CHAPTER 5
Collections
Tax collections begin around Oct. 1. You typically have until Jan. 31 of the following year to pay your taxes. On Feb. 1, penalty and interest charges begin accumulating on most unpaid tax bills. If Feb. 1 is drawing near and you have not received a tax bill, you should contact your local tax offices. Find out how much tax you owe and make sure your correct name and address are on record.
Under certain circumstances, taxing units may impose additional penalties for legal costs on unpaid taxes. Before you buy a home, it is a good idea to obtain a tax certificate for the home from all jurisdictions that tax it. The tax certificate will show whether delinquent taxes are owed on the property.
5.1 Tax payment deadlines
Taxing units must give you at least 21 days to pay after they mail your original bill. If your bill is mailed after Jan. 10, the delinquency date is postponed. You have until the first day of the next month (at least 21 days) to pay the bill. If the taxing unit mails your tax bill on Jan. 15, therefore, your taxes do not become delinquent until March 1. The delinquency date must be printed on your bill.
Most property owners pay their property taxes before year's end so they can deduct the payments from their federal income taxes. If you are appealing the appraisal review board's order to district court, you must pay the tax amount not in dispute or the taxes due based on the appraisal review board order. If you are appealing the appraisal review board's order to binding arbitration, you must pay the tax amount not in dispute.
You have no legal right to withhold taxes or put taxes in escrow to protest government spending or for any other reason. You may, however, make a payment under protest, indicating so on the check or in a transmittal letter.
5.2 Keeping track of tax bills, receipts and other records
The tax collector must mail tax bills to both you and your designated agent, if you have one. If your mortgage company pays property taxes on your home out of an escrow account, make sure the taxing units send original tax bills to the company so that the mortgage company receives the tax bill. You may want to request a receipt from your tax office to verify that the mortgage company has paid these taxes on time. The tax collector must give you a receipt for your tax payment if you ask for one.
If you own a business, you must pay taxes on the property you own on Jan. 1 of the tax year. Dealers and retailers of certain special inventories must submit a monthly inventory tax statement to the county tax assessor-collector where the inventory is located. If you are a motor vehicle, boat and outboard motor or heavy equipment dealer or a manufactured housing retailer, you should check with your appraisal district or county tax office for details on how to report property and pay taxes on your inventory.
If you go out of business after the first of the year, you will still be liable for taxes on the personal property you owned on Jan. 1. You are not relieved of this liability because you no longer own the property. If you conduct a going-out-of-business sale, you must request a going-out-of-business permit from the appraisal district. Check with your appraisal district for more details.
Your tax bill may include taxes for more than one taxing unit if these units have combined their collection operations.
5.3 Deferring tax payments
You may defer homestead taxes for value exceeding 105 percent of your home's appraised value, plus any new improvements, from the preceding tax year. You must file a deferral application with the appraisal district before the taxes become delinquent, and you must pay the taxes based on 105 percent of the home's value.
While any taxpayer can defer payments on value that exceeds 105 percent, if you are a homeowner age 65 or older or disabled, you may defer or postpone paying any property taxes on the full taxable value of your home for as long as you own and live in it. To postpone your tax payments, you must file a tax deferral affidavit with your appraisal district. This deferral applies to all property taxes of the taxing units that tax your home.
A tax deferral, however, only postpones your tax liability. It does not cancel it. Interest on the amount due accrues at the rate of 8 percent a year. Past taxes and interest become due 181 days after you, or your surviving spouse, no longer own or live in the home that you qualified as a homestead. Any penalty and interest that was due on the tax bill for the home before the tax deferral will remain on the property and become due when the deferral ends.
You may abate a delinquent tax lawsuit by filing this affidavit with the court. You may stop a pending tax sale by filing the affidavit with the officer conducting the sale and the appraisal district, taxing unit or taxing unit's delinquent tax attorney.
5.3.1 You can pay your taxes in installments
Some taxpayers can pay homestead taxes in installments. If you are qualified for the age 65-or-older, disabled, or unmarried surviving spouse of disabled veteran homestead exemptions, you may pay your current taxes on your home in four installments.
You must pay at least one-fourth of your taxes before the Feb. 1 delinquency date. The remaining payments are due before April 1, June 1 and Aug. 1, without any penalty or interest. If you miss an installment payment, you will face a 6 percent penalty and also pay interest at 1 percent for each month of delinquency. You must give written notice with your first payment that you are paying your taxes in installments. Installment payments apply to all taxing units on the tax bill.
Homeowners and some small businesses whose property is damaged in a disaster and are located in a designated disaster area also may pay their taxes in four installments, in the same months as age 65 or older, disabled, or the unmarried surviving spouse of disabled veteran homeowners. If you miss an installment payment, you will face a 6 percent penalty and also pay interest at 1 percent for each month of delinquency.
5.3.2 You may have other payment options
Check with your tax collector on payment options that may be available on a local option basis, such as:
- discounts, if you pay your taxes early;
- split payment of taxes, allowing you to pay half your taxes by Nov. 30 and the remainder by June 30 without a penalty;
- partial payment of your taxes;
- escrow agreements for a special year-round account; and
- work contracts, in lieu of paying taxes, for certain taxpayers doing certain duties.
5.4 Consequence of failure to pay taxes
The longer you allow your delinquent property taxes to go unpaid, the more expensive and risky it becomes for you. For starters, you will have penalty and interest charges added to your taxes. Your property may also be foreclosed or seized.
5.4.1 You can accrue penalty and interest charges
Regular penalty charges may be as high as 12 percent depending on how long your taxes remain unpaid. Interest will be charged at the rate of 1 percent per month with no maximum. Private attorneys hired by taxing units to collect delinquent accounts can charge you an additional 20 percent penalty to cover their fees.
Some tax collectors will allow you to pay delinquent taxes in installments for up to 36 months. They are not required to offer this option, however. Before signing an installment agreement, you should know that the law considers your signature an irrevocable admission that you owe all the taxes covered by the agreement.
5.4.2 You can be sued
The tax collector's last resort is to take you to court if you are delinquent in paying your taxes. Court costs will be added to your delinquent tax bill.
If you own taxable property on Jan. 1, you are liable for all taxes due on the property for that year. You can be sued for delinquent taxes even if you sold or transferred the property since then.
5.4.3 Your property may be sold
Each taxing unit holds a tax lien on each of your taxable properties. A tax lien automatically attaches to your property on Jan. 1 each year to secure payment of all taxes.
This tax lien gives the courts the power to foreclose on the lien and seize your property, even if you did not own the home on Jan. 1. Your property then will be auctioned and the proceeds used to pay your past due taxes.