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Metro, Multnomah County to waive penalties and interest after botched rollout of new taxes

All penalties and interest assessed to people who still owe the Supportive Housing Services tax and Preschool for All tax will be waived for tax year 2021.

PORTLAND, Ore. — Metro and Multnomah County abruptly reversed course by waiving all penalties and interest for a pair of new taxes meant to fund homeless services and preschool. The decision comes after fierce public outcry. 

A KGW investigation found many taxpayers had no idea the taxes were overdue until they received a letter demanding payment along with penalty and interest. Both taxes target only higher-income earners.

Metro and Multnomah County said they tried to alert taxpayers by reaching out to employers, accountants and tax preparation firms, but clearly not everybody got the message.

The popular tax preparation software TurboTax also didn’t warn taxpayers who are likely to owe.

“We didn’t succeed in getting information to everyone who needed to hear it,’’ said Multnomah County Chair Jessica Vega Pederson in a statement. “We’re going to fix that.”

On Tuesday, both Metro and Multnomah County announced all penalties and interest assessed to those people who still owe the Supportive Housing Services tax and Preschool for All tax will be waived for tax year 2021.

Anyone who has already paid interest and penalties for the 2021 tax year will get a full refund for the interest and penalties. Refunds will be issued over the next few months, a county spokesperson explained.

All other penalties and interest going forward, including the 2022 tax year, will remain in effect.

The City of Portland collects the taxes on behalf of Metro and Multnomah County.

Portland’s Bureau of Revenue and Financial Services is in the process of mailing roughly 20,000 letters to high-income households warning they didn’t pay Metro’s newly created homeless services tax and Multnomah County’s separate preschool for all tax, which voters overwhelmingly approved in 2020.

The first batch of 12,000 letters went out several weeks ago. An additional 8,000 letters will be sent out over the next few weeks, explained both Metro and Multnomah County spokespeople.

The new personal income taxes only apply to individuals who made more than $125,000 annually or couples who bring in more than $200,000 dollars combined.

Metro collects a 1% tax on income over those thresholds for the homeless services tax. Multnomah County asses a tax of 1.5% over that threshold. The tax rate bumps up to 3% for all income above $400,000.

So far, Metro said it has collected $202 million in taxes for homeless services, while Multnomah County said it has taken in $241 million for preschool-for-all. 

Metro and Multnomah County explained it’s too early to accurately calculate a compliance rate, but early data suggests roughly 33% of those eligible have yet to pay Metro’s homeless tax.

In addition to the penalty and interest waiver, Metro and Multnomah County announced the government will increase outreach to taxpayers through mailers, advertising, press releases and social media.

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