WESTERLY — About 200 properties are currently subject to a tax sale planned for Nov. 19. If the owners do not pay their overdue taxes or make payment plan arrangements with the town, the properties will go up for bid; the tax sale will be the town’s first in more than five years.
Since the Finance Department started working on the tax sale in April, there have been 399 accounts with past due taxes that totaled $1.4 million. Since April, payment of $553,460 has been made to meet the obligations of 130 of the overdue accounts, Finance Director James Lathrop said. Additionally, the town entered into 61 new installment agreements for a total of $356,960.
The town’s goal with installment agreements is to have taxes current in one year. The length of agreements is limited to two years. Interest continues to accrue under installment plans and participants must pay current and future taxes on time.
“It is not the intent of the revenue office to hurt any business or individual,” Lathrop said, explaining the town’s willingness to work with those who have fallen behind on their taxes.
In the future, Lathrop said, tax sales will be conducted annually. “Towns that have annual tax sales have collection rates that are that much higher,” he said.
Interim Town Manager Michelle Buck said the establishment of tax sales “demonstrates a commitment on behalf of the town to make sure every avenue of collection is explored and enforced.”
Taxpayers can become delinquent for a number of reasons, including financial hardship or forgetfulness. Some owners never receive a bill. This year about 200 tax bills were returned to the town as undeliverable, Lathrop said. Most of the returned bills were for property owners who live out of state.
According to Lathrop, the town’s tax collection rate has decreased from 99 percent to 96 percent since the last tax sale. Since the town budget is based on estimated tax collections, increasing the collection rate leads to lower taxes overall, he said.
Lathrop, who has worked for the town for just over two years, said he could not comment on why the town has not conducted a tax sale in more than five years.
“Many organizations put so much focus on expenses and how money is spent, they fail to focus on revenues. Sometimes it is easier to find an extra $1 million in revenue than to find $1 million to cut. The Finance Department has been introducing a new way of thinking to address issues,” Lathrop said.
Under Lathrop’s guidance, the town has also been focused on increasing collection rates for motor vehicle taxes. Acting Tax Collector Kathy Damicis and Julie Ruisi, who works with Damicis, have been heading up the project, which collected $1.8 million in past due motor vehicle taxes last fiscal year and has collected close to $900,000 overdue in the new fiscal year.
RI Tax Titles LLC of Lincoln has been hired by the town to assist with the tax sale. The company’s fees are added to the overdue taxes and paid by the property owner or winning bidders. The town is not charged by the company, Lathrop said.
The first formal notice of the tax sale will be published Oct. 28. The notice will include a list of the properties and their owners. Three other advertisements will be published.
On the day of the sale, buyers must pay all overdue taxes and related costs. Buyers receive a collector’s deed, which positions the holder to take title to the property through a foreclosure process carried out in Superior Court. The only liens that survive foreclosures are those filed by governmental agencies for environmental problems, or by the Internal Revenue Service liens if the IRS was not properly notified of the imminent tax sale. Buyers are responsible for special assessments such as those imposed by fire districts, but those assessments are not included in the tax sale price.
Property owners may redeem their property by paying the sum for which the property was purchased, plus a penalty of 10 percent of the purchase price if redeemed within six months after the sale, an additional 1 percent of the purchase price for each succeeding month, together with any intervening taxes and interest of 1 percent per month. Properties may be redeemed until foreclosure proceedings are started.