Americans routinely tell pollsters they don’t feel public officials genuinely care about people like themselves. One major driver of this cynicism is the government’s double standard: one set of rules for itself, and a much harsher set for the public.
I recently experienced this hypocrisy firsthand regarding a low-profile but significant issue: local government’s refunding of taxpayer overpayments. These overpayments happen surprisingly often—due to mortgage mix-ups, property sales, or successful assessment challenges—and they have become a quiet but significant source of government revenue.
My ordeal began when a check-washing scheme at my local post office in Severna Park forced me to close my checking account and open another, resulting in an accidental tax overpayment. I was also in a life-and-death struggle with throat cancer, which consumed my attention.
If I had owed this money to Anne Arundel County, the consequences would have been swift and severe. In our county, the fee for a late property tax payment is 6% interest plus a 6% penalty. If a water bill is just one day late, the penalty is 10%. If a tax bill remains unpaid for a few months, the County can foreclose on the property and collect recordation fees that dwarf the original penalties. (The County forecloses on about 1,000 homes per year for tax delinquency.)
But when the shoe is on the other foot, the rules change. Maryland counties claim they have unlimited time to refund a tax overpayment and can do so without paying a cent in interest or penalties.
Compare this to the federal government. The IRS pays interest on overpayments if a refund is delayed more than 45 days. The U.S. Consumer Financial Protection Bureau requires financial institutions to refund overpayments within seven days. Yet, under Maryland state law, counties can hold your money indefinitely without consequence.
In my case, Anne Arundel County took more than 8 months to notify me of my overpayment, and more than 5 months to issue the refund after my request. In total, the government held my money for 14 months. When they finally paid up, they refused to pay any interest for the unreasonable delay.
I filed a complaint in small claims court for $400.78 in lost interest. The County’s response was telling. They didn’t argue that the delay was reasonable. Instead, they argued they couldn’t be held negligent because of “government immunity, sovereign immunity, common law immunity,” and a laundry list of other protections. In short, they can get away with gross negligence simply because they are the government.
To make matters worse, the County moved to have the case transferred from small claims court to tax court. While court officials had previously assured me that small claims was the right venue, the transfer made the legal battle absurdly expensive relative to the $400 dispute. The County also informed me that if I lost in tax court, the court might require me to pay its legal costs (which it did not do). But I proceeded, knowing that if every taxpayer folded, this injustice would never be remedied.
My argument was simple: if a literal reading of the law leads to the absurd conclusion that a county has unlimited time to refund money without penalty, the law’s purpose—preventing unreasonable delays—should take precedence. I pointed out the perverse incentives at play. Anne Arundel County has a $2 billion budget and sophisticated software that instantly flags overdue payments. Yet because the County financially benefits from holding your money, it has no incentive to design systems that refund it promptly.
Legal scholars would label my case a “one-shot” vs. “repeat player” game. With $400 at stake, I was the one-shot player. With millions of dollars to protect in countless similar situations, Maryland counties were the repeat players. This incentive structure explains why three senior County officers were assigned to my case. In such a game, tax courts are systematically biased toward repeat players, as incentives, precedent, expertise, and relationships all favor repeat players.
At a motion hearing months later, even the judge acknowledged that the delay in my refund was excessive. However, he also went along with the County’s legalistic claim that the proper remedy was legislative rather than legal.
Clearly, the courts won’t save us from the County’s “heads I win, tails you lose” policies. We must demand that Maryland’s General Assembly close this loophole. Until then, Maryland counties will continue to apply self-serving double standards and hardball legal tactics to intimidate taxpayers seeking justice.
The law states that tax overpayments must be refunded, which is the law’s purpose. It does not state by when it must be refunded, nor does it state the interest and penalties for unreasonably delayed refunds. But since a law without a remedy is not really a law, unreasonable delay implies a penalty. There are many vague and sometimes self-contradictory laws like this, where it is the court’s duty to tease out their practical implications. That is, when textualism leads to an absurd conclusion, a standard rule of construction is to look at a law’s purpose. And if the court is unwilling to fulfill this duty (e.g., because of the repeat-player incentives), then it is the legislature’s responsibility to step in.
You state that “the law’s purpose—preventing unreasonable delays—should take precedence.” Can you clarify which law you are talking about, how you think it should be reformed, and what your evidence shows the purpose of that law is?