Richmond’s attempt to fix tax rebate fumble was still full of costly mistakes: audit
VENN
RICHMOND, Va. (WRIC) -- Richmond's second attempt to fix its costly tax rebate check fumble was still plagued by errors, which resulted in many residents receiving checks written for too much or too little.
On Tuesday, Nov. 25, Richmond's Office of the City Auditor (OCA) released its audit on the string of errors with the city's tax rebate program that impacted nearly 60,000 Richmonders.
It all began in March when officials revealed that "several thousand" city residents mistakenly received tax rebate checks with the wrong names. Other errors with the program that touched more residents were also revealed during this process.
Ultimately, the Finance Department performed updated calculations and new checks were issued by late June -- and while "a majority of taxpayers" received an accurate payment after that, many still did not. Per city auditors, this is due to the "absence of a formal implementation plan, calculation errors or calculation methods warranting further review."
Due to these sustained issues, just over $32,500 in overpayments and about $80,300 in underpayments were made during the second run of checks.
The first run of checks included about $82,500 in unresolved overpayments -- meaning they were never recouped, while $590 remained unpaid.
"Additional overpayments and underpayments likely exist and cannot be quantified until further research is performed by Finance, primarily involving properties sold or transferred before January 1, 2024," the OCA said. "In addition, the noted transfers may correct some of the issues noted in the report but cannot be quantified until the Finance Department reviews the transfers and sales."
What was the tax rebate program?
The rebate checks were sent as part of an ordinance that was adopted by the city council in November 2024.
The intent was to return a surplus of up to $16 million to real estate taxpayers through a one-time rebate.
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The ordinance dictated that payments would be calculated as four cents for every $100 of the assessed value of the real estate property as of Jan. 1. It defined eligible properties and recipients of the rebate as follows:
- Eligible Property: A parcel of real estate separately assessed for real estate taxes by the City on Jan. 1, 2024, that is not entirely exempt from real estate taxation or for which no tax bill would otherwise be issued.
- Eligible Taxpayer: A person or persons listed as the owner of an Eligible Property in the 2024 records of the City Assessor as of Jan. 1, 2024.
What went wrong with this process?
In March, the city created 59,376 rebate checks for the taxpayers, totaling about $14.7 million. However, many of these checks were fraught with errors.
These errors came to be because the finance department incorrectly used 2025 ownership data to determine eligible properties and eligible taxpayers instead of ownership data as of the agreed-upon Jan. 1, 2024 date established by the ordinance.
According to the OCA, the following issues arose due to the errors:
- Thousands of the checks had the wrong names. A total of 8,359 checks were incorrectly written to the same payee, and some checks were issued to the 2025 owners instead of the owner as of Jan. 1, 2024.
- Many were written for the wrong amount. By deriving rebate amounts from the 2025 taxes billed -- including fees, fines and other charges -- the amounts used to calculate the rebates were inflated for some recipients.
- Some properties were incorrectly included. Parcels exempt from taxes in 2024 were rebated because they were taxable in 2025. Additionally, parcels that did not exist in 2024 were rebated because they were taxable in 2025.
- Other properties were incorrectly excluded. Parcels taxable in 2024 but exempt in 2025 were not given a rebate.
Errors with some of the checks were identified as they were being sent out and the process was stopped before all checks were mailed -- but 17,067 checks were cashed before cancellation, totaling $1.37 million.
Over 870 may have been cashed by the incorrect taxpayer, while nearly 600 were cashed for amounts higher than what was written on the check, per the OCA.
The city's official responsible for the tax rebate program -- Jamie Atkinson, Richmond's Director of Revenue Administration -- ultimately resigned because of these mistakes, leaving now-former Director of Finance Sheila White in charge of seeing the program through to completion.
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While the city aimed to fix the errors when issuing the second round of rebate checks, city auditors learned that other issues still persisted, resulting in further mistakes.
How could these kinds of mistakes happen?
The ordinance that created this program did not establish a detailed plan for how it would be implemented, according to the OCA. It also did not explain "how to handle several scenarios."
"As a result, Finance staff made case-by-case decisions during calculations," city auditors said.
Auditors learned that the second-round tax rebate checks for over 1,660 properties were determined either using incorrect calculations or methods of calculation that weren't specified under the ordinance.
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Examples of such calculation errors include 63 tax-exempt parcels incorrectly receiving checks based on the "area tax" for their street, as well as 60 parcels being incorrectly appraised based on their 2024 value and not their available 2025 value.
Additionally, in more than 1,400 cases, the Finance Department incorrectly determined final payment amounts by choosing to mismatch values from 2025 and values from 2024 when calculating, per the audit.
Ultimately, because of these and other errors, the city ended up paying out more than the original ordinance allotted for this program. While the Richmond City Council only approved $16 million in rebates, just under $16.03 million was paid out -- a noteworthy jump, as the first round of rebate checks only came out to $14.7 million combined.
"This overage was caused by the issuance of incorrect checks in the first batch that were cashed and had to be issued again so that the correct taxpayer could get the correct rebate," city auditors said.
How can this be avoided in the future?
The OCA recommended that, when approaching future rebates like this one, the city do the following:
- Choose a single year for both eligibility and amounts
- Link eligibility to completed taxpayer action, like a filed return or the most recent paid tax bill -- and define the recipient by that action
- Use a simple calculation method, like a flat amount or a capped liability
These changes could not only reduce errors, but also lower the administrative costs associated with making rebates happen. the OCA said.
Auditors also made the following broader recommendations:
- The Department of Finance should develop an action plan to address the issues found in this report, including the cost-effectiveness of measures like the tax rebate program.
- The Chief Administrative Officer should work with the City Attorney to determine if any action is necessary to address the funds paid out in excess of $16 million.
- The Chief Administrative Officer should develop a process to ensure that programs created through city council ordinances are properly implemented.
The city agreed with the OCA's findings and all three recommendations.
In the audit, city officials added that the Department of Finance will validate the rebate calculations of any resident who requests a review. Should a discrepancy be found, the adjustment will be applied to the taxpayer's 2026 second-half real estate tax bill, which will be issued in May 2026.
