Extends the authority for villages to hold tax lien sales

BILL NUMBER:A7606

Title of bill

An act to amend chapter 602 of the laws of 1993 amending the real prop- erty tax law relating to the enforcement of the collection of delinquent real property taxes and to the collection of taxes by banks, in relation to the enforcement of the collection of taxes in certain villages

Purpose or general idea of bill

To extend for three additional years the authority for villages to hold annual tax lien sales as a means of enforcing collection of delinquent taxes.

Summary of specific provisions

Amends subdivision (c) of §6 of Chapter 602 of the Laws of 1993, to provide that any village which adopted a local law by September 1, 1994, authorizing such village to continue to enforce unpaid property taxes by tax lien sale, may continue to hold tax lien sales for village taxes which become liens in 2010, 2011 and 2012.

Justification

Chapter 602 of the Laws of 1993, which became effective on January 1, 1995, comprehensively reformed the method by which local governments enforce the collection of unpaid real property taxes. Part of that reform included eliminating municipal authority to enforce unpaid taxes via tax lien sales. However, Chapter 602 authorized counties, cities and towns with local charters that included tax enforcement provisions - including tax lien sales - to opt out of the new enforcement system by adopting a local law prior to July 1, 1994. To address the needs of the 165 villages for whom their county does not enforce village taxes, the Legislature then enacted Chapter 532 of the Laws of 1994, amending Chap- ter 602 to provide that any village using tax lien sales as a means of tax enforcement was authorized to enact a local law retaining the right to continue to hold annual tax lien sales for village taxes that became liens in 1995, 1996 and 1997. This was then extended several times to allow for tax lien sales through 2009. More than 100 villages passed such a local law, and continue to rely upon tax lien sales.

A tax lien sale is NOT the public sale of property, but rather the public sale of the current year's delinquent property taxes on a proper- ty. By selling such liens, villages are able to recoup the outstanding delinquent taxes owed the village, including interest penalties and charges.

Additionally, the public notice of the impending sale of tax liens serves to encourage delinquent taxpayers to remit full payment of their property taxes. For many villages, particularly in the downstate region, annual tax lien sales serve as a critical cash flow device. Without such tax lien sales, villages would be required to raise an additional amount of property taxes to cover delinquencies. This bill would allow villages to continue to use tax lien sales for village taxes levied in 2007, 2008 and 2009.

Prior legislative history

New Bill.

Fiscal implications

None to the State. Will enable tax enforcing villages to continue hold- ing tax lien sales to reduce their tax delinquency liability, thereby relieving pressure on the property tax.

Effective date

This act shall take effect immediately.