The City of Portland and Multnomah County are responding to a wave of complaints and confusion after nearly 12,000 letters were sent out to residents claiming they owed money for new taxes meant to fund homeless services and preschool, despite having already paid.
In a joint statement released on Friday, Metro, Multnomah County, and the City of Portland acknowledged the need for improved communication and clarity regarding the complex tax collection system. The statement read, “Confusion about the recent notices shows we have room to improve, and we are committed to doing so.”
The issue arose when the City of Portland mailed out approximately 12,000 letters to high-earning taxpayers, informing them of the Supportive Housing Services tax by Metro and the Preschool for All tax by Multnomah County. However, the Notice of Debt letters failed to provide a clear explanation of the problem, leading many recipients to seek answers from the city, resulting in long wait times on the phone.
One taxpayer, Marc Steinmetz, expressed his frustration after receiving a letter claiming he owed penalties and interest on Metro’s homeless services tax, despite having already paid it in full. Although the city agreed to waive the penalty upon reviewing his bill, they insisted on charging the interest, leaving Steinmetz even more perplexed. He has since requested that the city also waive the interest.
The City of Portland is responsible for collecting taxes on behalf of Multnomah County and Metro. Nick Christensen, spokesperson for Metro, stated, “We expect the customer service from the Revenue Office to be held to the highest standard. We’ll be working with our partner to improve the way this works in the future.”
The personal income taxes, which were approved by voters, apply only to individuals earning over $125,000 annually or couples with a combined income over $200,000. Metro collects a 1% tax on income over these thresholds for the homeless services tax, while Multnomah County imposes a tax of 1.5% above the threshold. The tax rate increases to 3% for all income above $400,000.
The complexity of the tax collection system has led to some taxpayers receiving letters demanding penalty and interest due to underpayment or failure to make quarterly estimated payments. The governments’ joint statement explained that many taxpayers may be unfamiliar with quarterly estimated payments and the associated fees.
While the collection of these taxes has been more successful than anticipated, with Metro’s Supportive Housing Tax surpassing expectations and bringing in $850 to $900 million in the first three years, the government agencies are reviewing the system for potential improvements.
Taxpayers who have received a Notice of Debt letter are advised not to ignore it. They are encouraged to contact the City of Portland Revenue Division tax help line or email the respective tax help addresses provided for assistance in resolving any questions or concerns.
