News Column

NM Could Adopt Tougher Tax Debt Rules

Oct. 19, 2012

Dianne Stallings, Ruidoso News, N.M.

tax forms

Unless state taxation officials can be persuaded to switch back to a previous process, owners of properties with delinquent taxes may no longer be able to submit partial payments and will have to work with the state, not the local county treasurer to resolve the debt.

Expressing their frustration at the change in the state's handling of tax delinquent properties, Lincoln County commissioners vented their disappointment Tuesday and agreed to protest the policy.

County Manager Nita Taylor briefed commissioners on a letter received Sept. 24 from the New Mexico Tax and Revenue Department about property tax delinquency lists, collection and remittance of penalties, interest and costs.

Taylor said state officials decided to revive a law that was passed in 1990, but the process outlined was never followed. The state proposes to remove a county treasurer's ability to accept partial payments for taxes once a property appears on the tax delinquency list. The law requires all penalties, interest and costs collected after a property appears on a list to be paid to and retained by the taxation and revenue department.

Any documented noncompliance would be a serious matter that the state would not overlook and could lead to a variety of adverse consequences, including suspension and efforts to collect county penalties, interest and costs that should have been remitted to the RTD, but were not, Taylor wrote.

Accepting payments

County Treasurer Glenna Robbins provided documentation that included correspondence from the TRD in 2011 authorizing the county to act as its agent in accepting "all" payments on accounts submitted to the department on a delinquency list. A 2012 notice modifies that authority for the county to accept only payment in full on those accounts.

In a reply letter sent to the TRD, Robbins pointed out that the state's own audits found no deficiencies and that the county complied with all regulations concerning the collection and remittance of penalties, interest and cost to the state. She noted that each year, the delinquency list contains more than 100 properties, but over the months from July to the time the Property Tax Department sets a sale date, most have bee paid in full because of the ability of the her office to collect the delinquent taxes. The payments are posted timely and tax collections are distributed to various taxing entities monthly. The penalty and interest is distributed to the TRD, Robbins wrote.

Her concern is that the relinquishment of the authority to accept partial payments will place a hardship on county taxpayers and others, that the loss of the check and balance system that the treasurer has in place will be jeopardized by property tax money that belongs to taxing entities not getting to them in a timely manner, Robbins wrote.

"This new process also takes away the county's ability to work with the taxpayer to pay down the delinquent account," she stated. "The treasurer requests the authority to accept partial payments be returned to the county."

Protests

Similar letters were fired off by treasurers in the other 32 counties, Robbins noted. The treasurers also sought assistance from the New Mexico Association of Counties. An association representative told commissioners after several meetings with state tax officials, the association hoped for a change, but was disappointed when the decision was to stay on course with the payment ultimatum. A letter received Tuesday before the meeting declared there is no conflict between the regulation and the duties of the treasurer. Another meeting is set for Oct. 24, in Santa Fe to discuss the issue.

"On July 10, the county submitted its list of 238 delinquent properties with three more years taxes due to the state," Chief Deputy Treasurer Beverly Calaway told commissioners. "We have collected 41 of those, but had to refuse payment from 14 property owners, who wanted to make partial payments on their accounts. Please keep in mind that many are very low income or unemployed, have medical or financial hardships. They have been instructed to contact the property tax division in Santa Fe to advise them of the options available. The only ones I know are payment in full or installments to the state, which is hard to qualify for and very strict."

The county treasurer has four issues with the change, Calaway said. The money collected in prior delinquent sales and installments has not been issued or distributed on a timely basis by the TRD as required by state law, Calaway said. Owners who have tried to contact the state have not received a timely response from the department or none at all. Information given to property owners on the current delinquent list has not been correct and added to the confusion of trying to collect the taxes, she said.

"If a property owner goes into an installment agreement for 36 months and TRD holds all the money collected, this means the entities we collect for, such as schools and the hospital, may not receive their money for up to three years," Calaway said.

"Where do we start at the top to make this go away?" asked Commission Chairman Jackie Powell. The governor is aware of the situation, Calaway said.

"We were hoping they would change their minds and see the need for county treasurers to represent the people in the counties," she said.

"They need to be able to come to local office and not one in Santa Fe."

Seeking consistency

Calaway was told the reason the TRD decided to change the approach was because some county treasurers were not adhering to the law and were making agreements on their own or not sending penalties and interest to the state.

But Lincoln County's record is spotless and all counties shouldn't be punished for the failure of a few, she said.

"We have an excellent reputation for the collections we do," she said. "A lot (of potential buyers) don't want to come here because we collect all the taxes before the sale. The state likes coming here because we have clean records from the clerk to the assessor to the treasurer's office. We do our job and do it according to law.

"I understand the (Taxation and Revenue Department and Property Tax Division) want treasurers to be consistent in the way they collect partial payments and distribute penalties and interest to the state, but we look at it that we are doing the job correctly. Tax and revenue reviewed all our records two years ago and said we're doing an outstanding job. Don't penalize all for the few who don't follow the law."

Commissioner Mark Doth said legislators need to be told to change the law if the state won't back down. The governor also could step in and talk to her appointed department secretary.

"I believe that's where it's headed," Calaway said. "(Robbins) does not believe any state department can work with or help property owners in the county any better than we and she thinks it is a disservice to tell them they must call Santa Fe and work with them."

Notices about contacting the state if full payment is not submitted are being included in delinquent tax bills, she said.

"What a mess," Doth said. "And it wasn't broken."

County Assessor Paul Baca attested to the efficiency and diligence of the treasurer's clerks. County Manager Nita Taylor said the local office could better serve property owners and guarantee a continuous flow of money to taxing entities in a timely manner. "That's a concern," she said. "If we don't have the money, the taxing entities don't get theirs. I like the idea of strongly worked letter to be sent right away."



Source: (c)2012 the Ruidoso News (Ruidoso, N.M.) Distributed by MCT Information Services


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