By Jamie Goldberg | The Oregonian/OregonLive
Multnomah County and the Metro regional government will waive penalties and interest charges for high-income households that failed to pay a pair of newly created taxes to fund homeless services and universal preschool.
Roughly a third of the six-figure households that owed a Metro tax to fund homeless services failed to pay it or had another issue with their payment for tax year 2021, the first year the tax went into effect, according to Metro. The regional government said more than 40,000 households paid the new tax on time, but that it recently sent about 20,000 notices to households that either failed to pay or had other issues with their payments.
Some taxpayers also failed to pay a new Multnomah County tax to fund universal preschool in the same tax year, although county officials have said they do not yet know the number of delinquent filers.
“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 Marissa Madrigal, Metro’s chief operating officer, in a statement. “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.”
Taxpayers who have already paid interest or penalties on either of the two taxes will receive full refunds, officials said.
Taxpayers who failed to make quarterly payments for either tax during 2022 also will have fees waived for tax year 2022 only, officials with both the county and Metro said. The 2022 homelessness services and preschool taxes are due April 18 of this year.
Starting in January 2021, Metro began collecting a 1% income tax from individuals in Clackamas, Multnomah and Washington counties who made more than $125,000 annually or couples who made more than $200,000 combined as well as from businesses generating at least $5 million annually.
That money is supposed to fund housing, behavioral health services and other housing-related services for people experiencing or on the verge of homelessness.
As for Multnomah County’s preschool tax, single filers with taxable incomes of more than $125,000 and joint filers with incomes above $200,000 owe a 1.5% county income tax on earnings above those levels.
Single filers who bring in more than $250,000 and joint filers at more than $400,000 pay even more: a 3% tax on income above those levels.
The county said it is working with the city of Portland, which administers both taxes, to increase outreach to those who may have owed the preschool tax but failed to pay it.
The Oregonian/OregonLive reported earlier this month that thousands of high-income households had failed to pay the two taxes and that Portland’s Bureau of Revenue and Financial Services had begun sending letters to households that didn’t pay one or both taxes.
Neither Metro nor Multnomah County notified individuals or households that owed the taxes before they came due, saying instead that the city of Portland performed “extensive” outreach to area employers, business organizations and tax preparers, including the Oregon Society of CPAs and Oregon Association of Minority Entrepreneurs.
Employers were not required to withhold the universal preschool tax during 2021. But starting in January 2022, that changed. Multnomah County employers were notified to automatically withhold it for employees making over $200,000 of taxable income per year.
The decision by the county and Metro to waive penalties and interest for late payers of the 2021 tax comes after Tony Green, a deputy city ombudsman, said earlier this month that the city’s tax department should waive penalties for all high-income households that failed to pay the taxes or at least inform people that they were eligible to have the fines canceled or refunded.
Multnomah County Chair Jessica Vega Pederson acknowledged Tuesday that not enough was done to make affected taxpayers aware of their need to pay. “In levying the first County income tax since 2003, we didn’t succeed in getting information to everyone who needed to hear it,” she said in a statement. “We’re going to fix that.”
Shane Dixon Kavanaugh of The Oregonian/OregonLive contributed to this report.