Certain delinquent taxpayers face added penalties



STEPHENVILLE (November 3, 2016) – When it comes to tax collections, it’s better to be proactive rather than reactive. On Tuesday, Stephenville City Council approved a resolution allowing attorneys working on behalf of the local tax office and city to collect additional penalties from certain delinquent taxpayers.

The resolution relates not to real estate (property) taxes, but business personal property, according to Erath County Tax Assessor/Collector Jennifer Carey.

The tax office will mail out delinquency notices for all 2016 delinquent taxes in February, but the move by the city council gives collectors a little more leverage.

“We will now be able to include a notice advising all taxpayers the business-personal property taxes which are still delinquent on April 1 will now have the additional 33.11 penalty and the attorneys can and will start legal action against them,” Carey explained. 

In speaking with The Flash following the meeting, Carey said the issue applies to things like furniture and fixtures. The building personal property is stored in, and the piece of real estate on which the business is located, give taxing entities equity to seize to recoup losses if needed.

But, Carey explained that business personal property tends to come and go, making it imperative to collect related taxes on such property as early as possible.

“If you have to wait until July, that is a long time,” Carey said. “We could lose out on tax dollars.”

Real estate taxpayers will also receive their delinquent notices in February, according to Carey, who said attorneys won’t be able to take action against them until July 1. But, if the real estate has delinquencies from previous years, the attorneys can file on them at the earlier date and include 2016 amounts due. 

Texas Tax Code Section 33.11 says in order to defray collection costs for taxes imposed on personal property, a governing body of a taxing unit can make taxes that are delinquent on or after February 1 incur an additional penalty on a date prior to July 1 if affected entities contract an attorney to collect delinquent taxes.

The issue received the support of all but one council member, Rhett Harrison.

Linebarger Goggan Blair & Sampson represents local taxing entities when Carey’s office is not paid in a timely manner or payment arrangements are not made. Attorney Jeff Brown has worked with Carey’s office throughout her tenure, working on behalf of each of the county’s taxing entities.

Explaining the importance of timely collections, Carey said failure of businesses can add up to major revenue losses and provided an example dating back about five years ago when a major taxpayer dealt a blow to Huckabay ISD.

“When the methane plant went delinquent, that was 20 percent of the school district’s tax roll,” Carey said, adding that the original operators of the renewable energy generation facility filed bankruptcy and Huckabay ISD finally received payment when plant sold.

“All of that – the delinquency and inability to collect owed taxes, affects school funding,” Carey said. “The Texas Education Agency could reduce funding to any school due to collection issues.”

A similar issue occurred in Bluff Dale when a fracking business associated with the oil and gas industry left the school district awaiting the payment of an estimated $80,000 tax bill.”

“They also finally paid, but not in a single fiscal year,” Carey said.

Revenue is not the only concern. Carey said bond ratings are determined by tax collection rates. If a taxing entity wants to borrow money, collection efforts are a determining factor.

“If we start early enough and have early turnover to the attorney, we can hopefully get the funds collected and keep collection rates high,” Carey said.

In a related report received by the city council, Brown said his office only has the “opportunity” to speak with one percent of city taxpayers. He said the city has a 99 percent collection rate, which is the highest of all the entities within Erath County.

In the latest efforts, the law firm was collected almost $76,000 in delinquent taxes over a one- year period, from September 1, 2015 – August 31, 2016. 

Looking at current causes for concern, Carey referenced the recently shuttered Hastings store in Stephenville. The corporation filed Chapter 11 bankruptcy, meaning local entities could lose all associated tax revenue.

Big 5 Sporting Goods meanwhile closed several locations in Texas including the local store, but Carey said the California-based corporation said it will take care of all obligations.

“If they don’t pay, we can turn collections over to an attorney who can file an action,” she said.

To avoid legal action all together, Carey said businesses can make arrangements through her office. She referenced oil and gas related businesses who took such measures to avoid seizure of property.

“One of the larger companies paid $5,000 to $10,000 per month until they got caught up – first on the personal property and then on the real estate,” Carey said.


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