Part of Willie Donwell’s job is to sniff out people crying poor to avoid paying property taxes to the city of Detroit.
More than 4,000 people apply to the city every year for a property tax exemption permitted under state law for those who are living in poverty.
While the Detroit Citizens Board of Review approves most of them — the exemption is a tool that can help the needy avoid foreclosure — Donwell is part of an effort to crack down on people scamming the system. Donwell said there are plenty of suspicious applications to keep him busy.
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“People look for a way to skirt around the process to benefit them personally,” said Donwell, who chairs the Board of Review. “That’s a thing that we have to be conscious of and make sure that people understand that if they do that now, there will probably be some ramifications.”
Although Detroit has been granting these exemptions for 20 years, last year was the first time property owners with questionable applications were called in for hearings to explain — under oath — their living situations and why they can not pay their property taxes. Applicants are questioned in various ways. Some are asked about what cars they own and how they paid for their house.
Another round of hearings starts Wednesday. A representative from the city’s Inspector General’s office attends the hearings. Applicants who lie could face perjury penalties, Donwell said. After considering a property owner’s application, including income documentation and copies of utilities bills, and the answers given at their hearing, the nine-member board of review votes on whether to approve the poverty exemption.
The added layer of scrutiny comes as Detroit rebounds from bankruptcy and city officials stress the importance of maximizing tax collection and tightening other aspects of Detroit’s financial management.
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Last year, the city processed 4,214 property tax exemption applications. Of those, 3,678 property owners were granted a 100% exemption from their property taxes. An additional 127 were given a 50% exemption. As a result, the city lost out on about $1.6 million in tax revenue.
“For every exemption that we give, those dollars just go away,” Donwell said. “We remove the assessment, so there is no tax to collect.”
Municipalities throughout the state can offer similar programs. Each city sets its own guidelines for approving an exemption, including the income and assets of a household. In 2014, the Grand Rapids Board of Review processed 137 applications for poverty exemptions; of those, 86 were granted.
The state also loses millions due to the property tax poverty exemptions. A state report estimated Michigan will miss out on $8.5 million in tax revenue in the current fiscal year and $8.8 million in the next fiscal year beginning July 1 as a result of the property tax poverty exemptions.
The deadline for Detroit residents to apply for a poverty exemption is Dec. 8. The maximum income allowed for the program ranges from $16,660 for a household of one to $40,090 for a household of eight.
On Wednesday and Thursday, the Board of Review is holding hearings to question applicants whose applications warrant further review.
This process is different from that of appealing one’s assessment amount, which also goes before the Board of Review.
About 40 were called to such hearings in November. Of those, 17 applications were denied or the board did not render a decision. The latter determination is actually more harsh because the property owner loses appeal rights to the Michigan Tax Tribunal. The board approved poverty exemptions for 19 individuals who were called in for a hearing.
Amie Kole-James, 66, was among those for whom the board did not render a decision last year. According to city records, it was the first time since 2008 she was not exempted from paying property taxes at her Palmer Woods home, which is kept in pristine condition and had a taxable value of $99,932.
“They’re corrupt. They don’t have any compassion,” Kole-James said when reached this week. “It’s like they don’t want you to stay in the city. They want you to lose your house.”
Kole-James’ hearing before the board last year was somewhat typical, according to audio recordings. She was asked direct questions about her income and whether she operated a business that she did not report on her property tax exemption application.
Prior to the hearing, the board cross-checked her information with other assistance programs for homeowners. It found Kole-James applied to the state and received a homestead property tax credit the previous year even though she also was granted a poverty exemption, meaning she had no tax bill to pay. When the board questioned Kole-James about applying for the homestead tax credit, she replied, “Well, I don’t do my taxes.”
“I’m going to stop you right there, Ms. Kole-James,” Donwell said during that hearing. “Everybody says that I don’t do my taxes, ‘I have a tax preparer.’ Understand, under the law, we are responsible for our taxes.”
The board also questioned Kole-James, who is single, as to how she was going to pay for nearly $20,000 in home repairs she said she planned on making to her home on Balmoral Drive. Kole-James said she was going to get a loan with her son’s help. Kole-James told the board her only income is $1,200 a month for disability — she has a vision problem — and a monthly allocation on her Bridge Card.
After the hearing the Board of Review decided it could not render a decision on Kole-James’ application, meaning she would have to pay her property taxes. More than $6,400 in taxes, interest and fees is due at her property for the 2014 tax year, according to online records from the Wayne County Treasurer’s office. Kole-James told the Free Press she is trying to pay her taxes.
Donwell said he has a simple piece of advice for poverty exemption applicants: Be honest.
“For those individuals that really need the help, the Board of Review is a perfect place to come,” he said. “You want to tell us as much as you can without us finding it out on our own. Because when we find out on our own it begins to raise red flags.”
Contact Joe Guillen: 313-222-6678 or jguillen@freepress.com. Follow him on Twitter @joeguillen.
