2018-07-26 / Front Page

City takes look at senior tax break

By Abigail Worthing
Staff Writer

SACO – One Saco resident has issues with a city program that allows seniors a break on their taxes.

Saco’s tax abatement program allows residents 60 and older who own and reside in their home to work for the city and, in exchange, receive a credit on their property taxes. Eligibility for the program hinges on household income, capped at $38,450 for one-person and $43,950 for dual income homes. Seniors who are accepted into the program have opportunities to work in offices such as the school department, fire department or public works as well as within city hall itself. The tax abatement formerly required 100 hours to take $750 off a senior’s tax bill. However, in 2018 a change reduced the abatement to $599 for 59 hours of volunteer hours.

According to freelance accountant and Saco Citizens for Sensible Government member Barbara Colman, the problem within the program starts with the classification of the workers.

“The city has been classifying them as volunteers, but that’s not right. These people are workers and need to be treated as such. We can’t classify them as ‘contractors’ either,” said Colman, referring to another word used when referring to seniors in reference to the program. “You’re telling them when and where to be, so they’re workers.”

According to program guidelines, taxpayers who receive abatement in exchange for services are considered volunteers by the city, therefore not required to file a W4, and are covered by liability insurance through the city. In other cities that offer the program, such as the senior tax abatement program in Wilbraham Massachusetts, those participating are considered employees, and funds earned toward abatement are considered taxable income. Therefore those who participated in the program over the past year in Saco should have received a 1099 form.

According to a timeline provided by Colman, she first approached City Administrator Kevin Sutherland in January 2016 about the issue and says she has repeatedly reached out to him and members of council since with little to no response. During a July 9 city council meeting, Colman addressed the council during the public comment portion, reminding them that these seniors must be treated as employees, and failure to address the situation could result in fines from the IRS.

“This program was developed by councilors nine years ago. It was never intended to skirt IRS regulations. We’ve assembled a committee to make the changes necessary,” said City Administrator Kevin Sutherland. “It’s been turned into more of a concern, and we’ll address it.”

On June 4 the city created a senior tax abatement ad hoc committee to address issues with the program and create a report on the recommended course of action. Seniors are continuing to work at the approved rate of $599 for 59 hours while the committee searches for a long term plan.

According to committee member and Ward 5 Councilor Alan Minthorn, the committee will meet monthly and is working through a myriad of concerns to find the best solution. Other members of the committee include Senior Tax Abatement Program Coordinator Mary Starr, Age Friendly Saco Chair Jean Saunders, Representative Donna Bailey, and Representative Maggie O’Neill.

“We’re considering many options. We’re starting from scratch,” Minthorn said. “We want to ensure seniors are getting the best program possible while also ensuring that we’re being aboveboard with all legal offices.”

While statewide programs already include an exception for abatements, if the abatement becomes taxable in Saco, there is the risk that federal programs could be affected. According to Minthorn, the committee will work with federal offices to ensure programs such as Medicaid and food stamps are unaffected by the abatement. Minthorn also wanted to ensure that the abate- ment is accessible by all, including those who are wheelchair or homebound, and provide options to accommodate those who cannot necessarily go to an office for work hours. The committee will look into opportunities that will provide flexibility for those who may push against the boundary of eligibility for federal aid, providing opportunities to work up to only what their limitations will allow. For example, if receiving $599 in taxable income will cause a senior to lose federal benefits, but $400 would not, the senior should be permitted to work up to their personal cap of $400.

For those who cannot perform work hours and stand to lose their home due to the rising property taxes, Minthorn would like to see an “abatement reserve,” where seniors who have already reached their 59-hour cap can continue to work to pay into the reserve for those unable to work. A program like this could potentially allow other private residents who would like to volunteer for the city to pay their “wages” into the abatement fund.

“A program like this would allow high school seniors who need volunteer hours for graduation to double dip, so to speak, and earn the hours they need to while helping senior citizens,” Minthorn said.

For Colman, she wants the city to fix the problem with the abatement, but in a way that won’t hurt the seniors who have chosen to use it.

“A lot of seniors are upset with me because they think I want to change everything in a way that will affect them negatively, but that couldn’t be farther from the truth,” Colman said. “I just want to get them what they deserve.”

Contact Staff Writer Abigail Worthing at news@inthecourier.com.

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