VALPARAISO | The state has reversed last week's decision by Porter County officials to grant temporary amnesty to the owners of hundreds of multi-unit residential buildings who have been receiving a larger homestead deduction than is allowed by law.
Porter County Auditor Bob Wichlinski must comply with the law by collecting three years of back taxes, interest and a penalty of 10 percent, said Catherine Wolter, general counsel for the Indiana Department of Local Government Finance.
"I believe he was trying to do the right thing," Wolter said of Wichlinski.
The DLGF was tipped off about the amnesty program Monday by an email referencing a news story, Wolter said.
While bill amounts will vary, a random example provided last week by the auditor's office amounted to just more than $6,000.
The violations involve owners who live in their multi-unit buildings and have been receiving a homestead deduction on their entire structure rather than just the portion that makes up their primary residence, Wichlinski said last week. The violations have been occurring for many years, he said.
Wichlinski said he decided upon the amnesty approach because there is no foolproof way of determining whether the property owner knowingly took advantage of the tax break. It is also unclear whether county employees made the distinction clear to taxpayers when they applied for the deduction.
"We're going to do what we have to do to become in compliance with the law," he said Monday.
Valparaiso Mayor Jon Costas said the change in approach is good news to the municipalities and schools.
"Right now, it is important to collect every tax dollar that is properly levied," he said.
The city used to collect 98 to 99 percent of the revenue it had coming, but that number fell to the range of 92 percent over the past three years for a total loss of nearly $3 million, Costas said.
Wichlinski said the penalty money collected will be turned over to the state, and the back taxes and interest will go the auditor's nonreverting fund, which has paid, in part, for the crackdown on homestead violations.
Wichlinski said he will work with the assessor's office to determine what percentage of each property in question should receive the deduction. The new figures will be used in preparing all future bills.