Planning and Development Committee
JOINT FAVORABLE REPORT
AN ACT CONCERNING THE INTEREST RATE ON DELINQUENT PROPERTY TAXES.
Joint Favorable Substitute
SPONSORS OF BILL:
Planning & Development Committee
REASONS FOR BILL:
To provide towns with a local option for charging interest on delinquent property taxes and to amend the way in which interest on such delinquent property taxes is calculated so that a payment that is only delinquent for a fraction of a month will not be charged interest for a full month.
Section 5, subsection (b) of section 12-80a of the general statutes will be substituted in lieu thereof with the following changes. The Office of Policy and Management will determine the value of personal property equivalent to seventy per cent of the value of personal property listed. The amount of tax on this personal property will be determined by multiplying the value of the personal property by a mill rate of forty-seven mills. At the end of such tax year, a tax bill will be submitted to each company stating the amount of tax owed to each town, in relation to the location of the personal property. If a city/borough is not consolidated into a town, then the town shall receive a portion of the tax due according to the following ratio: the total taxes levied in the previous fiscal year by the town, city or borough will be the numerator of the fraction. The total taxes levied by the town, city or borough located within the town will be added together and the sum will be the denominator of the fraction. The person that collects the taxes in each town that is owed the above taxes can apply an interest rate, when taxes are delinquent, at a rate of one and one-half per cent for each month.
Section 6, subsection (f) of section 12-157 of the general statues will be substituted in lieu thereof with the following changes. Within sixty days after a sale a collector will be able to publish in a newspaper the location of a property where the delinquent taxpayer is located. By certified mail a notice will be sent stating the date of the sale, name and address of the purchaser, the amount the purchaser paid for the property, and the date the redemption period will expire to the delinquent tax payer, the mortgagee, the lienholder, and any other parties interested in the sale of said property. The notice will include a statement stating that if the redemption does not take place at the time and manner required by law will be terminated.
No later than six months after the date of the sale the property will be subject to pays or tenders to the collector, the amount of taxes, interest and charges that were due and owing at the time of the sale, included will be the interest on the total purchase price paid at the rate of eighteen per cent per annum from the date of the sale or twelve per cent if section 3 of this act was adopted by the municipality.
RESPONSE FROM ADMINISTRATION/AGENCY:
NATURE AND SOURCES OF SUPPORT:
Paul S. Nakian: Mr. Nakian supports this bill because it will improve the existing legislation in that it will allow a municipality to elect to lower the delinquent portion of the property tax to be subject to a rate of twelve per centum. He suggests that the state mandate the maximum tax to be 12% per annum, while allowing towns to lower the rate as low as six percent.
NATURE AND SOURCES OF OPPOSITION:
Melanie Yanus, Clinton Tax Collector: Believes that keeping interest rates uniform for each municipality is very important. This uniformity allows taxpayers in Connecticut to be treated equally. The rates that currently stand are fair. Ms. Yanus also states that the per diem portion of this bill is not workable
South Central Connecticut Regional Water Authority (SCCRWA): The SCCRWA calculates its water bills at the same interest rates as the municipalities charge for delinquent taxes and this change in the statute would negatively impact the SCCRWA. This change in the interest rate would require SCCRWA to modify its computer billing system at a significant cost, while also undermining the revenue collection to the detriment of customers who pay on time.
Betsy Gara, Council of Small Towns (COST): COST opposes this bill because it will impose pressure on towns to reduce interest rates on delinquent accounts while increasing costs for taxpayers who already pay their bills on time.
CCM: CCM opposes SB 820 because it is a de facto mandate which will require towns to reduce the interest rates. This could open up a $14.5 million hole in the municipal budgets. Everyone wants to reduce property taxes which will also reduce the likelihood of taxpayer delinquency. The better approach would be to enact meaningful property tax reform.
Reported by: Craig Cubellotti
Date: March 15, 2013