known an audit finding would occur,” calling it a “proactive policy change,” despite the years that have passed since Wilen first raised the issue.

Wilen said he felt vindicated by the audit’s findings, but believes refunds to taxpayers are necessary.

“The government doesn’t just got to say, ‘Oops, we made a mistake, so we got to keep the money,’” he said. “Never heard of such a thing!”

Del. Al Carr (D-Montgomery Co.) sponsored the bill on this issue in 2017. He said Thursday he will revive his bill during the next legislative session in January and propose an amendment that will address retroactive refunds, potentially for the last three years.