Relief from tax penalties is on the way to thousands of Portland-area households, according to coordinated press releases from two of Oregon’s largest government agencies.
After recently warning roughly 20,000 high-income households they owed penalties related to two new taxes, Metro and Multnomah County are backing off. Taxpayers complained they hadn’t been properly notified of their new tax obligations before unexpectedly receiving letters asking them to pay penalties on top of the tax amounts.
The withdrawn penalties relate to two tax measures approved by voters two years ago, which were first collected for the 2022 tax year: the Metro regional government’s Supportive Housing Services program and Multnomah County’s Preschool For All effort.
The Metro homeless measure taxes individuals earning at least $125,000 per year, or households earning at least $200,000. It also taxes businesses in the Portland metro region that gross over $5 million.
Preschool For All has similar tax thresholds for county residents, but has additional higher tax rates for people who earn more. It doesn’t tax businesses.
“We understand that many taxpayers, particularly those who use TurboTax and other online tax preparation were surprised they might owe a local income tax,” said Metro Chief Operating Officer Marissa Madrigal in a statement released Tuesday. “We also know most people we’ve heard from want to do the right thing and would have paid the tax if they had known. We are waiving the penalties and interest in good faith, acknowledging that the first year of navigating a new tax can be challenging.”
Metro officials said more than 40,000 taxpayers have paid the new regional tax for housing services. In their statement, Multnomah County officials said “most people who owed the new taxes paid and paid on time.”
Multnomah County said its collections for 2022 have been higher than expected.
“The County, which forecast $119 million in revenue for fiscal year 2022, has already collected $187 million in Preschool for All taxes for fiscal year due to higher-than-expected capital gains collections,” the county said in its statement.
County officials said people who have already paid interest or penalties can get a refund. Officials said they’re working to improve outreach to taxpayers for future tax years.
“In levying the first County income tax since 2003, we didn’t succeed in getting information to everyone who needed to hear it,’’ said Multnomah County Chair Jessica Vega Pederson in a statement Tuesday.
“We’re going to fix that.’’
Officials at both Metro and Multnomah County said the programs funded by the new income taxes are already delivering services promised to voters and taxpayers. Metro officials say the funding has protected more than 10,000 Oregonians from eviction, placed 2,200 people into supportive housing and “built or maintained” 900 shelter beds.
Multnomah County said Preschool For All has “opened 718 slots for children in its first year.”