Local tax collections are receiving a boost due to legislation enacted last year requiring tax certification prior to deed recordation, the first phase in a process that will see the issuing of permits prohibited until delinquent taxes are paid.
Back in 2010, county officials talked about avenues for revenue enhancement during a down economy. County managerial staff was asked to research the possibility of mandating tax certification prior to deed recordation, as well as prohibiting the issuance of permits until all owed property taxes was paid, ways to maximize revenue while holding taxpayers accountable.
It was pursued locally to add Sampson County to existing legislation requiring such payment of delinquent taxes before issuing special use or conditional use permits, or a building permit, or recording deeds conveying property. Last year, House Bill 296,was passed by the N.C. General Assembly, authorizing Sampson to do just that.
It took effect September 2012. A local resolution was passed to move forward with first phase — the deed recordation piece.
County tax administrator Jim Johnson said, from Sept. 1 through Jan. 31, the process of certifying taxes paid before deed recordation has resulted in a sizable collection of past due taxes.
“We’ve collected $32,557.16 in delinquent property taxes and another $13,430.10 in deferred taxes as a result of this new process,” said Johnson, “so we do think it’s an effective measure. You have to pay the taxes up front.”
Initial meetings have been held about implementing phase two, which would require all outstanding taxes be paid before various permits, including building permits, special use permits and conditional use permits, are issued.
In order for that change to be made, a public hearing would have to be held because it would require an amendment to the current zoning ordinance, county attorney Annette Starling said.
“With the building permits part, there has been some discussion about how they would actually do that,” she said. “We were discussing, would the individual go to the Tax Office first before getting the building permit, or would we have someone at the Building Permits office check their back taxes owed?”
County manager Ed Causey said the logistics have been a standing topic even without the new Sampson-inclusive legislation.
“Even without this, we’re having significant discussions on how to streamline that process and create, as much as possible, a one-stop shop,” said Causey. “Right now, we’re trying to look at out permitting process and see if we can improve that.”
He said it was a “very fitting topic” to talk about organizing some governmental operations to have the county’s planning component located with Inspections and Building Permits, and how tax status might be reviewed at a combined office.
“The last thing you want is citizens running all over town trying to get a permit and make sure taxes are paid,” said Johnson. “I think we need to have some more meetings and probably bring (director) Mary Rose from (Clinton-Sampson) Planning (Office) in and Myron (Cashwell) from Inspections and talk about how to proceed with implementing it without placing undue burden on the citizens.”
Staff is currently moving toward establishing a process by which the permitting piece of the legislation can be best handled, and a zoning amendment is expected to be delivered to the Board of Commissioners in the near future.
Johnson said, following a local resolution, the first piece of the legislation and delinquent tax collection process has been gone well.
N.C. General Statute 161-31 authorized the Board of Commissioners, by resolution, “to require the Register of Deeds not to accept any deed transferring real property for registration unless the county tax collector has certified that no delinquent ad valorem taxes, or other taxes with which the collector is charged, are a lien on the property described in the deed.”
“The deed recording is working out wonderful,” he noted. “Obviously, at the beginning, there were attorneys who just didn’t like to do it, because it was an extra step (in dealing with land transfers).”
In order for a deed to be recorded, taxes have to be paid or there has to be a stamp, a statement, on top of the deed that taxes would have to be paid upon closing. Most of the time, taxes are paid at closing upon property being purchased, however there are situations where property is conveyed to a family member or another person and taxes are not paid.
Johnson said the Register of Deeds Office being housed in the same building as the Tax Office has contributed to limited hold up and “no inconvenience whatsoever” for the required paperwork to be done. A similar situation would aid in a seamless collection process of delinquent taxes for those seeking permits in the future.
Johnson said it has also encouraged some to pay the next year’s taxes prior to them being past due.
“It’s just another collection tool that you haven’t been using and doesn’t cost you anything really to implement,” he said. “As times get harder and harder, you have to look for more and more ways to get your revenue up — and this is a collection tool.”
Along with the enacting of legislation, another method of collecting owed taxes is the county’s utilization of the Debt Setoff program, through which tax refunds and lottery winnings are withheld to pay debts incurred. Johnson said 9,500 letters were mailed locally in October to taxpayers notifying them that the Debt Setoff Program was in place.
“We notified them that delinquent taxes were owed and we were going to attach those taxes to any lottery winnings or any income tax refunds they would get,” said Johnson. “Since October up until January of this year, we have collected $475,000 in delinquent money for property taxes. We want to attribute most of that to the fact that we have the Debt Setoff. It’s been very, very effective.”
Once the state is notified, it stays on record for 10 years.
“If it comes up three years from now, and they still have delinquent taxes owed and they’re in the state system, if they get a tax refund our taxes is going to come off of that before they get their refund.” Johnson said.
With motor vehicle tax collection changing, and that process being handled by the state starting this summer, Johnson said those tax collections should receive a boost. Sampson’s current motor vehicle tax collection rate, as well as those for real and personal property taxes, are at or around the state average.
“This should enhance that,” he said, “make it even better.”
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at firstname.lastname@example.org.