Reeling in delinquent property taxes
Gary B. Gray
Nov 3, 2012 at 9:55 PM
What would Washington County do with a $5.2 million cash infusion?
That money is owed to the county in delinquent property taxes. Washington County Trustee Jack Daniels, the person who chooses the county’s delinquent property tax attorney, is comfortable with private attorney Lawrence Counts, who has served in this capacity since 1995.
Counts, who was not immediately available for comment, receives attorney fees consisting of a $100 research fee plus 10 percent of the base tax on each individual or business account.
John Rambo, the county’s new in-house attorney, offered his services as delinquent property tax attorney for no additional cost other than his previously determined salary. This would have saved the county about $100,000 a year, according to statements by members of the county’s Legal Services Oversight Committee at an August meeting.
Johnson City Finance Director Janet Jennings said she and other city officials really hoped this would happen. The city, which is owed about $1.7 million in delinquent city property taxes, basically follows the county’s timing, which means it must wait until Counts sets a date.
The next date for a tax sale is Jan. 25. The last sale was in May 2011, meaning nearly seven financial quarters will have passed. The county total includes county taxes due in Johnson City, Jonesborough and all unincorporated areas. The city total is city taxes only.
“If you’re waiting nearly two years, you’re not going to catch up,” Jennings said. “By the time the sale comes around, you’ve added two more years to the tax rolls. There is no set time at which the county has the tax sales. It sits there until the tax attorney has a sale or auction. The city has no authority to lead that charge, and we traditionally piggy back on their schedule. But we are looking into the possibility of setting our own dates.”
Daniels, who is serving his seventh term as trustee, disagreed with Jennings on several points.
“The Legal Services (Oversight) Committee met later and ruled that out,” Daniels said about Rambo becoming the county’s tax attorney. “That’s a dead issue. It’s her (Jennings’) prerogative. She can select another tax attorney. It’s my job to select the county tax attorney. Mr. Counts is the attorney for all three entities (the county, Johnson City, Jonesborough). But he is not the sole person to set the date. He works with Mrs. Sneyd (Brenda Sneyd, clerk and master) to arrive at a date.”
Obviously, a tax sale is meant to sell the properties and get them back on the tax rolls. Delinquent tax collection is another thing altogether, and it is well known there may be no buyers interested in some of the properties. It’s also true local governments do not expect to retrieve everything they’re owed.
“If you got caught up — even if you pick up half — you’re going to have a good one-time boost,” Jennings said. “If you are a business, would you let your receivables (go) for seven years?”
“In my opinion, no, because we’re earning penalty and interest on people that could pay their taxes,” Daniels said about possibly having annual tax sales. “The next sale will be for tax years 2005 and 2006. We do them about two years at a time. But when it comes right down to the time of the tax sale you would be surprised how many pay their taxes. We had about $70,000 come in last week.”
On Aug. 16, the Legal Services Oversight Committee called on Rambo to explain what he understood to be his duties as county attorney. He said at the time his responsibilities would include advising all county constitutional officers, department heads and managers and commissioners. But he also said he would serve as delinquent tax collector if he was appointed to do so.
Though that duty was not delineated at the time he became county attorney, the August committee meeting minutes show Rambo would have remitted all fees collected back to the county. In other words, he would not charge for the service, and the county would save an estimated $100,000 annually.
“Lawrence Counts will continue to do delinquent taxes,” said County Mayor Dan Eldridge. “John has way more than enough to do. Jack Daniels ultimately is responsible for all county taxes. When the property taxes become delinquent, he turns them over to Brenda Sneyd. There is a commission — a percentage that is kept to fund the trustee’s operations. The remainder goes back into the county’s general fund.”
The general fund is where local governments place tax revenue. It provides the resources necessary to sustain the day-to-day activities and thus pays for all administrative and operating expenses.
Rambo recently confirmed that he did offer to act as delinquent tax attorney and said he would have asked for no compensation beyond his previously established salary of about $148,000.
“I can only do that which is assigned to me,” he said. “State law is clear that it is the trustee who determines who collects delinquent property tax.”