ARIZONA STATE SENATE
Fifty-Second Legislature, First Regular Session
FACT SHEET FOR S.B. 1135
tax liens; delinquency; partial payments.
Purpose
Allows for delinquent property taxes to be paid in partial installments, decouples year-to-year delinquent taxes for the purpose of repayment, outlines the lien purchase and redemption process and modifies the mechanism for funding the Elderly Assistance Fund (Fund).
Background
Property taxes in this state are due in two equal installments. The first installment is due on October 1, and becomes delinquent on November 1 (or the next business day when November 1 falls on a weekend or a holiday). The second installment is due on March 1 and becomes delinquent after May 1 (or the next business day when May 1 falls on a weekend or a holiday). Pursuant to A.R.S § 42-18056, at any time before an individual’s property tax becomes delinquent, the county treasurer is required to accept partial payments of the tax in the amount of at least 10 percent of the installment and at least 10 dollars. After a tax becomes delinquent, the interest levied is 16 percent per year until paid (A.R.S. § 42-18053). If the delinquent taxes are not paid within 13 months, the property can be placed in a tax lien auction administered by the county. The rate of interest on the tax lien is the lowest bid, not to exceed 16 percent.
The Fund was established for the purpose of reducing primary school district taxes (A.R.S. § 42-17401). The Fund can only be established by the board of supervisors in a county with a population of more than two million persons to be administered by the treasurer.
When a property tax lien is redeemed in a county that has established a Fund, statute requires the county treasurer to deposit an amount in the Fund that is equal to the difference in the delinquency rate of 16 percent and the amount of interest stated in the certificate of purchase (A.R.S § 42-18153). A qualified individual is defined as someone who lives in an organized school district and who is approved for the property valuation protection pursuant to article IX, section 18, subsection (7) of the Arizona Constitution. Statute requires that the treasurer in a county that has established a Fund, on June 30 of each year, to proportionately reduce the primary school district taxes for qualified individuals for the following tax year depending on the total amount of monies in the Fund and the total number of qualified individuals who live in the county.
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires the treasurer in a county that has established a Fund to accept partial payments on delinquent taxes equal to at least 25 percent of the total amount remaining due on the oldest year of the delinquency.
2. Instructs the treasurer in a county that has established a Fund to issue a receipt to the taxpayer and a copy of the receipt to any holder of a certificate of purchase (CP) of the tax lien, and to credit the taxpayer for the payment.
3. Requires that the difference in the statutory delinquent-tax interest paid and the CP interest paid be divided by the treasurer in a county that has established a Fund in the following amounts:
a) 80 percent deposited to the elderly assistance Fund.
b) 20 percent paid to the holder of the CP.
4. Instructs the treasurer of a county that has established a Fund to issue separate CPs for each subsequent year’s taxes, each bearing the interest rate stated in the original CP.
5. Stipulates that each subsequent CP carries the same foreclosure right as the original certificate, and that for subsequent year CPs, the lean purchaser may bring an action to foreclose at any time beginning three years after the date the tax lien would have been otherwise noticed and offered but not later than 10 years after the assignment of the tax lien.
6. Requires the county treasurer to accept partial payments of at least 10 dollars before the tax becomes delinquent.
7. Makes technical and conforming changes.
8. Becomes effective on the general effective date.
Prepared by Senate Research
February 16, 2015
BR/TW/ls