Improving Tax Compliance

Transcription

1 Sunday MAY, :50-4:40PM Improving Tax Compliance MODERATOR SPEAKERS Brian Seals Taxpayer Services Supervisor, Lakewood, CO Carla de la Pava Treasurer, Arlington County, VA Adam Langley Senior Research Analyst, Lincoln Institute of Land Policy #GFOA2017

2 IMPROVING TAX COMPLIANCE Carla de la Pava Treasurer Arlington County, VA Adam Langley Senior Research Analyst Lincoln Institute 2017 GFOA ANNUAL CONFERENCE

3 2017 GFOA ANNUAL CONFERENCE

4 0.24% 2017 GFOA ANNUAL CONFERENCE

5 IMPROVING TAX COMPLIANCE: Assessments Prevention Collections 2017 GFOA ANNUAL CONFERENCE

6 QUALITY ASSESSMENTS Assessments Collections Prevention Communication Tools Data Analysis CARFAX 2017 GFOA ANNUAL CONFERENCE

7 ACCIDENTAL DELINQUENTS Assessments Prevention 460,000 Reminders 7,500 Robo Calls Collections 900 Pieces of Returned Mail Advertising/Social Media 2017 GFOA ANNUAL CONFERENCE

8 PEOPLE WHO CANNOT AFFORD TO PAY Assessments Prevention Taxpayer s Assistance Program (TAP) Interest free, short-term loan guaranteed by the Treasurer Collections 2017 GFOA ANNUAL CONFERENCE

9 Preventing Property Tax Delinquency With Monthly Installment Payments Adam H. Langley Senior Research Analyst, Lincoln Institute of Land Policy Government Finance Officers Association Annual Conference (May 21, 2017) 9

10 Mortgage Escrow for Property Taxes 10

11 Mortgage Escrow for Property Taxes % Homeowners Who Pay Property Tax Through Mortgage 44% Have Mortgage Escrow: Pay property tax as part of mortgage bill 56% No Mortgage Escrow 20% Have mortgage, but no property tax escrow 36% Do not have a mortgage Source: American Community Survey (2015). 11

12 Mortgage Escrow for Property Taxes Under % Homeowners Who Pay Property Tax Through Mortgage All Ages 55% 20% 44% Have Mortgage Escrow: Pay property tax as part of mortgage bill 45% 80% 56% No Mortgage Escrow 20% 16% 20% Have mortgage, but no property tax escrow 25% 63% 36% Do not have a mortgage Source: American Community Survey (2015). 12

13 Property Tax Escrow 46% of Americans couldn t come up with $400 in emergency (Federal Reserve survey) $400 13

14 Property Tax Escrow 46% of Americans couldn t come up with $400 in emergency (Federal Reserve survey) $400 Median Property Tax Bill = $2,259 Source: Federal Reserve Report on the Economic Well-Being of U.S. Households in 2015; 2015 American Community Survey (U.S. Census Bureau). 14

15 Property Tax Escrow 46% of Americans couldn t come up with $400 in emergency (Federal Reserve survey) $400 Median Property Tax Bill = $2,259 Monthly Bill = $188 Source: Federal Reserve Report on the Economic Well-Being of U.S. Households in 2015; 2015 American Community Survey (U.S. Census Bureau). 15

16 Monthly Property Taxes and Delinquency Study of Wisconsin municipalities Increase number of installments from two to three Reduce property tax delinquency by about a third (Waldhart and Reschovsky 2014) Preliminary survey in Survey Monkey Homeowners without mortgage escrow 2.5x more likely to have ever been late in paying their property tax bill relative to owners that pay property tax through mortgage 16

17 Monthly Property Taxes and Delinquency Problem Billing property taxes in one or two large lump sums Financial challenges for many households Some become delinquent Solution: Options to pay property taxes monthly 1) Prepayment programs for property taxes (16 states) 2) Milwaukee: Tax bill includes monthly installment option 17

18 Prepayment Programs for Property Taxes Different names Prepayment agreements, escrow plans, monthly payments Local option programs Taxpayers submit application to enroll in monthly payment plan Several payment options available: Check, automated monthly payment via EFT or ACH, credit/debit card Money held in escrow account to pay off annual or biannual bills Gov t earn interest on escrow accounts Reconciliation process at end of year Final monthly bill slightly more or slightly less than first 11 bills Taxpayers submit 13 th payment or receive refund to bring into balance 18

19 States that Allow Prepayments for Property Taxes Source: State statutes ( ). 19

20 Best Practices for Prepayment Programs Outreach and advertising are critical On payment plan for delinquent taxes Enroll in monthly escrow plan for current taxes Encourage automated monthly payments Use RFP to minimize transaction costs on automated payments 20

21 Monthly Installments in Milwaukee, WI Automatic enrollment w/out application Tax bill includes monthly option Automatically enrolled in monthly payment plan after making first monthly installment 21

22 Milwaukee Tax Bill Has Option to Pay in Full or Installments Monthly or Full Payment Note: Milwaukee has six taxing districts with different number of installments: 7 monthly installments (Feb-July): Includes county, state, and sewer district (Ex: $484) 10 monthly installments (Feb-Oct): Only city, school district, and technical college (Ex: $335) 22

23 Monthly Installments in Milwaukee, WI Learn More: Automatic enrollment w/out application Tax bill includes monthly option Automatically enrolled in monthly payment plan after making first monthly installment No escrow accounts Monthly payment goes right to receivables No reconciliation (10 monthly payments) Tax rates set in December 1 st payment by Jan 31; Final payment Oct 31 Several payment options Automated payments through EFT Check Pay at 13 U.S. Bank branches in city 23

24 Property Tax Delinquency Rate (2013) Flint, MI Detroit Cleveland Cincinnati St. Louis Miami Philadelphia Buffalo Memphis, TN Baltimore Milwaukee Newark, NJ Dallas Atlanta 4.0% 3.9% 2.9% 2.5% 2.1% 6.0% 5.2% 5.0% 8.9% 8.2% 9.7% 15.9% 32.2% 31.7% Note: Same-year delinquency rate for cities with poverty rates above 25%. Source: Pew Charitable Trust (2013), Delinquent Property Tax in Philadelphia. 24

25 Participation Rates in Four Jurisdictions with Monthly Payments Milwaukee (WI) Butler Co. (OH) Twin Falls Co. (ID) % Paying Monthly 20.8% 3.7% 2.1% # Taxpayers who Pay Monthly Installments 33,753 5, Total Number of Accounts 162, ,000 30,000 Participation Rate for Homeowners without Mortgage Escrow (Estimate) 33.0% 6.5% 4.3% Source: Data provided from city or county treasurers. 25

26 Wrap Up ½ homeowners pay property tax in 1-2 lump sums each year Billing taxes on annual or biannual basis Delinquency Options for monthly property tax payments: 16 states: Property tax escrow programs run by tax collectors Milwaukee: Tax bill with option to pay monthly in Milwaukee Contact Adam H. Langley

27 THE EVADERS Assessments Collections Prevention Impose Liens Bank Wage Rent Seize Assets Court Action (Judgments) DMV Holds Publish Names Seize State Income Tax Refunds 2017 GFOA ANNUAL CONFERENCE

28 2017 GFOA ANNUAL CONFERENCE

29 Discussion and Questions 2017 GFOA ANNUAL CONFERENCE