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HomeMy WebLinkAboutAgenda - 09-05-2023; 8-g - Relief from Collecting Property Tax and Fee Debts 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 5, 2023 Action Agenda Item No. 8-g SUBJECT: Relief from Collecting Property Tax and Fee Debts DEPARTMENT: Tax Administration ATTACHMENT(S): INFORMATION CONTACT: Property Tax and Fee Debts Summary Nancy T. Freeman, Tax Administrator, Report (919) 245-2735 Memorandum of Explanation Relief from Collecting Property Tax & Fee Debts Report (on file with Clerk's Office) PURPOSE: To approve the release of ad valorem property tax and fee debts owed to Orange County in excess of ten (10) years that are no longer collectible. BACKGROUND: Under North Carolina General Statute (NCGS) 105-373 (g)the Board of County Commissioners "...may, in its discretion, relieve the tax collector of the charge of taxes owed by persons on the insolvent list that are five or more years past due when it appears to the governing body that such taxes are uncollectible." Attached is a summary report, listing by year and beginning with 2007 through 2013, of ad valorem personal property tax and fee bills that have been worked extensively and can no longer be collected using enforced collection techniques. A more-detailed report of the individual accounts has been provided to the Clerk to the Board. NCGS 105-373 (h) addresses the relief from collection of taxes on classified motor vehicles. To remain uniform, attached is a listing by year beginning with 2007 through 2013, of Classified Registered Motor Vehicles tax and fee bills that have been worked extensively and can no longer be collected using enforced collection techniques. NCGS 105-378 (a) specifically bars the use of enforced collections unless the procedure was instituted within 10 years from the date the tax first became due. After discussion with the Chief Financial Officer and conformance with generally accepted accounting principles (GAAP), staff recommends to write-off this debt from the charge and system maintained by the Tax Administration Department. In addition, beginning in 2024 and for future years, an annual request to release one year's worth of debt from the charge will be included in the Annual Tax Collector's Settlement agenda item each September. 2 FINANCIAL IMPACT: There is no impact to the County's balance sheet or fund balance from writing off these 2007-2013 accounts. Due to the age of these account balances, these accounts have been adjusted off the County's accounts receivable balance as part of the allowance for doubtful accounts (bad debt) computation. The bad debt computation is required pursuant to generally accepted accounting principles for financial reporting purposes. The total amount of personal property and registered motor vehicle ad valorem property tax being submitted for relief from collecting debt from the years 2007 through 2013 is $1,159,830.88. SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated with this item. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board approve and direct the Chief Financial Officer and the Tax Administrator to account for and release all debts charged for the purpose of ad valorem personal property and classified motor vehicle tax in excess of ten (10) years from the record. 3 SUMMARY OF PROPERTY TAX 2007-2013 FOR RELEASE OF COLLECTING PROPERTY TAX AND FEE DEBTS YEAR RMV* INDIVIDUAL BUSINESS FEE ONLY GRAND TOTAL 2007 123,242.09 10,250.03 4,281.77 3,902.00 $ 141,675.89 2008 128,064.42 11,487.46 11,962.37 3,772.00 $ 155,286.25 2009 128,814.76 10,128.57 3,450.67 3,414.55 $ 145,808.55 2010 155,104.57 12,504.20 10,673.19 3,093.00 $ 181,374.96 2011 136,952.22 8,871.60 24,216.67 7,036.00 $ 177,076.49 2012 180,119.50 8,643.02 7,032.00 4,836.00 $ 200,630.52 2013 105,197.94 8,996.21 41,998.07 1,786.00 $ 157,978.22 TOTAL $ 957,495.50 $ 70,881.09 $ 103,614.74 $ 27,839.55 $ 1,159,830.88 NOTE: These write-offs include all unsecured taxes from 2007-2013. In addition, solid waste fees are inlcuded in the writeoffs. Secured (real property) taxes are not included in the write-offs. *Registered Motor Vehicle(RMV)billing was handled by the County Tax Office until late 2013, at which point the billing and collection was moved to the State level. Because of the change,future reports will reflect a dramatic decrease for this category. ORANGE COUNTY 4 NO I-H CAROLINA TAX ADMINISTRATION Nancy Freeman,Director nfreeman@orangecountync.gov 228 S.Churton Street,Suite zoo,Hillsborough,NC 27278 919-245-2100 To: Board of County Commissioners Bonnie Hammersley, Manager Subject: Request for Relief from Collecting Debts Date: August 21, 2023 After communication with Financial Services Director Gary Donaldson, I am bringing forward a request to release specific types of debt older than 10 years from the current taxation system. Real property liabilities are not dischargeable and are not included in the total amount brought forward for release. The $149,640.69 currently in real property liability older than 10 years remains a lien to the real property. North Carolina General Statute 105-378 (g) specifically speaks to the tax collector being barred from any type of enforced collection methods after a period of ten years. Additionally, North Carolina General Statue 105-373 (g) & (h) speak to the relief of the charge of taxes owed from the collector for unsecured debt of personal property and of registered motor vehicles. Copies of both statutes have been attached for your review. Over the past 10 years these debts have been worked extensively in an endeavor to resolve their collection. Though the statutes do allow for relief earlier than 10 years,the recommendation is to continue to pursue collection until the 10-year deadline because of the active collections program in place. Therefore, as the Tax Collector I submit to resolve issues from an accounting standpoint that authorization be given to release the debts older than 10 years for all unsecured debt.All real property debt will continue to be reflected in the tax management system. Respectfully submitted, Nancy Freeman, Tax Administrator Orange County Government I www.orangecountync.gov 1 919.732.8181 5 § 105-373. Settlements. (g) Relief from Collecting Insolvents. - The governing body of any taxing unit may, in its discretion, relieve the tax collector of the charge of taxes owed by persons on the insolvent list that are five or more years past due when it appears to the governing body that such taxes are uncollectible. (h) Relief from Collecting Taxes on Classified Motor Vehicles. The board of county commissioners may, in its discretion, relieve the tax collector of the charge of taxes on classified motor vehicles listed pursuant to G.S. 105-330.3(a)(1) that are one year or more past due when it appears to the board that the taxes are uncollectible. This relief, when granted, shall include municipal and special district taxes charged to the collector. (1939, c. 310, s. 1719; 1945, c. 635; 1947, c. 484, ss. 3, 4; 1951, c. 300, s. 1; c. 1036, s. 1; 1953, c. 176, s. 2; 1955, c. 908; 1967, c. 705, s. 1; 1971, c. 806, s. 1; 1983, c. 670, s. 22; c. 808, ss. 5-7; 1987, c. 16; 1991, c. 624, s. 3; 1991 (Reg. Sess., 1992), c. 961, s. 10; 1993, c. 539, s. 726; 1994, Ex. Sess., c. 24, s. 14(c); 1997-456, s. 27; 2006-30, s. 7.) § 105-378. Limitation on use of remedies. (a) Use of Remedies Barred. -No county or municipality may maintain an action or procedure to enforce any remedy provided by law for the collection of taxes or the enforcement of any tax liens (whether the taxes or tax liens are evidenced by the original tax receipts, tax sales certificates, or otherwise)unless the action or procedure is instituted within 10 years from the date the taxes became due. (b) Not Applicable to Special Assessments. - The provisions of subsection (a), above, shall not be construed to apply to the lien of special assessments. (c) Repealed by Session Laws 1998-98, s. 26, effective August 14, 1998. (d) Enforcement and Collection Delayed Pending Appeal. - When the board of county commissioners or municipal governing body delivers a tax receipt to a tax collector for any assessment that has been or is subsequently appealed to the county board of equalization and review or the Property Tax Commission, the tax collector may not seek collection of taxes or enforcement of a tax lien resulting from the assessment until the appeal has been finally adjudicated. The tax collector, however, may send an initial bill or notice to the taxpayer. (1933, c. 181, s. 7; c. 399; 1945, c. 832; 1947, c. 1065, s. 1; 1949, cc. 60, 269, 735; 1951, cc. 71, 306, 572; 1953, cc. 381, 427, 538, 645, 656, 752, 775, 1008; 1955, c. 1087; 1957, cc. 53, 678, 1123; 1959, cc. 373, 608; 1961, cc. 542, 695, 885; 1965, cc. 129, 294; 1967, c. 242; c. 321, s. 1; c. 422, s. 1; 1969, c. 96; 1971, c. 806, s. 1; 1998-98, s. 26; 2006-30, s. 6; 2011-3, s. 3(b).)