City Adopts New Tax Collection Procedure

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By Terry Rogers

In March 2017, Milford City Council approved changes to the City Charter that included a new method for collecting unpaid taxes and fees. The method in the code before the change could take up to two years and high court costs for the City. The new method, known as a monition sale, can be completed in six months, lowering the cost to the City and encouraging property owners to resolve delinquency much sooner.

“We believe Milford is a community worth investing in and that everyone should pay their fair share of taxes,” Eric Norenberg, City Manager, said. “Last year, when we realized that the delinquent taxes and fees owed to the City was significant, we began looking at how to collect those amounts in a fair, expeditious manner. We began by offering an opportunity for delinquent taxpayers to pay the base taxes that were owed and, during June 2016 only, waived the penalties and interest. We also offered payment plans. However, that was not enough. So, we looked at the procedure for using the courts to recover the unpaid taxes and fees.”

Mr. Norenberg said that when the City looked into the collection procedure permitted under the charter, they found that the process would allow the property owner to redeem the land up to one year after a court judgement. This was time consuming and was unlikely to result in a successful sale of property to collect past due debts. Since the state allows for two options to collect past due debts, City Council voted to switch to the monition sale option in March.

Effective this year, a written notice will be sent to the assessed owner that states the total balance owed in past due taxes and fees. The letter will state that failure to pay within 30 days may result in legal proceedings that could lead to the sale of the assessed property. Mr. Norenberg said that he City is still working out all the details under the new process but it is possible that the legal action could begin one to two months after the notification period. The City plans to begin with ten property owners who are currently significantly behind in their taxes and fees. Mr. Norenberg said that those ten property owners owe approximately $120,000 in taxes, fees, penalties and interest.

In addition to the change in tax collection procedures, Mr. Norenberg said that the City is reviewing properties that are listed as tax exempt.

“Depending on the nature of the exemption, the proof or documentation will be different,” Mr. Norenberg said. “In the case of a non-profit group that owns property, the usual IRS documentation would likely be adequate. But in other cases, there may have been exemptions granted for other reasons. If we don’t have documentation of such actions granting an exemption or the purpose or reason for the exemption has expired, we are asking those taxpayers to provide us with those records. We have found a few that were identified as tax exempt but were either no longer eligible for tax exempt status or there was not adequate documentation. In those cases, we sent bills.”

The City is also looking at farm land that has been listed as tax exempt in an effort to bring their tax assessment records into compliance with state law. Delaware Code provides that municipalities “shall use the county assessment…for all property within a municipality whose value has been assessed pursuant to §8328-8337 of Title 9 for its agricultural, horticultural or forestall use.”

“In cases where the county assessment is zero or much lower than the Milford assessment, we must honor that county assessment for farmland,” Mr. Norenberg said. “We are in the process of making sure properties in Milfrod that have been qualified for the program are still eligible.”

Anyone who has questions about the new past due tax collection process, tax-exempt status for their property or the assessment of their farmland can contact the City for more information.

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