Bill says property tax penalties are unneeded

Spokane County Treasurer Rob Chase believes that the penalties and interest charged on delinquent property taxes are just too high.

Under state law, late taxes are penalized 3 percent after the first three months and another 8 percent after nine months. On top of that, interest is charged at 1 percent a month.

Chase pointed out that the total comes to 23 percent after the first year.

Most of the people who fail to pay on time are having financial problems or are on low incomes, including seniors.

“The bottom line is 23 percent is usurious,” Chase said.

The treasurer is pushing to change state law to eliminate the penalties but maintain the interest charges. He also wants the state to allow partial payments, possibly on a monthly basis, and to accept late and partial payments electronically.

The county now has software technology to handle electronic payments. Any bank charges are paid by the taxpayer.

Currently, treasurers are prohibited from accepting late payments that are not for the full tax year, including penalties and charges, he said.

On Thursday, Chase appeared before the Senate Committee on Governmental Operations that is considering a bill to allow payments on a monthly or quarterly basis if commissioners in a county approve the method.

Chase said he told the committee he likes the Senate bill, but it should also include provisions eliminating the penalties and allowing more flexible payment plans.

He is working with state Rep. Matt Shea, R-Spokane Valley, on House Bill 1430, which would include all of the provisions.

Elimination of late penalties would cost Spokane County about $2 million a year, or 1.5 percent of its general fund, he said.

The potential loss of revenue may be why other members of the state treasurers association have not supported the bill, he said.

At least two other House bills are mirroring the proposal heard by the Senate.

Idaho charges a 2 percent penalty for late payments and 12 percent annual interest, Chase said.

The changes are intended to help people in distress. He said one man came to his office and explained he didn’t pay his taxes because he was unemployed and sick with a brain tumor.

“He didn’t have the money to pay for a full year,” Chase said. “We’ve got to be serving the public and not be self-serving.”

If tax bills are not paid for three consecutive years, then the county moves to foreclose on the property.

Out of 200,000 property accounts, about 10,000 are late each year in Spokane County. Currently, owners of 58 parcels are facing foreclosure.

The properties are sold by auction to satisfy the unpaid taxes. The minimum bid is the amount of the taxes, plus interest and penalties, which amount to a 47 percent add-on after three years.

Chase’s proposal to eliminate penalties would reduce the cost to prospective buyers if the sale goes at or near the minimum bid.

But Chase said he is not pushing the proposal to benefit purchasers of foreclosed properties; he’s doing it for the troubled property owners.

As part of his effort to help taxpayers in trouble, Chase said he has moved the foreclosure auction each year from Dec. 1 to March 4 to give more time to get caught up on back taxes.

“A lot of these people are seniors on fixed incomes, veterans,” Chief Deputy Treasurer Mike Volz said.

Chase said, “We want to keep them out of foreclosure.”