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“Circuit Breaker” Missouri Property Tax Credit for Senior and Disabled Missourians

By Brenda Procter, M.S., Associate State Extension Specialist in Personal Financial Planning

As many of you may have heard by now, there has been considerable controversy about a change in interpretation of the rules for the Missouri Property Tax Credit, formerly known as Circuit Breaker. “Rent tax credit” and “rent rebate” are other terms used to refer to the credit. Under the Circuit Breaker program, income-eligible senior and disabled Missourians can claim a tax credit of up to $750 if they pay rent or $1,100 if they pay real estate tax on the home they own and occupy. The Circuit Breaker program has been around since the mid 1970s, but renters did not gain eligibility for the Missouri Property Tax Credit until the early 1990s.

For the 2008 tax year, some 220,000 taxpayers received the credit, which averaged $544 per individual. Renters with income less than $27,500 ($29,500 for married couples) and owner occupants with income less than $30,000 ($34,000 for married couples) are eligible if they or their spouses are 65 years of age or older or if they are 100% disabled. Surviving spouse social security benefit recipients can qualify beginning at age 60.

A new interpretation of the law has taken many taxpayers and tax preparers by surprise, and lawmakers’ phone lines have been busy with calls from confused and sometimes angry constituents. There has been no change in the law. So what happened?

Around the beginning of the tax season, word started circulating that a small and largely unnoticed technicality in the law had not been enforced in past years. Many residents of low-income housing units and nursing homes received a notice that they are not, and never have been, eligible for the property tax credit they have come to count on every year. Why? Because their public housing facility did not pay property taxes. Many facilities do make “payments in lieu of taxes” (PILOT), but those payments are not technically “property taxes” and do not qualify residents in those facilities for the Missouri Property Tax Credit.

Some lawmakers, advocates and residents are crying “foul.” Missouri Property Tax Credit recipients often use their benefit to catch up on bills and meet some of their most basic needs. The change came without warning and many people who receive the property tax credit do not understand its terms and do not understand why they are no longer eligible. Taxpayers and preparers do not have access or training to interpret local property tax records, which has added to the confusion.

The Missouri Department of Revenue assures those who are now deemed ineligible and who have received the credit in the past that they will not be required to return past payments. According to Ted Farnen, Communications Director for the Department of Revenue, taxpayers and preparers who file claims in good faith to the best of their ability will not be held liable if claims are later found to be ineligible.

A group of lawmakers have met to address a potential “stop-gap” measure to ease the transition for seniors and disabled Missourians who were caught off guard this year. For more information, visit the Missouri Department of Revenue website at http://dor.mo.gov/tax/personal/faq/ptc.htm#q1 or contact your own Missouri legislators. You may look up contact information for your Missouri Senator or Representative at http://www.senate.mo.gov/llookup/leg_lookup.aspx