DC Failed to Collect Possibly Millions in Property Taxes Due to Computer Error

DC can raise property tax rate on blighted, vacant homes

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Washington, D.C., has failed to collect hundreds of thousands and possibly millions of dollars in property taxes that are supposed to compel property owners to clean up vacant and blighted houses.

Neighbors have complained about a vacant home on Indian Rock Terrace in upper Northwest for years.

Public records show the D.C. Department of Consumer and Regulatory Affairs (DCRA) has sent crews out to clean up the property and fined the homeowner more than $1,000 as recently as this month. In addition to fines, D.C. can raise the property tax rate from 85 cents per $100 of value to $5 or $10 depending on the condition of the house.

The increased tax rates are meant to compel the homeowner to fix up the property.

Inspectors classified the house as vacant in 2019, in 2020 and again this year, but the tax rate was never changed and taxes never went up.

That error isn’t an isolated incident. District officials acknowledged discovering a problem with the system last year.

“Some information regarding the classification of vacant and blighted properties was not being properly transmitted and/or received,” D.C. said in a statement. “Any properties that should have been taxed at the Class 3 or 4 rate but were not will be charged retroactively.” 

D.C. Council Chairman Phil Mendelson raised concerns about the program several weeks ago and was told the problem was fixed.

“It’s a bit outrageous that they would not be as truthful with the Council as they were with you,” Mendelson told News4.

In a letter to Mendelson, the director of DCRA indicated the problem with the tax rates not being applied is due to a computer upgrade at the Office of Tax and Revenue.

DCRA lists almost 3,000 vacant properties and more than 100 blighted properties across the District but could not tell News4 how many are being taxed at the correct rate.

“We’re not getting the money we would get, and therefore it’s clear the program is being mismanaged,” Mendelson said.

“It means a crappy neighborhood,” he added. “That’s what it means for residents … It affects the quality of life in that neighborhood.

Mendelson plans to follow up with DCRA. He said this issue is just part of more widespread problems with the agency. 

The tax rate has been corrected on the Indian Rock Terrace property, increasing the taxes owed from $6,000 to more than $120,000.

Homeowner Hakan Ilhan, who owns several well-known restaurants in the District, was at the house Wednesday with a contractor. He said he was going to appeal the tax increase and plans to have a contractor begin work next week, saying he hasn’t done any work on the house because he’s been focused on keeping his restaurants afloat during the pandemic.

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