September 24, 2012

Mainers missing out on tax and rent refunds

By Kelley Bouchard
Staff Writer

Each year, about half of the estimated 200,000 eligible households in Maine apply for a property tax or rent refund from the state. Given the average refund was $479 last year, consistently low participation in the Maine Resident Property Tax and Rent Refund Program is a curiosity, officials said, especially in a tough economy.

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Applications and instructions for the Maine Residents Property Tax and
Rent Refund Program are available online at or by
calling 626-8475.

Overall participation last year was nearly 10 percent lower than it was three years before the recession hit, from 120,654 applications in 2005 to 109,034 applications in 2011, according to Maine Revenue Services.

Experts believe people don't apply for the voluntary tax relief program for a variety of reasons. Some don't know it exists or assume they don't qualify. Others find the application form too complicated or they don't want to deal with Maine Revenue Services any more than they must.

Or, like Michael Ackerson, a 27-year-old software developer who rents an apartment in Fairfield and works in Portland, they're just too busy.

"My accountant suggested I look into the program, but I've been right out straight at work lately," Ackerson said recently. "I'll definitely take advantage of it, though, now that I know more about it."

State and local tax officials say they do what they can to inform people about the income-based refund program and help them apply, but they say most so-called circuit-breaker tax programs have low participation rates.

A study by the American Association of Retired Persons found a 40 percent participation rate among similar voluntary tax-relief programs, which have been adopted by about two-thirds of the states and the District of Columbia, according to the Lincoln Institute of Land Policy.

Started in 1972, Maine's program provides partial refunds to residents for property taxes or rent paid the previous calendar year. Applications are accepted Aug. 1 through May 31 each fiscal year.

"The program is designed to provide relief to people whose property taxes or rent represents a disproportionate amount of their income," said Sen. Richard Rosen, R-Bucksport, who is chairman of the Legislature's Approriations and Financial Affairs Committee.

Rent refunds are considered tax relief because tenants pay property taxes through their landlords.

"Tenants may not realize they qualify because they lose sight of the fact that a portion of their rent goes to property taxes," Rosen said.

In broad strokes, single Mainers may qualify this year if their income in 2011 was $64,950 or less; Mainers with spouses or dependents may qualify if their household income last year was $86,600 or less.

Qualified applicants are eligible for a refund if their property taxes were more than 4 percent of income or if rent was more than 20 percent of income. Other factors may influence whether an applicant gets a refund, including investment income, public assistance and child support. The maximum refund is $1,600.

Residents who are at least 62 can either apply the same way as everyone else or, if it makes sense, under a special Senior Refund Program. The special program for seniors is limited to households with incomes less than $14,700 (single) or $18,200 (spouse or dependents), and the maximum refund is $400.

The state calculates refunds in the way that provides the greatest benefit.

It got easier to apply for the refund program in 2004 when Maine Revenue Services started offering electronic filing, which now accounts for about one-third of all refund applications, said Dennis Doiron, director of the state's income and estate tax division. Participation in the refund program may be on the rise this year, though it's too early to tell.

Applications were up more than 6 percent and refunds were up 9 percent in August, compared with the first month of the refund program in 2011, Doiron said.

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