Luzerne County’s private tax claim operator plans to pitch a plan to county officials that could increase revenue by about $1.5 million for taxing bodies and allow properties to be sold sooner if owners don’t pay real estate taxes.
The program, which tax claim operator Northeast Revenue Service LLC implemented this year in Montgomery County, would put liens on delinquent properties if owners don’t pay in full or get on payment plans by Feb. 21 or some other date chosen by the county each year.
The liens would require delinquent property owners to start paying an additional 5 percent fee to cover county tax claim operational costs — an expense currently covered by school districts and municipalities, said Northeast Revenue President John Rodgers, an area attorney. The county’s portion of this fee is waived as part of its operational agreement with Northeast Revenue.
Liens also allow properties to be publicly auctioned at sheriff sales in as little as six months, as opposed to back-tax auctions that can’t be scheduled for about two years, Rodgers said.
Delinquent tax payments increased $5 million at the start of this year in Montgomery County because property owners didn’t want to face the added costs of liens on top of interest.
Luzerne County property owners are charged 9 percent interest annually on delinquent taxes.
Liens and the resulting sheriff sales also remove the luxury of sitting on a debt two years until properties are listed for back-tax auctions, Rodgers said.
Some Luzerne County property owners habitually wait until the period right before a back-tax auction to pay, he said.
Earlier sales also reduce deterioration that can make properties less attractive to potential buyers, he said.
“This brings money in quicker for the taxing bodies and allows school districts and municipalities not to absorb the cost of collection, which they do now,” Rodgers said.
Two revenue sources
The projected $1.2 million revenue estimate comes from two sources.
The county would receive an additional $35.50 in filing fees for each lien, which would total around $355,000 based on the estimated 10,000 liens Rodgers anticipates filing annually.
He believes school districts and municipalities would save an estimated combined $1.25 million by no longer paying the 5 percent fee on back taxes collected by his office. This number is based on the $25 million in back taxes Northeast Revenue forwarded to schools and municipalities last year.
Taxing bodies would have to negotiate an agreement with Northeast Revenue to cover the 5 percent fee payments made before liens, he said. Montgomery County agreed to absorb this cost in exchange for the benefit of receiving more back-tax revenue at the start of the year instead of waiting, Rodgers said.
Property owners would still have the option to get on payment plans to avoid the liens, he said.
The structure of these repayment agreements is set by state law — 25 percent down with the remainder paid off within a year. Payment plan defaulters aren’t eligible to participate in another payment plan for three years — another state requirement.
Northeast Revenue has strictly enforced these payment plan requirements, Rodgers said.
Luzerne County Manager Robert Lawton said he can’t comment on the proposal until he receives it.
Rodgers said he hasn’t proposed the lien idea to Luzerne County officials yet because he first wanted to fully research the law and ensure it worked successfully in Montgomery County.
A similar program couldn’t be implemented in Luzerne County until next year, he said.