Vermont taxpayer advocate urges outreach, proposes change to property tax credit for people in pending divorces

Jeff Dooley, taxpayer advocate for the Vermont Department of Taxes, told the Ways & Means Committee that his office assisted roughly 50 cases last year and that most of the extraordinary-relief work involved the state property tax credit.

"In the past year, I believe I assisted 50 51 cases came before me. 42 cases, were approved. Of those 42 cases, 88% of those were property tax credits," Dooley said during his annual report to the committee.

Dooley told the committee he splits his work between systemic recommendations and individual casework, including extraordinary relief when the literal application of tax law creates significant hardship. He said the property tax credit (PTC) produces the most contacts because it is complex, involves comparatively large sums for low-income Vermonters and has strict deadlines.

He described several administrative initiatives the department implemented or plans to expand. The department implemented the new childcare contribution last year and conducted targeted mailings, online seminars and follow-up outreach when reporting appeared inconsistent. Dooley said the department expanded its communications team from one person to three and plans monthly meetings between his office and communications staff to increase outreach to underserved communities.

"We do have now a fully staffed communications staff ... we're pretty excited about what we're going to be able to do with that fully staffed communications team," Dooley said, and added the team will work on translation and disability access for forms and materials.

Dooley said the department is distributing information to public libraries, working with the Community Action Network and considering partnerships with organizations such as AARP and area agencies on aging to reach older Vermonters who may be eligible for the PTC. He said the office will track output metrics such as documents translated and credits issued year over year.

On legislation, Dooley presented a statutory proposal aimed at people who are in the middle of divorce proceedings. Under current law, he said, a person who continues to occupy a jointly owned home while separated often must claim only 50% ownership for the PTC and include the absent spouse's income, producing a sharply reduced credit during the pendency of the divorce.

"What this proposal does ... is basically it still requires the person to include their spouse's income and household income while they're going through the process of the divorce, but they get to claim ownership as if their spouse still live there," Dooley said. He said the proposal would let the person occupying the home claim ownership as if the spouse still lived there for credit-calculation purposes while the divorce is pending.

Committee members raised practical questions about documentation and potential gaming. Dooley said the department would likely require a copy of the initial divorce filing to confirm a pending proceeding and that past committee members had been concerned about fraudulent or sham filings if household income were excluded.

No formal committee action or vote was recorded on the proposal during the hearing; Dooley described it as a statutory recommendation under consideration. He also noted ongoing, broader conversations about simplifying the PTC's household-income definition with staff working on a potential rewrite of the PTC system.

Dooley closed by reiterating the dual role of his office: recommending administrative and legislative fixes at the macro level and helping individual taxpayers resolve issues at the micro level. "This doesn't get preapproved by the commissioner or by anyone ... This is solely in my report," he said, adding he will continue to press departmental improvements even when they are controversial inside the agency.

The committee did not take votes on the matters Dooley raised during the session; members signaled interest in further work and follow-up meetings with Dooley and department staff.