HB 1487

This bill changes the interest rate on delinquent property tax payments and the interest rate on subsequent tax payments to a certain rate to be determined by the banking commissioner.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

76:13 Interest. Interest [~~at 12 percent per annum~~] shall be charged upon all taxes except resident taxes, except as otherwise provided by statute, not paid on or before December 1 after their assessment, which shall be collected from that date with the taxes as incident thereto, except in the case where a tax bill sent to the taxpayer on or after November 2 and before April 1 of the following year interest shall not be charged until 30 days after the bills are mailed. The interest rate shall be set by the tax collector, but shall not exceed the 30-year treasury bill rate plus one percent as determined by the banking commissioner. The interest rate shall be set each April 1, but may be adjusted no later than October 1. Interest due that amounts to less than $5 may be waived by the collector, with the approval and consent of the board of selectmen and the board of assessors, if in his judgment the administrative and collection costs involved do not warrant collection of the amount due. The tax collector shall state on the tax bill the date from which interest will be charged and such date shall be determined by the day the collector sends out the last tax bill on his list. The collector shall notify the board of tax and land appeals in writing of the date on which the last tax bill was sent.

80:32 Redemption. Any person with a legal interest in land so sold may redeem the same by paying or tendering to the collector, or in his absence, at his usual place of abode, at any time before a deed thereof is given by the collector, the amount for which the land was sold, with interest at [~~18 percent per annum~~] the rate determined in RSA 76:13 upon the whole amount for which the land was sold from the time of sale to the time of payment in full, except that in the case of partial payments in redemption made under RSA 80:33-a, the interest shall be computed on the unpaid balance, together with redemption costs and costs for notifying the mortgagees, if any. In case the tax collector who sold the property in question shall have died, become incapacitated, been removed from office or removed from the town or city or shall have been discharged from his bond by the selectmen or assessors, then the person with the legal interest in redeeming the property may tender such sums to the tax collector then in office of said city or town. Upon advice from the selectmen or assessors that the amount tendered is the correct amount due, the tax collector shall accept said amount for the redemption of the property.

80:37 Payment of Subsequent Tax. For purposes of this section, "subsequent tax" shall mean any tax assessed upon the real estate subsequent to that for which it was sold by a municipality, a county or the state. The purchaser of real estate at any tax sale may pay to the collector any subsequent tax and the collector shall, within 30 days after such payment, notify the register of deeds thereof, giving the date and the amount of such payment and the name of the person so paying together with the date of the tax sale, the name of the person taxed and a description of the property sold as shown in the report of sale recorded in the registry of deeds. The collector of taxes shall receive $1 for such notice to the register of deeds of the payment of subsequent tax plus $1 to be paid to the register of deeds. The purchaser, within 30 days of payment of the subsequent tax, shall personally, or by certified mail, notify in writing any mortgagee who was notified of his purchase at the tax sale of this payment of the subsequent tax. The purchaser paying the subsequent tax shall receive the same fees prescribed for notifying the mortgagee of his purchase at the tax sale to be included in his costs to be paid by the person making redemption, except that when a town is a purchaser at a tax sale and the town pays a subsequent tax and the selectmen direct the collector of taxes as agent for the town to give notice of payment of a subsequent tax to any mortgagee who was notified of the purchase by the town at the tax sale, the collector shall be paid the sum of $5 for this service. Any amounts so paid on account of subsequent taxes, together with interest thereon at the rate [~~of 18 percent per annum~~] determined in RSA 76:13 from the date of payment shall, in addition to the purchase price at the time of sale with accrued interest and costs, be paid by the person making redemption.

80:69 Redemption. Any person with a legal interest in land subject to a real estate tax lien may redeem the same by paying or tendering to the collector, at any time before a deed thereof is given by the collector, the amount of the real estate lien, with interest at [~~18 percent per annum~~] the rate determined in RSA 76:13 upon the whole amount of the recorded lien from the date of execution to the time of payment in full, except that in the case of partial payments in redemption made under RSA 80:71, the interest shall be computed on the unpaid balance, together with redemption costs and costs for identifying and notifying the mortgagees, if any. In case the tax collector who executed the tax lien against the property in question shall have died, become incapacitated, been removed from office or removed from the town or city or shall have been discharged from his bond by the selectmen or assessors, then the person with the legal interest in redeeming the property may tender such sums to the tax collector then in office of said city or town. Upon advice from the selectmen or assessors that the amount tendered is the correct amount due, the tax collector shall accept said amount for the redemption of the property.

III. When a municipality is the lienholder and the municipality pays a subsequent tax and the selectmen direct the collector of taxes, as agent of the municipality, to give such notice of said payment to any owner and to any mortgagee as provided above, the collector of taxes shall receive the same fees provided for the lienholder for his service. The amount of subsequent taxes paid, together with interest on such taxes at the rate [~~of 18 percent per annum~~] determined in RSA 76:13 from the date of payment shall, in addition to the tax lien amount at the time of execution with interest and costs, be paid by the person making redemption.

The Department of Revenue Administration indicates this bill will decrease local revenue by $12.6 million in FY 2001 and each year thereafter, and will increase local expenditures by $500,000 in FY 2001. The N.H. Municipal Association indicates this bill will increase local expenditures by an indeterminable amount in FY 2001 and each year thereafter. There will be no fiscal impact on state and county revenue or expenditures.

The Department states the total amount of interest collected locally in 1997 was $22,958,000, however, the Department cannot distinguish the amounts collected at 12% from the amounts collected at 18%. Therefor, to estimate the fiscal impact, the Department assumed the total amount of interest was collected at 15%, which is the average of 12% and 18%. The Department compared the 15% interest rate to the Treasury rate plus 1%, which currently equals 7.5%, to estimate that interest collected locally would decrease by half, or $11,479,000. The Department made a further adjustment of 10% to reflect the reduced incentive to pay taxes timely. The $11,429,000 plus 10% equals $12,627,000.

The Department estimates this bill will cause local expenditures to increase $500,000 in FY 2001 for a one-time cost to change software and billing systems. This amount was based on the amount appropriated in Chapter 303, Laws of 1999 for municipal software changes due to Claremont legislation.

The Municipal Association states this bill will reduce the incentive for taxpayers to pay their outstanding taxes when the taxes are taken to lien, since the interest rate will remain the same. The reduced incentive may cause cash flow problems that could lead to more short term borrowing at higher interest rates and increases in bond ratings due to untimely collections. The Association also notes the need for modification for computer software and hardware to handle the change in interest rates.

LBAO

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The Association states more personnel may be required at the municipal level to calculate and track amounts outstanding at differing interest rates. Legal costs associated with bonding employees could increase due to the bill allowing the same person to set the tax rate and collect the taxes.