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Local Government Talks Confusion Over Tax Collection Notices

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After numerous calls, emails, and complaints, local government has finally responded to the confusion caused by demand letters claiming that people owe money for new taxes funding homeless services and preschool, despite many already having paid.

In a joint statement released Friday, Metro, Multnomah County, and the City of Portland announced that they are working to address taxpayer questions and clarify the complex tax collection system. “The confusion around these recent notices indicates that we have room for improvement, and we are committed to making those improvements,” the statement said.

This statement was issued about a week after Portland sent out nearly 12,000 letters to high-earning taxpayers regarding Metro’s Supportive Housing Services tax and Multnomah County’s Preschool for All tax. These Notice of Debt letters caused widespread confusion because they lacked clear explanations, leaving many people on hold for hours trying to get answers from the city.

Marc Steinmetz, a taxpayer, shared his frustration: “The first time I called, there were 128 people ahead of me in the queue.” He was perplexed after receiving a letter stating he owed penalties and interest on Metro’s homeless services tax, even though he had paid it in full. The city agreed to waive his penalty but not the interest, leaving him even more confused. Steinmetz has since requested that the city also waive the interest. “It is frustrating,” he said.

Portland collects these taxes on behalf of Multnomah County and Metro. “We expect the Revenue Office’s customer service to meet the highest standards. We’ll work with our partner to improve this process in the future,” said Nick Christensen, a spokesperson for Metro.

The voter-approved personal income taxes apply to individuals earning more than $125,000 annually or couples making over $200,000 combined. Metro collects a 1% tax on income above these thresholds for the homeless services tax, while Multnomah County imposes a 1.5% tax over the same threshold. For income above $400,000, the tax rate increases to 3%.

Taxpayers expected to owe more than $1,000 annually are required to make quarterly estimated payments. Failure to do so, or underpayment, results in letters demanding penalty and interest payments. “Many of these taxpayers may be unfamiliar with quarterly estimated payments and might not have encountered underpayment fees before,” the governments’ statement explained.

Steinmetz suggested that it would be simpler if people could just pay once a year.

The collected taxes are significantly exceeding expectations. Metro’s Supportive Housing Tax, initially projected to bring in $250 million annually, has instead generated between $850 and $900 million in its first three years, according to Metro’s spokesperson.

The aggressive tax collection and complex system have raised questions. “We are currently reviewing the SHS system to see if there are reforms that can improve the Supportive Housing Services program as it moves forward,” Christensen explained.

Taxpayers are advised not to ignore any Notice of Debt letters they receive. Those with questions should contact the City of Portland Revenue Division tax helpline at 503-865-4748 or email (for Metro) or (for Multnomah County) for assistance.

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