MDR spokeswoman Kathy Waterbury told The Clarion-Ledger that the agency found cases where people were paying too little, too much or — in most instances — enjoying the tax break a deceased elderly or disabled relative formerly received.
Waterbury said the problems were discovered when the agency used its new computer software to determine which Mississippi residents qualified for homestead exemption.
Under homestead exemption, the state encourages people to own homes by exempting the houses from some property taxes. The state reimburses counties and cities for lost tax revenues from homestead exemption. Those reimbursements, local officials say, have not kept pace with actual losses experienced by cities and counties.
Most of those re-flagged involved relatives of deceased elderly or disabled residents who, after their family members' death, lived in their house but didn't refile for the homestead exemption they actually qualified for.
Waterbury said county tax assessor offices are using the lists to correct their records and notify those who need to refile.
"Some were just typos on the applications . things that had to be cleaned up to correct," Waterbury said. "But the biggest things we were seeing were the deaths. We were able to get information and run it against the entire system of Social Security administration death rolls."
Mississippi taxpayers who qualify receive up to a $300 credit against the ad valorem taxes due on their homestead, or real property. The homestead credit is graduated and based on the assessed value of the property. The credit maxes out at $300 for assessed value of $7,500.
Those 65 or older, or 100 percent disabled, are exempt from tax on the first $75,000 of the true value of their home.
Property is assessed at a percentage of its true value. Owner-occupied residential homes are assessed at 10 percent; any other property is 15 percent. The true value of the property is multiplied by the assessment ratio to determine the assessed value.
The assessed value is multiplied by the local millage rate to determine the property taxes owed.
Because both the counties and the Department of Revenue have had to work with thousands of paper applications, Waterbury said, it's not a given that mistakes, or failures to refile when a status changes, will be discovered quickly.
"When you are dealing with the volume we have, we just don't have enough people to handle it, and nor do the counties," she said. "In this day and age, you live by technology. It's impossible to check a list that comes to you in an electronic format against paper documents."
She said among things that must be verified are whether those filing actually live in the home they are filing for. And, she said, rental property does not qualify, and residents can only have one homestead exemption.
"A lot of people rent their property, and they don't understand that homestead doesn't apply to every home," she said.
Those convicted of failing to notify the tax assessor's office of a change in their homestead status face a fine of up to $5,000, up to two years in prison, or both.
Waterbury said the state isn't looking to charge those red-flagged. And there will be no retroactive payment of taxes on incorrect homestead exemptions, she said.
"''There might be some situations that are criminal, but on most of these, people just didn't know any better, and it catches up with them," she said.