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Property Tax Exemptions and Deferral For Older Citizens Surviving Spouses by bigpoppamust

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									Property Tax
Exemptions and Deferral
      For Older Citizens, Surviving
      Spouses and Minors Under
      Clauses 41 and 17




      Published by
      William Francis Galvin
      Secretary of the Commonwealth
      Citizen Information Service
      One Ashburton Place, Room 1611
      Boston, Massachusetts 02108
      Telephone: (617) 727-7030
      Toll-free: 1-800-392-6090 (in Mass. only, TTY also)
      TTY: (617) 878-3889
      Fax: (617) 742-4528
      E-mail: cis@sec.state.ma.us
      Website: www.state.ma.us/sec/cis


      updated 4/4/01
Dear Massachusetts Citizen,

Citizen Information Service receives many inquiries from
senior citizens regarding tax deductions on their property tax
bills. By state law, exemptions or deferrals are allowed to
those qualified primarily from among seniors, surviving
spouses, minor children of deceased parents, veterans, and the
blind. This booklet is intended to answer questions for those
individuals interested in lessening their tax responsibilities.
Included in this updated version are the very latest changes in
tax laws for the past two years, offering the possibility of both
a tax reduction and income tax credit for property taxes paid
by seniors.

I hope the publication presented becomes a valuable aid in
understanding the benefits which may be available to you.




                         William Francis Galvin
                         Secretary of the Commonwealth
Table of Contents
Introduction .................................................................. 9


Property Tax Exemptions
For Older Citizens Under Clauses 41, 41B and 41C
Benefits ...................................................................... 10

Eligibility requirements ................................................. 10
Age and Status
Ownership and Occupancy
Real Estate and Personal Property
Income Eligibility


Property Tax Deferral
For Older Citizens Under Clause 41A
If you are unable to qualify for an exemption ................... 16

Eligibility requirements ................................................. 17
Age and Status
Ownership and Occupancy
Real Estate and Personal Property
Income Eligibility

Surviving spouse deferral ............................................. 18


Applying for Exemptions and Deferral
Under Clauses 41, 41A, 41B and 41C
How to apply for a tax exemption or tax deferral .............. 19
Joint Ownership

                                           (more contents on next page)
Property Tax Exemptions
For Older Citizens, Surviving Spouses And Minors
Under Clauses 17, 17C, 17C1/2 and 17D
Benefits ..................................................................................... 20

Eligibility requirements ........................................................... 21
Age and Status
Ownership and Occupancy
Real Estate and Personal Property
Income Eligibility

How to apply for a tax exemption ........................................... 22
Joint Ownership

Other exemptions/Credits ....................................................... 24
Elder Volunteer Program
New Income Tax Credit

Appeals ..................................................................................... 27
Questions, Additional Assistance
Introduction ...............................
If you are an older citizen, surviving spouse - husband or wife
- or minor whose parent is deceased, you may be more vulner-
able than most citizens to high property taxes.

Fortunately, there are programs to help you meet your tax
obligations. These programs, which provide either property
tax exemptions or a deferral of taxes, are set forth in different
clauses of Chapter 59: Section 5 of the Massachusetts Gen-
eral Laws. Those specifically geared for you are variations of
Clause 17 or Clause 41 or the Clause 41A tax deferral.

With revaluation of property at full and fair cash value, most
people found that they could no longer meet the eligibility
requirements of Clause 17 and Clause 41 exemptions. Aware
that this situation had arisen, the legislature enacted statutes
which created alternative exemptions to the Clause 17 and
Clause 41 exemptions. These clauses – Clause 17C, Clause
17C1/2, or Clause 17D, and Clause 41B or Clause 41C –
are available to those whose cities and towns have accepted
them.*

This booklet describes the exemptions under the variations of
Clauses 41 and 17 the one deferral available to the elderly,
Clause 41A.



*Acceptance by a city or town means approval by the town meeting in a
town, the city council subject to the provisions of the city charter in a
city and the town council in a municipality having such form of
government. All cities and towns are subject to the provisions of Clause
17 and Clause 41 unless they have accepted a more recently enacted
clause. When they accept such a clause, the provisions of the clause
which was in effect are no longer applicable.

                                                      Introduction • 9
          Clauses 41, 41B and 41C

Benefits ......................................
•    If you qualify under one of the Clauses 41, 41B, 41C
    exemptions, your assessor will grant you a deduction of
    $500 from your tax bill. These exemptions provide the
    greatest benefit to a senior citizen homeowner.
•    If you do not qualify for one of the Clause 41exemp-
    tions, you may be eligible for one of the Clause 17 ex-
    emptions. These would provide you with a deduction of
    $175 from your tax bill.

For more information on all exemption and deferral clauses,
contact your local assessor.


Eligibility requirements ...............
Age and Status
Clauses 41, 41B, and 41C
• You are a single person who is a sole owner or a joint
   owner who shares ownership with other person(s). You
   must be 70 years or older before the beginning of the
   fiscal year, July 1, for which an exemption is sought.
•   You and your spouse are joint owners. Either spouse must
    be 70 years or older before the beginning of the fiscal year,
    July 1, for which an exemption is sought.
•   You are a married person who is a sole owner. You must
    be 70 years or older before the beginning of the fiscal year,
    July 1, for which an exemption is sought.




10 • Tax Exemption: Clauses 41, 41B and 41C
Ownership and Occupancy
Clauses 41, 41B, and 41C
You must have owned and occupied as principal residence any
real property in Massachusetts for five years including owner-
ship and occupancy of present property on July 1 in the year
of application. Massachusetts must have been your place of
domicile for the preceding ten years.

A surviving spouse inheriting the property must have occu-
pied the property for five years.

Real Estate and Personal Property
Clause 41
Total worth may not exceed one of two options.
Option 1 allows a total worth of $17,000 for a single person
or $20,000 for a married couple, excluding assessed value of
domicile as of July 1 in year of application.

Option 2 allows a total worth of $40,000 for a single person
or $45,000 for a married couple, including the assessed value
of the domicile. If there is joint ownership with a person not a
spouse, the whole estate, real and personal, of each joint
tenant or tenant in common must be less than $12,000 for a
single person or not exceed $15,000 if married, including the
assessed value of the domicile.

Clause 41B
For a single person who is a sole owner or a joint owner who
shares ownership with other person(s), total worth cannot
exceed $20,000, (if married - $23,000) excluding the value of
the domicile as of July 1 in the year of application. The
portion, if any, which produces income must be included.




               Tax Exemption: Clauses 41, 41B and 41C • 11
Clause 41C
For a single person who is a sole owner or a joint owner who
shares ownership with others, total worth should not exceed
$28,000 (if married - $30,000), excluding assessed value of
domicile as of July 1 in the year of application. Only the
portion, if any, which produces income and exceeds two
dwelling units must be included.

Income Eligibility
Clause 41
for single person – less than $6,000
for married couple – less than $7000

Clause 41B
for single person – less than $10,000
for married couple – less than $12,000

Clause 41C
For single person – less than $13,000
For married couple – less than $15,000

You may deduct the minimum annual social security pay-
ment* from your gross income receipts if your gross receipts
include payments from social security, railroad retirement or a
federal, state, county, municipal or district retirement or
pension plan. Ordinary business expenses and losses may be
deducted from gross income receipts, but not personal or
family expenses.

Joint Ownership
Joint ownership with persons not your spouse. If you or you and
your spouse own property jointly with other person(s), you

*The minimum annual social security payment rate changes yearly. It is
determined by the Department of Revenue and is available from your
Board of Assessors.

12 • Tax Exemption: Clauses 41, 41B and 41C
may apply for that portion of the exemption which corre-
sponds to the proportion of the property that you or you and
your spouse own. However, unless each joint owner meets the
requirements for income and total worth for a single person
or married couple, whichever is applicable, no joint owner is
eligible.

If you are unable to qualify for an exemption under any of the
clauses described in previous pages, or if these exemptions do
not help you enough in paying your real estate taxes, you
might consider applying for a tax deferral under Clause 41A.
A deferral permits you to delay payment on property taxes.

If you qualify for a Clause 41A tax deferral, you enter into an
agreement with your local assessor to defer payment of all or
part of your taxes plus eight percent interest up to fifty
percent of your interest in the property valuation.

Taxes in every year may be deferred until you reach a point
where the unpaid taxes plus interest due are equal to fifty
percent of your interest in the property at full and fair cash
value. When that point is reached, although you may no
longer defer payment on current and future taxes, the unpaid
taxes and interest to date together with interest which will
continue to accrue on the unpaid taxes may remain unpaid
until the property is sold or until one's death. Upon one's
death the deferral may be continued by your surviving spouse,
if he/she qualifies, or the taxes may be paid by your heirs or
your estate. You can, of course, repay total deferred taxes at
any time before then. Upon your death, if your surviving
spouse does not continue to defer, or if the property is sold
prior to your death, the interest rate goes up to sixteen per-
cent, and the taxes must be paid in order to release the lien
that was placed on the property while there were unpaid
deferred taxes. If the taxes are not paid within six months of

               Tax Exemption: Clauses 41, 41B and 41C • 13
death or sale, the local treasurer may seek to foreclose the lien
on the property if the deferred amount remains unpaid.

Age and Status
• You are single, or if married, your spouse is not an owner.
   You must be 65 years or older by July 1 of the year in
   which application is made.
•   You and your spouse are joint owners. Either spouse must
    be 65 years or older by July 1 of the year in which applica-
    tion is made.
•   You, age 65 or older, or you and your spouse, either of
    whom is 65 years or older by July 1 of the year in which
    application is made, own property jointly with other
    person(s).
•   You are a single person who is a joint owner sharing
    ownership with other person(s). You must be 65 years or
    older by July 1 of the year in which application is made.

Ownership and Occupancy
Applicant(s) must have owned and occupied as your domicile
any real property in Massachusetts (including present prop-
erty) for five years. Massachusetts must have been your
domicile for the preceding ten years.

Real Estate and Personal Property
Not applicable.

Income Eligibility
From all sources in calendar year preceding year in which
application is made, not to exceed $20,000. A community
may adopt a higher maximum qualifying gross receipts
amount but such amount shall not exceed $40.000.



14 • Tax Exemption: Clauses 41, 41B and 41C
A surviving spouse inheriting property must have occupied it
or other real property for five years. The surviving spouse who
otherwise qualifies may choose to continue to defer taxes.
However, the total of taxes deferred by both spouses together
with interest thereon may not exceed fifty percent of their
interest in the property valuation.

Payment of a deceased spouse’s deferred taxes shall not be
required during the life of a surviving spouse of any age who
inherits the property and who enters into a tax deferral and
recovery agreement.

If you or your spouse own property jointly with other indi-
viduals you may apply for the deferral. The deferred taxes
with interest at eight percent in this case are not to exceed one
half of the full and fair cash value of the proportion of this
property owned by you or you and your spouse.

Contact your local Board of Assessors for an application form.
You must apply each year for an exemption or deferral.
Generally, you can receive only one exemption, so submit the
application for the exemption which will provide the greatest
benefit. However, since Clause 41A is a deferral of taxes, you
may use a Clause 41A deferral in conjunction with an exemp-
tion for which you qualify.

Applications under Clause 41, Clause 41A, Clause 41B or
Clause 41C must be filed with your local Board of Assessors
on or before December 15 in each year. If the actual, not
preliminary, property tax bill is mailed after September 15,
you have three months from the date the bill is first mailed in
which to apply. In the year of local acceptance of Clause 41C
the community allows an additional 45 days from the date of
acceptance to apply unless a later date for applying is allowed
by another statute.


                Tax Exemption: Clauses 41, 41B and 41C • 15
In addition to your local Board of Assessors, your local
Council on Aging may be able to help you fill out the forms.
Some councils employ tax specialists to provide such assis-
tance.

Joint Ownership
If two or more people own property each can apply, and if the
person is qualified, each will be entitled to his or her exemp-
tion. Consult your local Board of Assessors.

                      Clause 41A

If you are unable
to qualify for an exemption..........
If you are unable to qualify for an exemption under any of the
clauses described in previous pages, or if these exemptions do
not help you enough in paying your real estate taxes, you
might consider applying for a tax deferral under Clause 41A.
A deferral permits you to delay payment on property taxes.

If you qualify for a Clause 41A tax deferral, you enter into an
agreement with your local assessor to defer payment of all or
part of your taxes plus eight percent interest up to fifty
percent of your interest in the property valuation.

Taxes in every year may be deferred until you reach a point
where the unpaid taxes plus interest due are equal to fifty
percent of your interest in the property at full and fair cash
value. When that point is reached, although you may no
longer defer payment on current and future taxes, the unpaid
taxes and interest to date together with interest which will
continue to accrue on the unpaid taxes may remain unpaid
until the property is sold or until one's death. Upon one's


16 • Tax Deferral: Clause 41A
death the deferral may be continued by your surviving spouse,
if he/she qualifies, or the taxes may be paid by your heirs or
your estate. You can, of course, repay total deferred taxes at
any time before then. Upon your death, if your surviving
spouse does not continue to defer, or if the property is sold
prior to your death, the interest rate goes up to sixteen per-
cent, and the taxes must be paid in order to release the lien
that was placed on the property while there were unpaid
deferred taxes. If the taxes are not paid within six months of
death or sale, the local treasurer may seek to foreclose the lien
on the property if the deferred amount remains unpaid.


Eligibility requirements ...............
Age and Status
• You are single, or if married, your spouse is not an owner.
   You must be 65 years or older by July 1 of the year in
   which application is made.
•   You and your spouse are joint owners. Either spouse must
    be 65 years or older by July 1 of the year in which applica-
    tion is made.
•   You, age 65 or older, or you and your spouse, either of
    whom is 65 years or older by July 1 of the year in which
    application is made, own property jointly with other
    person(s).
*   You are a single person who is a joint owner sharing
    ownership with other person(s). You must be 65 years or
    older by July 1 of the year in which application is made.

Ownership and Occupancy
Applicant(s) must have owned and occupied as your domicile
any real property in Massachusetts (including present prop-


                                 Tax Deferral: Clause 41A • 17
erty) for five years. Massachusetts must have been your
domicile for the preceding ten years.

Real Estate and Personal Property
Not applicable.

Income Eligibility
From all sources in calendar year preceding year in which
application is made, not to exceed $20,000. A community
may adopt a higher maximum qualifying gross receipts
amount but such amount shall not exceed $40.000.


Surviving spouse deferral .............
A surviving spouse inheriting property must have occupied it
or other real property for five years. The surviving spouse who
otherwise qualifies may choose to continue to defer taxes.
However, the total of taxes deferred by both spouses together
with interest thereon may not exceed fifty percent of their
interest in the property valuation.

Payment of a deceased spouse’s deferred taxes shall not be
required during the life of a surviving spouse of any age who
inherits the property and who enters into a tax deferral and
recovery agreement.

If you or your spouse own property jointly with other indi-
viduals you may apply for the deferral. The deferred taxes
with interest at eight percent in this case are not to exceed one
half of the full and fair cash value of the proportion of this
property owned by you or you and your spouse.




18 • Tax Deferral: Clause 41A
      Clauses 41, 41A, 41B and 41C

How to apply for a
tax exemption or deferral .............
Contact your local Board of Assessors for an application form.
You must apply each year for an exemption or deferral.
Generally, you can receive only one exemption, so submit the
application for the exemption which will provide the greatest
benefit. However, since Clause 41A is a deferral of taxes, you
may use a Clause 41A deferral in conjunction with an exemp-
tion for which you qualify.

Applications under Clause 41, Clause 41A, Clause 41B or
Clause 41C must be filed with your local Board of Assessors
on or before December 15 in each year. If the actual, not
preliminary, property tax bill is mailed after September 15,
you have three months from the date the bill is first mailed in
which to apply. In the year of local acceptance of Clause 41C
the community allows an additional 45 days from the date of
acceptance to apply unless a later date for applying is allowed
by another statute.

In addition to your local Board of Assessors, your local
Council on Aging may be able to help you fill out the forms.
Some councils employ tax specialists to provide such assis-
tance.

Joint Ownership
If two or more people own property each can apply, and if the
person is qualified, each will be entitled to his or her exemp-
tion. Consult your local Board of Assessors.




Exemptions and Deferral: Clauses 41, 41A, 41B and 41C • 19
     Clauses 17, 17C, 17C1/2 and 17D

Benefits ......................................
•   If you qualify under one of the Clause 17 exemptions,
    your assessor will grant you a deduction of $175 from
    your tax bill.
•   If you qualify for one of the Clause 41 exemptions,
    instead, you will receive a deduction of $500 from your
    tax bill.

Clause 17 exemptions are geared to older citizens, surviving
spouses of any age and to qualified minors who have a de-
ceased parent. Senior citizens who are 70 and over and who
ineligible for one of the Clause 41 exemptions may qualify for
one of the Clause 17 exemptions due to no income limitations.




*Acceptance by a city or town means approval by the town meeting in a
town, the city council subject to the provisions of the city charter in a
city and the town council in a municipality having such form of
government. All cities and towns are subject to the provisions of Clause
17 and Clause 41 unless they have a accepted a more recently enacted
clause. When they accept such a clause, the provisions of the clause
which was in effect are no longer applicable.

20 • Tax Exemptions: Clauses 17, 17C, 17C1/2 and 17D
Eligibility requirements ...............
Age and Status
• You are single, or if married, your spouse is not an owner.
   You must be 70 years or older before the beginning of the
   fiscal year, July 1, for which an exemption is sought.
•   You and your spouse are joint owners. Either spouse must
    be 70 years or older before the beginning of the fiscal year,
    July 1, for which an exemption is sought.
•   You are a surviving spouse of any age or a qualified minor,
    that is, a minor who has a deceased parent.

Ownership and Occupancy
Those 70 years of age, as defined above, must have owned
and occupied the property as domicile in Massachusetts for
not less than ten years for not less than five years, Clause
17D, and must own and occupy the property on July 1 in the
year of application.

A surviving spouse or qualified minor must be the present
owner and occupant.

Real Estate and Personal Property
Clause 17
A person may have a total worth of $20,000, including the
assessed value of the said domicile effective July 1 in the year
of application. Any unpaid mortgage balance on that property
is excluded.

Clause 17C
A person may have a total worth of $40,000, excluding up to
$60,000 of the assessed value of the domicile as of July 1 in
the year of the application and any unpaid mortgage balance
on that property.

       Tax Exemptions: Clauses 17, 17C, 17C1/2 and 17D • 21
Clause 17C 1/2
A person may have a total worth of $40,000, excluding up to
$150,000 of the assessed value of the domicile as of July 1 in
the year of the application and any unpaid mortgage balance
on that property.

Clause 17D
A person may have a total worth of $40,000, excluding the
assessed valuation of the domicile as of July 1 in the year of
the application. Only the portion which produces income and
which exceeds two dwelling units must be included. Any
unpaid mortgage balance on that property is excluded.

Income Eligibility
Yearly income is not considered in determining eligibility for
Clauses 17, 17C, 17C 1/2 or 17D.


How to apply for a tax exemption
Contact your local Board of Assessors for an application form.
You must apply each year for an exemption or a deferral.
Generally, you can receive only one exemption, so submit the
application for the exemption which will give you the greatest
benefit. However, since Clause 41A is a deferral of taxes, you
may use a Clause 41A deferral in conjunction with a tax
exemption for which you qualify.

Applications under Clauses 17, 17C, 17C 1/2, or 17D must
be filed with the Board of Assessors on or before December
15 of each year. If the actual (not preliminary) property tax
bill is mailed after September 15, you have three months from
the date the bill is first mailed in which to apply.




22 • Tax Exemptions: Clauses 17, 17C, 17C1/2 and 17D
In addition to your local Board of Assessors, your local
Council on Aging may be able to help you fill out the forms.
Some councils employ tax specialists to provide such assis-
tance.

Joint Ownership
If two or more people own property, each of whom is entitled
to a different exemption, each can apply and if the person is
qualified, each will be entitled to his/her exemption. Consult
you local Board of Assessors.




      Tax Exemptions: Clauses 17, 17C, 17C1/2 and 17D • 23
Other exemptions .......................
In addition to the deferral and exemptions already described,
there are several other kinds of property tax exemptions under
Massachusetts General Laws, Chapter 59, Section 5:

Clause 18 exemptions are for persons who, because they are
aged, infirm and poverty-stricken, cannot make full or partial
payment of their property taxes. The decision to grant a Clause
18 exemption is made solely at the discretion of the assessors.

Varieties of Clause 22 exemptions are available for certain
categories of veterans and their families.

Clauses 37 or 37A exemptions are available to a blind person.

A Clause 42 exemption is available for a surviving spouse of a
police officer or firefighter killed in the line of duty.

A Clause 43 exemption is available to minor children of a
police officer or firefighter killed in the line of duty.

If you think you qualify for any of these exemptions, you may
file an application with your local Board of Assessors.

Elder Volunteer Property Tax Work-Off Law
Under Chapter 59, Section 5K of the Massachusetts General
Laws, amended by Chapter 127, Section 59 of the Acts of
1999, cities and towns may, beginning 7/1/99, provide resi-
dents over age 60 with a local property tax reduction, up to
$500, in exchange for volunteer services. The amount of the
tax reduction is not subject to personal income tax. Elder
volunteers are considered public employees when volunteering,
and there are no income or asset limitations for participation in
the program. Volunteers can work at a rate of $5.25 per hour,
which will go toward their tax bill. For more information,
seniors should contact their local tax assessor's office.

24 • Other Exemptions
Tax Credit for Low and Moderate Income Seniors
Beginning in tax year 1/1/2001, a new income tax program
will go into effect to help eligible seniors reduce their property
tax even further. Chapter 127, sections 80 and 81, of the
Acts of 1999 (the FY 2000 State Budget) instituted a new tax
credit program to assist low and moderate income seniors in
paying property taxes and utility charges. Under this pro-
gram, eligible homeowners and renters can receive a refund-
able credit on their state income taxes, when they file state
income tax returns in 2002 (for the previous taxable year).

To qualify for the credit, a person must be at least 65 years of
age, occupy the property as his or her principal residence, and
have had an income below a prescribed ceiling amount for the
relevant calendar year. The initial ceiling amounts defined in
the legislation are $40,000 for a single individual not head of a
household, $50,000 for a head of household, and $60,00 for
husband and wife filing a joint return. In addition, the assessed
valuation of the residence cannot exceed $400,000.

The amount of the credit a qualifying person is entitled to is the
amount by which the taxpayer’s property taxes, together with
the eligible amount of that taxpayer’s water and sewer charges,
exceed 10 percent of the taxpayer’s income. For communities
that included water and sewer debt service in their property tax
assessments pursuant to MGL Ch. 59 S. 21C(n), the eligible
amount of water and sewer charges is the sum that taxpayer paid
as part of his/her tax bill for water and sewer debt service. For
other communities, the eligible amount for each taxpayer is 50
percent of the water and sewer charges in the tax year for which
credit is sought.

A taxpayer may not necessarily receive the full amount by which
property taxes and utility charges exceed 10 percent of income,
however. Rather, the legislation imposes limits on the credit

                                         Other Exemptions • 25
amount. It also phases in the amount of the credit. In the
initial year of the program (for the tax year beginning 1/1/
2001), that maximum is $375. The maximum increases in
subsequent years to $750.

A senior who rents his/her domicile may also qualify for an
income tax credit under the new legislation. The program
entitles a senior who rents his/her home to a credit if 25 percent
of that senior’s rent exceeds 10 percent of his or her income,
again up to the statutory limits. A renter whose rent is subsi-
dized by the state or federal government through rental assis-
tance programs, however, does not qualify for this benefit.

Seniors who are not obliged to file a state income tax return
because they do not owe taxes may, nevertheless, obtain a
credit. To do so, however, they must file a return.

The legislation contains language which automatically in-
creases both the benefit amount and the eligibility limits in
future years. The income, valuation, and credit limits adjust
automatically in synchrony with the Consumer Price Index.

Please call the Dept. of Revenue’s Division of Local Services
for more information about this program: (617) 887-6367 or
1-800-392-6089.




26 • Other Exemptions
Appeals.......................................
If your application for any of the tax exemptions or the tax
deferral described in this publication is denied, except in the
case of Clause 18, you may appeal to:
State Appellate Tax Board
399 Washington Street, 10th floor
Boston, Massachusetts 02108
Telephone: (617) 727-3100
Facsimile: (617) 727-6234

Questions/Additional Assistance:
Your local Board of Assessors should be able to answer any
questions you may have. If not, please contact :
Massachusetts Department of Revenue
Property Tax Bureau
51 Sleeper Street
Boston, MA 02210
Telephone: (617) 626-2300
Facsimile: (617) 626-2330




                                                   Appeals • 27

								
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