Tax officials urge phased implementation of H.955, propose excluding commercial apartment buildings

Rebecca Samurro, deputy commissioner of the Department of Taxes, told the House Ways & Means Committee on April 9 that the non-homestead residential classification in H.955 should take effect in the same year as the homestead exemption and the uniform tax rates so taxpayers avoid a year of unusually low taxes followed by a spike once the new system is fully in place.

"We wanted to reiterate that ... the non-homestead residential classification of the second homes tax should start in the same year as the homestead exemption and the uniform tax rates," Samurro said, adding the timing reduces the risk of what staff repeatedly called "tax whiplash." The department recommended shifting the implementation timeline so the dwelling-use attestation (DUA) and data collection come one year before the tax goes live — providing JFO more robust data for rate-setting in January 2030.

The tax department also urged the committee to exclude large commercial apartment buildings (five units or more) from the initial non-homestead classification. Samurro said the department’s data show "about 1,600 apartments across the state that are short-term rentals," and the administrative work of reclassifying large buildings would impose heavy paperwork for landlords, listers and towns. "If they had 20 apartments, one of them is short-term ... the town's going to have to do that split," she said.

Committee members asked staff to clarify edge cases: the department explained a unit rented for a short period can remain a homestead so long as it is not rented for more than six months in a year. Staff also discussed possible multi-year data collection before rates are set and suggested adjusting effective dates so data collection and rate-setting align to reduce volatility for districts and taxpayers.

Tax staff recommended changes to the statutory timing for the attestation and for the DUA contingency that depends on clerks’ certification, arguing the DUA should not be "unleashed" before the contingency is met in late 2028. The department said aligning those contingencies and the start of implementation would avoid work done prematurely and protect taxpayers from inconsistent transitions.

The Department of Taxes asked the committee to reconsider some statutory language and to send staff the chart of fiscal-year/calendar-year/education-year alignment it uses to plan implementation. The committee also discussed the Education Fund Advisory Committee’s charge; tax staff proposed that committee review JFO and AOE work rather than be the primary technical body updating weights and data processes.

The committee recessed for staff work and a planned 10:30 a.m. walkthrough of revised bill language.