(Based on excerpts from "Principles of Municipal Tax Collection I", 4th ed., by Alice Anne Pareti, C.T.C., Rutgers University, January 1995.)
The duties of a tax collector may be separated into four broad categories:
The tax collector prepares and send out the tax bills. According to statute, the collector must complete mailing (or otherwise delivering) all bills by June 14.
Rate - Distribution of Taxes
Each tax bill must provide information, either on the bill or as a statement accompanying the bill, that discloses the tax rate used to compute the amount of taxes due for each parcel of property assessed. The tabulation shows the amount raised by taxation, expressed as a rate per $100.00 of assessed valuation (or the number of cents in each dollar paid by the taxpayer) which is used for each part of the overall tax rate (county tax, school tax [local or regional] and local expenditures). The local expenditure portion may be broken down further to show the amount for each department within the municipal government. N.J. S.A. 54:4-65.
Amount of the Bills
The amount of each of the first two installments (also called preliminary or first-half) is equal to one-quarter of the total tax for the preceding year or, if directed to do so for the tax year by resolution of the municipal governing body, one-half of the tax for the second half of the preceding tax year. (The latter method is not frequently utilized, but might be recommended in municipalities which had implemented a district-wide revaluation or had a wide disparity between half-years for some other reason.) The amount of tax payable for the third and fourth installments (final or second-half) is the full tax for the current year, less the amount billed as the first and second installments. The amounts for the final half are divided equally. N.J.S.A. 54:4-66.
Dates Taxes Payable - Dates Delinquent - Lien Established
Taxes are payable as follows:
|First Installment||February 1|
|Second Installment||May 1|
|Third Installment||August 1|
|Fourth Installment||November 1|
after which dates if unpaid, they are delinquent and remain delinquent until such time as all unpaid taxes including taxes and other liens subsequently due and unpaid together with interest have been fully paid and satisfied. The delinquent status remains even though a certificate of sale may have been issued (even to a third party lienholder). Delinquency means the sum of all taxes and municipal charges due on a given parcel of property covering any number of quarters or years. N.J.S.A. 54:4-66 & 67.
Taxes are a continuous lien and all subsequent taxes, interest, penalties and costs of collection which is imposed or accrues, is added to the lien and becomes part of it. N.J.S.A. 54:5-6.
Validity of Taxes
Taxes or assessments are valid whether or not the taxpayer (or his authorized agent) receives a bill. The statutes indicate that the taxpayer is "put on notice to ascertain from the proper official" the amount of his tax or assessment liabilities. The amounts for the first half taxes (February and May quarterly payments) must be divided equally. N.J. S.A. 54:4-64.
Billing - General
Designation of Agent
Where the owner has authorized the collector to send the tax bills to a mortgage company or agent, the collector must send the bill to that entity with a copy of the bill to the owner. The bill copy going to the owner must have the wording "This is not a bill - for advice only" printed upon it. N.J.S.A. 54:4-64.
Mortgagee or Servicing Organization - Duplicate Bills
If the taxpayer has authorized that his original bill be forwarded to a mortgagee or servicing organization, the tax authorization form is assignable and the Director of the Division of Local Government may be called upon to review the appropriateness of such an assignment request.
If the mortgagee or servicing organization requests a duplicate copy of a tax bill, the collector must issue a duplicate copy and may charge (pursuant to an ordinance authorizing the fee) a maximum fee of $5.00 for the first duplicate copy and a maximum fee of $25 for each subsequent duplicate copy of the same tax bill in the same tax year. Regulations in connection with this section are governed by the Commissioner of the Department of Community Affairs. N.J.S.A. 54:4-64. (In Colts Neck, we charge $ 25.00 for each subsequent duplicate copy.)
Most municipalities contain areas which are eligible for flood insurance. If so, at the time the collector sends the bills (and advice duplicate copies) for the third quarter (August) installment, he must include a notice regarding eligibility for flood insurance. N.J.S.A. 54:4-64.1.
Statement of State Aid
The tax bill must also contain a statement reporting amounts of State Aid and assistance received to offset local tax levies. The Director of the Division of Local Government Services provides each tax collector with this information each year. N.J. S.A. 54:4-65.
The collector must make an entry in a proper cash book crediting the taxpayer for the amount paid, the amount of any interest and penalty charged (or discount allowed). The collector must also enter the date and amount of each payment received on the tax duplicate. The entry must be opposite the items of tax on account of which the payment is made. The cash book must be provided to the collector at the expense of the taxing district. It remains the property of the district and must be "open at all reasonable times to public inspection." If the municipality has mechanical or computer record-keeping, the payment must be recorded in that fashion, rather than manually. The records so maintained are still open to reasonable public inspection. N.J.S.A. 54:4-71.
Times for Collection - In Colts Neck, the Office Hours are 8:30-4:30
In municipalities having a public municipal building, there must be a separate office for the collector who must be present there on certain days in each week during the months before the payment due dates as may be set out in a resolution adopted by the governing body. N.J.S.A. 54:4-72.
Monthly report of collections
On the first day of each month (or more often, if required by the governing body), the collector must make a report of his collections to the governing body. He must also pay the amount collected to the treasurer (or other appropriate official) of the municipality.
If the collector is also the treasurer, as is the case in Colts Neck, the collector must deposit all moneys collected directly into his account (in the name of the municipality) in the place (bank) designated by the governing body (meaning the resolution of depository authorized by the governing body). N.J.S.A. 54:4-73. Colts Neck's account is at the PNC Bank.
Within sixty (60) days after the close of the year, the collector must file and annual statement of receipts with the treasurer or chief financial officer of the taxing district and the governing body. The annual statement must show the amount of receipts collected during the preceding year, the amount of added (and omitted) taxes billed, as well as the amount of taxes abated or canceled and the taxes remaining unpaid at the end of the prior year. The form of the annual statement may be prescribed by the Director of DLGS. N.J.S.A. 54:4-91.
Annual List of Delinquent Taxes Believed Not Collectible
Annually, on (or before) May.1 in calendar year, the collector must file a list, in duplicate, with the governing body detailing any delinquent taxes which he believes are not collectible because he believes the tax is fictitious, double or due to an erroneous assessment. In the case of poll taxes, dog taxes or taxes on personal property, the list should also include delinquencies believed to be uncollectible due to reasons of removal (of the property), absence, death or insolvency of the taxpayer. The list must include the name of the delinquent taxpayer, the amount due, the type of tax, the period for which the tax was levied and if this is on real property, a description of the property assessed. In each case, the collector must include the reason why he believes the delinquency is uncollectible. Within sixty days after the collector has filed a list of delinquent taxes believed not collectible, the governing body (if satisfied that the tax is not collectible) must release the collector from the collection of such taxes and order the same canceled (by resolution). N. J. S. A. 54:4-9 1. I and 54:4-91.2.
Quarterly List of Delinquents
In municipalities having more than $3 million in assessed valuations according to the most recent annual debt statement, the governing body may designate the clerk to prepare quarterly lists of delinquent taxpayers (according to the collector's records) and to post copies of the list in at least ten conspicuous places within the municipality. At the time the list is prepared, the clerk must verify the collector's cash accounts, count the cash on hand, and determine if the duplicate is correctly posted and in balance. The clerk must certify the results to the local governing body and to the collector's surety. N.J.S.A. 54:4-122.7.
Homestead rebates are now handled at the State level. Applicants file their claims for Homestead rebates on forms which are filed simultaneously with filing of N.J. Gross Income Tax forms. Rebate checks are distributed from the State level. The collector's responsibility is to provide the State, on demand, with a delinquent listing of properties on which the prior year's delinquency exceeds $50 (excluding utility charges such as water and/or sewer) and which are still delinquent to a certain date in the subsequent year.
When Taxes Are Delinquent
Taxes may be received and credited as payments at any time, even prior to the dates when they become payable. If not paid on the due dates, taxes are considered delinquent.
Although taxes are due on the first days of February, May, August and November, the governing body has the statutory permission to waive interest on the payment of any installment of taxes if the payment is received by the 10th. The governing body must adopt an appropriate resolution granting this grace period. Colts Neck does allow the 10 day grace period.
Even though the statute states that no interest is charged if the payment is received within 10 days following the date on which it was due, the TCTA Counsel, Sandford Chernin, Esq., has opined that this means that payments must be received by the 10th of the month due in order to avoid interest charges. If payments are not received within the grace period, interest is then calculated from the date when the payment was originally due, until the date of actual payment.
Interest and Penalties
The governing body fixes the rate of interest chargeable on delinquencies by resolution. The maximum interest rate permitted by statute must not exceed 8% per annum on the first $1,500 of delinquency and 18% per annum on any amount is excess of $1,500 to be calculated from the date the tax was payable until the date of actual payment. In addition, the governing body may also authorize (by resolution) a penalty to be charged to a taxpayer at the end of each year (starting with the year 1991) if the given year's "delinquency" at the end of the year is in excess of $10,000. This charge is commonly called a year-end penalty. While the definition of "delinquency" means the total of all taxes and municipal charges due on a given parcel of property covering any number of quarters or years, the year-end penalty is applied only once each year to the portion of delinquency for that specific year.
In Colts Neck, the penalties are the maximum permitted, i.e., 8% and 18%.
Discount for Prepayment - Excesses and Deficiencies
Although rarely utilized, the governing body of a municipality also has the power (by resolution) to fix a rate of discount to be allowed for the prepayment of taxes or assessments. In Colts Neck there is no discount for prepayment.
Action in Superior Court
Anytime taxes have been delinquent for more than six months (either prior to or after holding a tax sale) on rental or income-producing property, the governing body may authorize, by resolution, that the collector take an action in Superior Court to be appointed receiver "ex officio" of rents and income from the property. (Obviously, the municipal attorney actually files the action with the Court.)
The collector then applies such rents and income to the delinquency, including penalties, interest and costs (of sale) and any amounts of costs and expenses of the receivership that the court may decide are appropriate. Without consent of the court, no expenses are recoverable. The court may proceed in the action in a summary manner (meaning quickly). The "receiver," meaning the collector, is not required to give bond other than his collector's bond.
After being appointed by the court (and with approval of the governing body) if the property is the subject of a mortgage, the first mortgagee (if found to be a suitable person in the eyes of the court and will accept) acts as the receiver's agent to collect the rents and income, and to manage the property. If the first mortgagee is not suitable, or does not wish to become the agent, then, with the governing body's approval, the receiver (through the courts) may designate the person in charge (or management of) the property, or some other competent person, to be the receiver's agent. Whoever is appointed is required to promptly account to the receiver. If the appointed person becomes derelict in his duty of collecting or accounting for the rents and income, or in the management of the property, the collector must apply to the court for the removal of the agent (after notice to him) and the court will remove the person and appoint another at the discretion of the receiver.
In this type of receivership, no fees are allowed for the receiver or his counsel unless the court approves. A proper showing is required.
Facts to be Established
The municipality, in presenting its case before the Superior Court, must establish:
_ that the delinquent taxes are still unpaid at the time of the court action
_ that the collector has exercised due diligence in attempting to collector the delinquency
_ that the collector believes that the real property is income-producing, or if not, that it can be leased and thereby made to become income-producing, and that the receivership will provide funds to satisfy the delinquency.
If, for some reason, the property is the subject of a county board or state tax court appeal, the court may require that a portion of the collections be held pending the outcome of the appeal. Upon receipt of an appeal judgment, the collector would apply the judgment proceeds first to interest on any unpaid tax and other amounts, including water or sewer payments, or parking or payroll taxes. If there is any excess after satisfying all unpaid amounts, the lien would be satisfied and the excess would be refunded to the taxpayer. Conversely, if the appeal proceeds are insufficient to satisfy the unpaid amounts, the balance owed (the lien, if a tax sale had been held) would remain.
Effect of Mortgage Foreclosure
At any time during the pendency of a suit before the court in connection with a mortgage foreclosure (or any other suit where a receiver is charged with collection of rents and income), and the owner or any person "interested" in the property, fails or refuses to make proper payments to the collector after a tax sale has been held on the parcel, the collector may intervene to the court by verified petition and apply for orders (as the court deems appropriate) for the payment of delinquent taxes, penalties, interest and other charges and costs, in accordance with the priority of the lien.
Remedies/exception of Receivership
Collecting delinquent taxes under this method is not in lieu of any other method, but exists to be an additional method of collection for the municipality. This portion of law does not apply to real property occupied by the owner as his residence or to farm property occupied by the owner, where there is no rent derived from the property. This section of law does not constitute a personal debt of the owner of the real property. Neither does it authorize the enforcement of the assessment and levy (except where prescribed by law) by any legal action against the owner personally. N.J.S.A. 54:4-123 through 54:4-136.