Transcription

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36 THE GENERAL PROPERTY TAX ACT (EXCERPT) Act 206 of m Granting state right of first refusal; election by state not to purchase property; purchase of property by city, village, township, or county; property sale at auction; notice of time and location; procedure; property not previously sold; disposition of sale proceeds; joint sale by 2 or more county treasurers; deed recording; minimum bid defined; cancellation of taxes upon transfer or retention of property; foreclosed property defined as facility. Sec. 78m. (1) Not later than the first Tuesday in July, immediately succeeding the entry of judgment under section 78k vesting absolute title to tax delinquent property in the foreclosing governmental unit, this state is granted the right of first refusal to purchase property at the greater of the minimum bid or its fair market value by paying that amount to the foreclosing governmental unit if the foreclosing governmental unit is not this state. If this state elects not to purchase the property under its right of first refusal, a city, village, or township may purchase for a public purpose any property located within that city, village, or township set forth in the judgment and subject to sale under this section by payment to the foreclosing governmental unit of the minimum bid. If a city, village, or township does not purchase that property, the county in which that property is located may purchase that property under this section by payment to the foreclosing governmental unit of the minimum bid. If property is purchased by a city, village, township, or county under this subsection, the foreclosing governmental unit shall convey the property to the purchasing city, village, township, or county within 30 days. If property purchased by a city, village, township, or county under this subsection is subsequently sold for an amount in excess of the minimum bid and all costs incurred relating to demolition, renovation, improvements, or infrastructure development, the excess amount shall be returned to the delinquent tax property sales proceeds account for the year in which the property was purchased by the city, village, township, or county or, if this state is the foreclosing governmental unit within a county, to the land reutilization fund created under section 78n. Upon the request of the foreclosing governmental unit, a city, village, township, or county that purchased property under this subsection shall provide to the foreclosing governmental unit without cost information regarding any subsequent sale or transfer of the property. This subsection applies to the purchase of property by this state, a city, village, or township, or a county prior to a sale held under subsection (2). (2) Subject to subsection (1), beginning on the third Tuesday in July immediately succeeding the entry of the judgment under section 78k vesting absolute title to tax delinquent property in the foreclosing governmental unit and ending on the immediately succeeding first Tuesday in November, the foreclosing governmental unit, or its authorized agent, at the option of the foreclosing governmental unit, shall hold at least 2 property sales at 1 or more convenient locations at which property foreclosed by the judgment entered under section 78k shall be sold by auction sale, which may include an auction sale conducted via an internet website. Notice of the time and location of the sales shall be published not less than 30 days before each sale in a newspaper published and circulated in the county in which the property is located, if there is one. If no newspaper is published in that county, publication shall be made in a newspaper published and circulated in an adjoining county. Each sale shall be completed before the first Tuesday in November immediately succeeding the entry of judgment under section 78k vesting absolute title to the tax delinquent property in the foreclosing governmental unit. Except as provided in subsection (5), property shall be sold to the person bidding the highest amount above the minimum bid. The foreclosing governmental unit may sell parcels individually or may offer 2 or more parcels for sale as a group. The minimum bid for a group of parcels shall equal the sum of the minimum bid for each parcel included in the group. The foreclosing governmental unit may adopt procedures governing the conduct of the sale and may cancel the sale prior to the issuance of a deed under this subsection if authorized under the procedures. The foreclosing governmental unit may require full payment by cash, certified check, or money order at the close of each day's bidding. Not more than 30 days after the date of a sale under this subsection, the foreclosing governmental unit shall convey the property by deed to the person bidding the highest amount above the minimum bid. The deed shall vest fee simple title to the property in the person bidding the highest amount above the minimum bid, unless the foreclosing governmental unit discovers a defect in the foreclosure of the property under sections 78 to 78l. If this state is the foreclosing governmental unit within a county, the department of natural resources shall conduct the sale of property under this subsection and subsections (4) and (5) on behalf of this state. (3) For sales held under subsection (2), after the conclusion of that sale, and prior to any additional sale held under subsection (2), a city, village, or township may purchase any property not previously sold under subsection (1) or (2) by paying the minimum bid to the foreclosing governmental unit. If a city, village, or Rendered Tuesday, June 3, 2014 Page 1 Michigan Compiled Laws Complete Through PA 129 of 2014 Legislative Council, State of Michigan Courtesy of

37 township does not purchase that property, the county in which that property is located may purchase that property under this section by payment to the foreclosing governmental unit of the minimum bid. (4) If property is purchased by a city, village, township, or county under subsection (3), the foreclosing governmental unit shall convey the property to the purchasing city, village, or township within 30 days. (5) All property subject to sale under subsection (2) shall be offered for sale at not less than 2 sales conducted as required by subsection (2). The final sale held under subsection (2) shall be held not less than 28 days after the previous sale under subsection (2). At the final sale held under subsection (2), the sale is subject to the requirements of subsection (2), except that the minimum bid shall not be required. However, the foreclosing governmental unit may establish a reasonable opening bid at the sale to recover the cost of the sale of the parcel or parcels. (6) On or before December 1 immediately succeeding the date of the sale under subsection (5), a list of all property not previously sold by the foreclosing governmental unit under this section shall be transferred to the clerk of the city, village, or township in which the property is located. The city, village, or township may object in writing to the transfer of 1 or more parcels of property set forth on that list. On or before December 30 immediately succeeding the date of the sale under subsection (5), all property not previously sold by the foreclosing governmental unit under this section shall be transferred to the city, village, or township in which the property is located, except those parcels of property to which the city, village, or township has objected. Property located in both a village and a township may be transferred under this subsection only to a village. The city, village, or township may make the property available under the urban homestead act, 1999 PA 127, MCL to , or for any other lawful purpose. (7) If property not previously sold is not transferred to the city, village, or township in which the property is located under subsection (6), the foreclosing governmental unit shall retain possession of that property. If the foreclosing governmental unit retains possession of the property and the foreclosing governmental unit is this state, title to the property shall vest in the land bank fast track authority created under section 15 of the land bank fast track act, 2003 PA 258, MCL (8) A foreclosing governmental unit shall deposit the proceeds from the sale of property under this section into a restricted account designated as the "delinquent tax property sales proceeds for the year ". The foreclosing governmental unit shall direct the investment of the account. The foreclosing governmental unit shall credit to the account interest and earnings from account investments. Proceeds in that account shall only be used by the foreclosing governmental unit for the following purposes in the following order of priority: (a) The delinquent tax revolving fund shall be reimbursed for all taxes, interest, and fees on all of the property, whether or not all of the property was sold. (b) All costs of the sale of property for the year shall be paid. (c) Any costs of the foreclosure proceedings for the year, including, but not limited to, costs of mailing, publication, personal service, and outside contractors shall be paid. (d) Any costs for the sale of property or foreclosure proceedings for any prior year that have not been paid or reimbursed from that prior year's delinquent tax property sales proceeds shall be paid. (e) Any costs incurred by the foreclosing governmental unit in maintaining property foreclosed under section 78k before the sale under this section shall be paid, including costs of any environmental remediation. (f) If the foreclosing governmental unit is not this state, any of the following: (i) Any costs for the sale of property or foreclosure proceedings for any subsequent year that are not paid or reimbursed from that subsequent year's delinquent tax property sales proceeds shall be paid from any remaining balance in any prior year's delinquent tax property sales proceeds account. (ii) Any costs for the defense of title actions. (iii) Any costs incurred in administering the foreclosure and disposition of property forfeited for delinquent taxes under this act. (g) If the foreclosing governmental unit is this state, any remaining balance shall be transferred to the land reutilization fund created under section 78n. (h) In 2008 and each year after 2008, if the foreclosing governmental unit is not this state, not later than June 30 of the second calendar year after foreclosure, the foreclosing governmental unit shall submit a written report to its board of commissioners identifying any remaining balance and any contingent costs of title or other legal claims described in subdivisions (a) through (f). All or a portion of any remaining balance, less any contingent costs of title or other legal claims described in subdivisions (a) through (f), may subsequently be transferred into the general fund of the county by the board of commissioners. (9) Two or more county treasurers of adjacent counties may elect to hold a joint sale of property as provided in this section. If 2 or more county treasurers elect to hold a joint sale, property may be sold under this section at a location outside of the county in which the property is located. The sale may be conducted by any county treasurer participating in the joint sale. A joint sale held under this subsection may include or be Rendered Tuesday, June 3, 2014 Page 2 Michigan Compiled Laws Complete Through PA 129 of 2014 Legislative Council, State of Michigan Courtesy of

38 an auction sale conducted via an internet website. (10) The foreclosing governmental unit shall record a deed for any property transferred under this section with the county register of deeds. The foreclosing governmental unit may charge a fee in excess of the minimum bid and any sale proceeds for the cost of recording a deed under this subsection. (11) As used in this section, "minimum bid" is the minimum amount established by the foreclosing governmental unit for which property may be sold under this section. The minimum bid shall include all of the following: (a) All delinquent taxes, interest, penalties, and fees due on the property. If a city, village, or township purchases the property, the minimum bid shall not include any taxes levied by that city, village, or township and any interest, penalties, or fees due on those taxes. (b) The expenses of administering the sale, including all preparations for the sale. The foreclosing governmental unit shall estimate the cost of preparing for and administering the annual sale for purposes of prorating the cost for each property included in the sale. (12) For property transferred to this state under subsection (1), a city, village, or township under subsection (6) or retained by a foreclosing governmental unit under subsection (7), all taxes due on the property as of the December 31 following the transfer or retention of the property are canceled effective on that December 31. (13) For property sold under this section, transferred to this state under subsection (1), a city, village, or township under subsection (6), or retained by a foreclosing governmental unit under subsection (7), all liens for costs of demolition, safety repairs, debris removal, or sewer or water charges due on the property as of the December 31 immediately succeeding the sale, transfer, or retention of the property are canceled effective on that December 31. This subsection does not apply to liens recorded by the department of environmental quality under this act or the land bank fast track act, 2003 PA 258, MCL to (14) If property foreclosed under section 78k and held by or under the control of a foreclosing governmental unit is a facility as defined under section 20101(1)(o) of the natural resources and environmental protection act, 1994 PA 451, MCL , prior to the sale or transfer of the property under this section, the property is subject to all of the following: (a) Upon reasonable written notice from the department of environmental quality, the foreclosing governmental unit shall provide access to the department of environmental quality, its employees, contractors, and any other person expressly authorized by the department of environmental quality to conduct response activities at the foreclosed property. Reasonable written notice under this subdivision may include, but is not limited to, notice by electronic mail or facsimile, if the foreclosing governmental unit consents to notice by electronic mail or facsimile prior to the provision of notice by the department of environmental quality. (b) If requested by the department of environmental quality to protect public health, safety, and welfare or the environment, the foreclosing governmental unit shall grant an easement for access to conduct response activities on the foreclosed property as authorized under chapter 7 of the natural resources and environmental protection act, 1994 PA 451, MCL to (c) If requested by the department of environmental quality to protect public health, safety, and welfare or the environment, the foreclosing governmental unit shall place and record deed restrictions on the foreclosed property as authorized under chapter 7 of the natural resources and environmental protection act, 1994 PA 451, MCL to (d) The department of environmental quality may place an environmental lien on the foreclosed property as authorized under section of the natural resources and environmental protection act, 1994 PA 451, MCL (15) If property foreclosed under section 78k and held by or under the control of a foreclosing governmental unit is a facility as defined under section 20101(1)(o) of the natural resources and environmental protection act, 1994 PA 451, MCL , prior to the sale or transfer of the property under this section, the department of environmental quality shall request and the foreclosing governmental unit shall transfer the property to the state land bank fast track authority created under section 15 of the land bank fast track act, 2003 PA 258, MCL , if all of the following apply: (a) The department of environmental quality determines that conditions at a foreclosed property are an acute threat to the public health, safety, and welfare, to the environment, or to other property. (b) The department of environmental quality proposes to undertake or is undertaking state-funded response activities at the property. (c) The department of environmental quality determines that the sale, retention, or transfer of the property other than under this subsection would interfere with response activities by the department of environmental quality. History: Add. 1999, Act 123, Eff. Oct. 1, 1999; Am. 2001, Act 99, Imd. Eff. July 30, 2001; Am. 2003, Act 263, Imd. Eff. Jan. 5, Rendered Tuesday, June 3, 2014 Page 3 Michigan Compiled Laws Complete Through PA 129 of 2014 Legislative Council, State of Michigan Courtesy of

39 2004; Am. 2006, Act 498, Imd. Eff. Dec. 29, Compiler's note: Enacting section 3 of Act 263 of 2003 provides: "Enacting section 3. This amendatory act is not intended to and shall not be construed to modify or alter the ruling of the Michigan supreme court in Smith v Cliffs on the Bay Condominium Association, docket no ' For transfer of certain powers and duties relating to collection of delinquent taxes and forfeiture, foreclosure, and disposition of tax-delinquent or tax-reverted property from department of natural resources to department of treasury by type II transfer, see E.R.O. No , compiled at MCL For transfer of powers and duties of department of environmental quality to department of natural resources and environment, see E.R.O. No , compiled at MCL Rendered Tuesday, June 3, 2014 Page 4 Michigan Compiled Laws Complete Through PA 129 of 2014 Legislative Council, State of Michigan Courtesy of

40 Act No. 126 Public Acts of 2014 Approved by the Governor May 20, 2014 Filed with the Secretary of State May 20, 2014 EFFECTIVE DATE: May 20, 2014 STATE OF MICHIGAN 97TH LEGISLATURE REGULAR SESSION OF 2014 Introduced by Senators Schuitmaker, Robertson, Proos and Jones ENROLLED SENATE BILL No. 562 AN ACT to amend 1893 PA 206, entitled An act to provide for the assessment of rights and interests, including leasehold interests, in property and the levy and collection of taxes on property, and for the collection of taxes levied; making those taxes a lien on the property taxed, establishing and continuing the lien, providing for the sale or forfeiture and conveyance of property delinquent for taxes, and for the inspection and disposition of lands bid off to the state and not redeemed or purchased; to provide for the establishment of a delinquent tax revolving fund and the borrowing of money by counties and the issuance of notes; to define and limit the jurisdiction of the courts in proceedings in connection with property delinquent for taxes; to limit the time within which actions may be brought; to prescribe certain limitations with respect to rates of taxation; to prescribe certain powers and duties of certain officers, departments, agencies, and political subdivisions of this state; to provide for certain reimbursements of certain expenses incurred by units of local government; to provide penalties for the violation of this act; and to repeal acts and parts of acts, by amending section 87b (MCL b), as amended by 2014 PA 33. The People of the State of Michigan enact: Sec. 87b. (1) The county board of commissioners of any county may create a delinquent tax revolving fund that, at the option of the county treasurer, may be designated as the 100% tax payment fund. Upon the establishment of the fund, all delinquent taxes, except taxes on personal property, due and payable to the taxing units in the county, except those units that collect their own delinquent taxes after March 1 by charter or otherwise, are due and payable to the county. The primary obligation to pay to the county the amount of taxes and the interest on the taxes shall rest with the local taxing units and the state for the state education tax under the state education tax act, 1993 PA 331, MCL to If the delinquent taxes that are due and payable to the county are not received by the county for any reason, the county has full right of recourse against the taxing unit or to the state for the state education tax under the state education tax act, 1993 PA 331, MCL to , to recover the amount of the delinquent taxes and interest at the rate of 1% per month or fraction of a month or a lower rate as established by resolution of the board of commissioners until repaid to the county by the taxing unit. However, if the county borrows to provide funds for those payments, the interest rate shall not exceed the highest interest rate paid on that borrowing. If the board of commissioners reduces the interest rate on the recovery of uncollected delinquent taxes as provided in this subsection, that decrease shall not apply to any year s delinquent taxes when borrowing against that year s delinquent taxes occurred before the board of commissioners adopted a resolution to reduce the interest rate on the recovery of uncollected delinquent taxes. Any amount that is due from a local taxing unit or the state for a prior year s uncollected delinquent tax is a lien against any future delinquent tax payments that may be payable to a local taxing unit or the state and the lien shall be satisfied by offsetting the amount due to the county from the local taxing unit or the state when distributions from the delinquent tax revolving fund are made by the county to the local taxing unit or the state in a subsequent year. A resolution or agreement previously executed or adopted to this effect is validated and confirmed. ESB 562 (64)

41 For delinquent state education taxes under the state education tax act, 1993 PA 331, MCL to , the county may offset uncollectible delinquent taxes against collections of the state education tax under the state education tax act, 1993 PA 331, MCL to , received by the county and owed to this state under this act. The fund shall be segregated into separate funds or accounts for each year s delinquent taxes. (2) If a delinquent tax revolving fund is established, the county treasurer shall be the agent for the county and, without further action by the county board of commissioners, may enter into contracts with other municipalities, this state, or private persons, firms, or corporations in connection with any transaction relating to the fund or any borrowing made by the county pursuant to section 87c or 87d, including all services necessary to complete this borrowing. (3) The county treasurer shall pay from the fund any or all delinquent taxes that are due and payable to the county and any school district, intermediate school district, community college district, city, township, special assessment district, this state, or any other political unit for which delinquent tax payments are due within 20 days after sufficient funds are deposited within the delinquent tax revolving fund or, if the county treasurer is treasurer for a county with a population greater than 1,500,000 persons, within 30 days after sufficient funds are deposited within the delinquent tax revolving fund. In a county with a delinquent tax revolving fund where the county does not borrow pursuant to section 87c or 87d, if the county treasurer does not make payment of the delinquent taxes to the local units within 10 days after the completion of county settlement with all local units under section 55, the county shall pay interest on the unpaid delinquent taxes from the date of actual county settlement at the rate of 12% per annum for the number of days involved. (4) Except as provided in subsection (5), the county treasurer shall pay from the fund directly to a school district its share of the fund when a single school district exists within a political unit. (5) If a local taxing unit has borrowed money in anticipation of collecting taxes for any school district or other municipality and the county treasurer has been so notified in writing, the county treasurer shall pay to the local taxing unit the shares of the fund for that school district or municipality. For purposes of this subsection, local taxing unit means a city, village, or township. (6) The interest charges, penalties, and county property tax administration fee rates established under this act shall remain in effect and shall be payable to the county delinquent tax revolving fund. (7) Any surplus in the fund may be transferred to the county general fund by appropriate action of the county board of commissioners. (8) A county board of commissioners may borrow money to create a delinquent tax revolving fund as provided in section 87c or 87d, or both. (9) This section shall not supersede section 87 but is an alternative method for paying delinquent taxes to local units. However, where this section is used by a county, section 87 shall not be used. This act is ordered to take immediate effect. Secretary of the Senate Clerk of the House of Representatives Approved Governor 2 ESB 562

42 THE GENERAL PROPERTY TAX ACT (EXCERPT) Act 206 of c Delinquent tax revolving fund; resolution authorizing borrowing and issuance of notes; amounts; limitation; pledge of delinquent taxes; segregated fund or account; disposition of note proceeds; requirements as to notes and resolution authorizing issuance; sale and award of notes; full faith and credit; designation as general obligation tax notes; provisions; payment and registration of notes; county under home rule charter; notes secured under trust or escrow agreement; exemption from revised municipal finance act. Sec. 87c. (1) A county that has created a fund pursuant to section 87b by resolution of its board of commissioners and without a vote of its electors may borrow money and issue its revolving fund notes to establish or continue, in whole or in part, the delinquent tax revolving fund and to pay the expenses of the borrowing. (2) If a fund is created and a county determines to borrow pursuant to this section, the county treasurer shall be the agent for the county in connection with all transactions relative to the fund. (3) If provided by separate resolution of the county board of commissioners for any year in which a county determines to borrow for the purposes provided in this section and subject to subsection (4), there shall be payable to the county treasurer's office from the surplus in the fund an amount equal to the following for delinquent tax administration expenses: (a) For any delinquent tax on which the interest rate before sale exceeds 1% per month, 1/27 of the interest collected per month. (b) For any delinquent tax on which the interest rate before sale is 1% per month or less, 3/64 of the interest collected each month. (c) Notwithstanding any other provision of this act or other law to the contrary, a county shall not pay any sums due to a county treasurer for services as agent for that county that have not been paid prior to the effective date of the amendatory act that added this subdivision. (4) The total sum payable under subsection (3) shall not exceed 5% of the total budget of the treasurer's office for that year. (5) In the resolution authorizing the borrowing and issuance of notes, the delinquent taxes from which the borrowing is to be repaid shall be pledged to the payment of the principal and interest of the notes, and the proceeds of the collection of the delinquent taxes pledged and the interest on the proceeds shall be placed in a segregated fund or account and shall not be used for any other purpose until the notes are paid in full, including interest. The segregated fund or account shall be established as a part of the delinquent tax revolving fund and shall be accounted for separately on the books of the county treasurer. (6) The proceeds of the notes shall be placed in and used as the whole or part of the fund established pursuant to section 87b, after the expenses of borrowing have been deducted. (7) The notes issued pursuant to this section shall comply with all of the following: (a) Be in an aggregate principal amount not exceeding the aggregate amount of the delinquent taxes pledged, exclusive of interest. (b) Bear interest not exceeding 14.5% per annum. (c) Be in those denominations, and mature on the date not exceeding 6 years after their date of issue, as the board of commissioners by its resolution determines. (d) May be issued at an original issue discount not to exceed 2% of the face value of the note issued. (8) The resolution authorizing issuance of the notes may provide that all or part of the notes shall be subject to prepayment and, if subject to prepayment, shall provide the amount of call premium payable, if any, the number of days' notice of prepayment that shall be given, and whether the notice shall be written or published, or both. Otherwise, the notes shall not be subject to prepayment. (9) The sale and award of notes shall be conducted and made by the treasurer of the county issuing them at a public or private sale. If a public sale is held, the notes shall be advertised for sale once not less than 5 days before sale in a publication printed in the English language and circulated in this state that carries as a part of its regular service notices of the sales of municipal bonds and that has been designated in the resolution as a publication complying with these qualifications. The notice of sale shall be in the form designated by the county treasurer. The notes may be sold subject to the option of the county treasurer and the county treasurer may withhold a part of the issue from delivery if, in his or her opinion, sufficient funds are available before delivery of the notes to make full delivery unnecessary to the purposes of the borrowing. (10) The notes are full faith and credit obligations of the county issuing them and, subject to section 87d, if Rendered Tuesday, June 3, 2014 Page 1 Michigan Compiled Laws Complete Through PA 129 of 2014 Legislative Council, State of Michigan Courtesy of

43 the proceeds of the taxes pledged are not sufficient to pay the principal and interest of the notes when due, the county shall impose a general ad valorem tax without limitation as to rate or amount on all taxable property in the county to pay the principal and interest and may reimburse itself from delinquent taxes collected. (11) If the resolution provides and subject to section 87d, the notes may be designated general obligation tax notes. (12) Notwithstanding any other provisions of this section and section 87d, all the following apply: (a) Interest on the notes may be payable at any time provided in the resolution, and may be set, reset, or calculated as provided in the resolution. (b) Notes issued under this section may have 1 or more of the following attributes: (i) Made the subject of a put or agreement to repurchase by the county treasurer. (ii) Secured by a letter of credit issued by a bank under an agreement entered into by the county treasurer or by any other collateral that the resolution may authorize. (iii) Callable as set forth in the resolution. (iv) Reissued by the county treasurer once reacquired by the county treasurer under any put or repurchase agreement. (c) The county treasurer may by order do 1 or more of the following: (i) Authorize the issuance of renewal notes. (ii) Refund or refund in advance notes by the issuance of new notes, whether the notes to be refunded have or have not matured. (iii) Issue notes partly to refund notes and partly for any other purposes authorized by this act. (iv) Buy and sell any notes issued under this section. (d) Renewal, refunding, or advance refunding notes shall comply with all of the following: (i) Shall be sold and the proceeds applied to the purchase redemption or payment of the notes to be renewed or refunded. (ii) Shall not be subject to the revised municipal finance act, 2001 PA 34, MCL to (iii) May be sold or resold at a public or private sale. (iv) May pledge the delinquent taxes pledged in the issue to be refunded in advance after the original issue is defeased by the advance refunding issue. (e) Notes may be issued secured by a second lien on delinquent taxes, interest, and county property tax administration fees already the subject of a first lien because of the issuance of a prior note issue. (f) Any notes issued may be secured in whole or in part under a trust or escrow agreement, which agreement may also govern the issuance of renewal notes, refunding notes, and advance refunding notes. The agreement may authorize the trustee or escrow agent to make investments of any type authorized in the agreement. (13) The notes issued under this section and interest on the notes shall be payable in lawful money of the United States of America and shall be exempt from all taxation by this state or a taxing authority in this state. (14) The notes issued under this section may be made payable at a bank or trust company, or may be made registrable as to principal or as to principal and interest under the terms and conditions specified in the authorizing resolution or by the county treasurer when awarding the notes. (15) Notwithstanding 1966 PA 293, MCL to , a county operating under a home rule charter shall not be restricted by the provisions of the home rule charter in connection with the powers granted to the county to issue notes by sections 87b and 87d and this section. The treasurer of a county described in this subsection, notwithstanding any charter provisions to the contrary, shall have all of the powers granted to county treasurers by sections 87b and 87d and this section. (16) If the treasurer authorizes on the order authorizing the notes, any notes issued may be secured in whole or in part under a trust or escrow agreement. That agreement may authorize the trustee or escrow agent to make investments of any type authorized in the agreement. (17) Notes issued under this act are exempt from the revised municipal finance act, 2001 PA 34, MCL to History: Add. 1975, Act 334, Imd. Eff. Jan. 12, 1976; Am. 1980, Act 48, Imd. Eff. Mar. 21, 1980; Am. 1981, Act 162, Eff. Dec. 1, 1981; Am. 1988, Act 450, Imd. Eff. Dec. 27, 1988; Am. 1999, Act 123, Eff. Oct. 1, 1999; Am. 2002, Act 165, Imd. Eff. Apr. 11, 2002; Am. 2012, Act 431, Imd. Eff. Dec. 21, Popular name: Act 206 Rendered Tuesday, June 3, 2014 Page 2 Michigan Compiled Laws Complete Through PA 129 of 2014 Legislative Council, State of Michigan Courtesy of

44 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 close print view Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 February 8, 2001 To: County Treasurers, Controllers, Board of Auditors, Board of Commissioners From: Richard L. Baldermann, CPA, CGFM Administrator, Local Audit and Finance Division Bureau of Local Government Services RE: Accounting for Delinquent Tax Revolving Funds (100% Tax Payment Funds) The county treasurer is required by the General Property Tax Law (Act 206 of 1893 ( page=getobject&objname=mcl-act-206-of-1893&queryid=175275&highlight=), as amended, Michigan Compiled Law (MCL) to ) to collect delinquent real property taxes levied by all local units of government within the county. Public Act 123 of 1999 amended the General Property Tax Law to subject tax delinquent property to forfeiture, foreclosure, and sale over a three-year period. Public Act 123 of 1999 applies to taxes levied after December 31, All property returned for delinquent taxes, and upon which taxes, interest, penalties, and fees remain unpaid after the property is returned as delinquent to the county treasurers, is subject to forfeiture, foreclosure, and sale for the enforcement and collection of the delinquent taxes. The act reformed the tax reversion process by decreasing the process to three years and amended the May Tax Sale process. It established the primary responsibility for administration with the foreclosing governmental units. Under the act, "foreclosing governmental unit" is defined to mean a county treasurer or the state, if the county has elected not to handle the process. The act added several new fees as a result of changes in the delinquent property tax process. How the fees are handled, in most cases, depends on whom the "foreclosing governmental unit" (FGU) is. However, the accounting for the delinquent tax revolving funds did not change significantly with the enactment of PA 123 of 1999 and in most situations Numbered Letter 7-88 issued August 17, 1988 by Treasury still apply. This letter discusses the accounting procedures for recording transactions when the county board of commissioners authorizes the creation of a delinquent tax revolving fund taking into consideration the amendments associated with PA 123 of The General Property Tax Law authorizes the county treasurer to "buy" any or all delinquent real property taxes and special assessments owed to the county and local units of government in the county. Under MCL Section b-d, the county treasurer pays the local unit treasurer in full for delinquent real property taxes owed according to the delinquent tax roll "returned" to the treasurer. Taxes eligible for payment under this section are:...all delinquent taxes, except taxes on personal property, due and payable to the taxing units in the county, except those units which collect their own delinquent taxes after March 1...(MCLA b(1)) The county treasurer shall pay from the fund any or all delinquent taxes which are due and payable to the county and any school district, intermediate school district, community college district, city, township special assessment district, or any other political unit...(mcla b(3)) Pursuant to Michigan Compiled Laws b, the board of commissioners may establish the Delinquent Tax Revolving Fund (DTRF). This fund must be segregated into separate funds or accounts for each year s delinquent taxes. The board must adopt a resolution establishing the separate fund or accounts for each tax year. Each year s separate fund or accounts continue in existence until the delinquent taxes for that tax year have been collected and the county board of commissioners have transferred any surplus to the county s general fund, in accordance with MCL section b. (7). The county retains all delinquent taxes, interest and penalties collected to offset its tax collection costs. The surplus earned, after any borrowing is paid off, is under the control of the board of commissioners. The surplus may be accumulated to reduce or avoid future borrowings, or expended for other purposes as authorized by the board of commissioners. This section allows local units and county funds to receive full payment for all delinquent real property taxes due them within 20 days (30 days if the county population exceeds 1,500,000) after sufficient money is deposited into the Delinquent Tax Revolving Fund. The county treasurer (hereafter referred to as the treasurer) also avoids the complications of having to make monthly payments to local units for their share of collections of delinquent taxes and related interest (MCL ). As further described in the "Uniform Chart of Accounts for Counties and Local Units of Government in Michigan," a Delinquent Tax Revolving Fund (DTRF) "accounts for money advanced by a county to pay other local taxing units and various county funds for their delinquent taxes." Delinquent property taxes are accounted for by the year that the delinquent taxes become delinquent in a fund segregated for the individual year's delinquent tax collections. The fund is called the Delinquent Tax Revolving Fund referred to as DTRF throughout this letter. DTRF(s) must clearly indicate the tax delinquency year, either by fund number or, if only one DTRF is used, by separate activity numbers. The three fund/activity structure options follow. Option "a" is used in this letter. The yearly suffix number will correspond to the year of the general obligation limited tax notes, if notes are issued. a) A series of DTRF's including a control DTRF, number 616, plus a separate DTRF for each year for which delinquent taxes are being collected by the treasurer. Each year's DTRF should be numbered to reflect the year of delinquency, i.e., fund would account for taxes that become delinquent March 1, When notes reach final maturity and payment is made, and the tax sale for properties with unpaid delinquent taxes has been held, that year's DTRF may be closed to the General Fund. The board of commissioners could then transfer the surplus to the control DTRF for use in the purchase of future delinquent taxes. b) A series of DTRF's as in option "a," including a control DTRF, number 615, and funds for each year numbered The last digit would correspond to the last digit of the delinquent tax year (625 for taxes delinquent as of March 1, 1985). c) A single DTRF, number 616, may be used. The accounts related to each tax levy are then designated by a unique activity number, such as "085" for taxes that become delinquent March 1, Section 60 of the General Property Tax Law (which was added as results of PA 123 of 1999 amendments) authorizes the county treasurer to cancel the /11

45 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 tax lien sale and the 2001 tax lien sale respectively, if there are no county delinquent tax revolving fund notes or bonds outstanding. If the county treasurer canceled the 2000 tax-lien sale or the 2001 tax-lien sale, then the 1997 delinquent taxes or 1998 delinquent taxes are subject to forfeiture and foreclosure. It provides in Section 60a (which was also added as results of PA 123 of 1999 amendments) that if a tax lien sale is canceled, delinquent taxes on the property will be subject to a 4 percent county property tax administration fee. Non-compounded interest at a rate of 1 percent per month can be added computed from the March 1 when the taxes were returned delinquent. All activity, prior to the property tax foreclosure process under the regular delinquent property tax collection process, should be accounted for under activity number 253. For example, interest and penalties on taxes go to activity number 253 as in the past. All revenue and expenditures after the property tax foreclosure process goes into activity number 254 within the delinquent tax revolving fund. On March 1, forfeiture date certain, MCL g requires that the following fees may be charged and collected by the county treasurer prior to redemption of the parcel from forfeiture and subsequent foreclosure. On March 1, in each tax year, certified abandoned property and property that is delinquent for taxes, interest, penalties and fees for the immediately preceding 12 months or more is forfeited to the county treasurer for the total amount of those unpaid delinquent taxes, interest, fees and penalties. If property is forfeited to a county treasurer under this subsection, the county treasurer does not have a right to possession of the property until 21 days after a judgment of foreclosure is entered under 78k. If property is forfeited to a county treasurer under this subsection, the county treasurer shall add $175 fee, as adjusted under section 78p, to each parcel of property for which those delinquent taxes, interest, penalties and fees remain unpaid. Property forfeited to the county treasurer under subsection (1) may be redeemed at any time before 21 days after the entry of judgment foreclosing the property under section 78k upon payment to the county treasurer of all of the following: (a) The total amount of unpaid delinquent taxes, interest, penalties and fees for which the property was forfeited. (b) In addition to the interest calculated under section 60a(1) or (2) and 78(3) additional interest computed at the non-compounded rate of ½% per month or fraction of a month on the taxes that were originally returned as delinquent computed from March 1 preceding the forfeiture. (c) All recording fees and all fees for service of process or notice. PA 123 of 1999 allows the County Treasurer (or State if it s the FGU) to sell the forfeited property to recover the amount owed for delinquent property taxes if the property is not redeemed. The foreclosing governmental unit must deposit the proceeds from the sale of tax delinquent property into a "restricted account" created for each year a property sale is held. We recommend that the County establish the restricted accounts within the Delinquent Property Tax Revolving Fund based on the year of the sale. Activity # 254--Delinquent Tax Property Sales should be used to record the sale proceeds and the authorized expenditures from the proceeds. When the forfeited property is sold, the proceeds from the sale should be recorded in the Delinquent Property Tax Revolving Fund under revenue account number 642 "Charge for Services-Sales." The proceeds in the fund can only be used for the following expenditures. 1. The delinquent tax revolving fund shall be reimbursed for all taxes, interest, and fees on all of the property whether or not it was sold. Foreclosed property reimbursement Reimbursement of all unpaid base tax, interest, administration fee paid to the local units of government at settlement, pre-forfeiture notices mailing fees, certified mailing fee, publication costs, pre-foreclosure personal property visits, certified mailing, publication costs, and recording fees that have not been reimbursed through redemption and were originally expended from the delinquent tax revolving fund to the last day prior to all redemption rights being extinguished. 2. All costs of the sale of property for the year shall be paid. Foreclosed property auction sales cost examples Contracting costs for hiring sales auctioneer, property sale publications, property sale signs, supplies and materials necessary for conducting the sales, etc. 3. Any costs of the foreclosure proceedings for the year, including costs of mailing, publication, personal service, and outside contractors, shall be paid. Foreclosure proceeding cost examples Foreclosure petition filing fees and any subsequent court motion filing fees; costs of outside title search contractors; process service contractors; other contractors; and any other costs that were originally expended from the county s general fund or another source of revenue other than the delinquent tax revolving fund and not reimbursed to the last day prior to all redemption rights being extinguished. 4. Any costs for the sale of property or foreclosure proceedings for any prior year that have been paid or reimbursed from that prior year s property sales proceeds shall be paid. 5. Any costs incurred by the foreclosing governmental unit in maintaining foreclosed property before the sale, including costs of any environmental remediation, shall be paid. Property maintenance cost examples Boarding up empty dwellings, disconnecting utilities, environmental clean-up costs, posting property as no trespassing, mowing grass, evicting tenants, etc. 6. If the foreclosing unit is the State, any remaining balance shall be transferred to the Land Reutilization Fund. The county treasurer must direct the investment of surplus funds and credit the interest and earnings from the investments to the restricted activity. The revenue and expenditures in activity 254 must be closed to a separate restricted earnings account in the fund equity within the Delinquent Tax Revolving Fund. JOURNAL ENTRIES FOR TRANSACTIONS INVOLVING DELINQUENT PROPERTY TAXES I. PROPERTY TAXES ARE LEVIED AND COLLECTED PRIOR TO BECOMING DELINQUENT The county treasurer records all property taxes from county millage(s). Collections are termed "current levy" from December 1 until March 1 and "delinquent taxes" beginning March 1. Records county portion of taxes levied on December 1, 20X1 in each fund for which millage has been levied. In accordance with the modified accrual basis of accounting, the receivable if offset by deferred revenue. Some adjustments may be necessary due to * Taxes Receivable --Real Property --Current Levy * Deferred Revenue Credit 2/11 Debit

46 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 December Board of Review or Tax Tribunal actions After the local unit treasurer collects the property tax and pays the county treasurer, the collection is recorded in the Trust and Agency Fund as undistributed current taxes until March 1, 20X2. Property tax collections are transferred to the General Fund and other funds with voted millage after December 31. The balance will then be $0.00. When paying other units for taxes collected, only the entry in Fund 701 is needed. Current tax levy receivable and deferred revenue balances are reduced when money is receipted in as Current Property Taxes-- Allocated (previous entry). NOTE: An entry is contained in III, which fully eliminates the receivable and deferred revenue account balances. * Use the number for the fund(s) receiving property taxes. --Real Property --Current Levy Cash Debit Undistributed Tax Collections Credit Undistributed Tax Collections Debit Cash Credit * Cash Debit * Current Property Taxes --Allocated * Deferred Revenue --Real Property --Current Levy * Taxes Receivable --Real Property --Current Levy II. FUNDS ARE PROVIDED TO PURCHASE DELINQUENT TAXES (3 ALTERNATIVES) Credit Debit Credit BORROWING ALTERNATIVE A: from General Fund General Fund advances cash to the Delinquent Tax Revolving Fund (DTRF) or, alternatively, the 20X1 DTRF, 616.X Long-Term Advances to Other Funds Debit Fund Balance Debit Fund Balance Reserved for Advances to Other Funds Credit Cash Credit Advance is recorded in the DTRF (or 616.X1) Cash Debit DTRF (or 616.X1) repays General Fund Advances from Other Funds Credit (reverse of two preceding entries) BORROWING ALTERNATIVE B: from Delinquent Tax Revolving Fund DTRF (or control DTRF or prior year DTRF surplus) advances funds to purchase delinquent taxes to 616.X Long-Term Advances to Other Funds BORROWING ALTERNATIVE C: from General Obligation Limited Tax Notes (GOLT) The GOLT Notes and Notes Proceeds are recorded in 616.X1. Account 007, Cash--Note Payment Reserve, records the "Note Reserve Fund" required in some note issues. The entry to accounts 001 and 007 is the note proceeds net of any discount and/or costs and fees. At the end of the year, the amount of principal due with the following year is transferred from Long Term to Current Notes Payable. Debit Cash Credit 616.X Cash Debit 616.X Advances from Other Funds Credit 616.X Cash (unreserved portion) Debit 616.X Cash--Note Payment Reserve Debit 616.X Borrowing Costs and Fiscal Agent Fees Debit 616.X Unamortized Note Discount Debit 616.X Notes Payable--Current Credit 616.X Notes Payable--Long Term Credit 616.X Notes Payable--Long Term Debit 616.X Notes Payable--Current Credit Payment of interest and/or principal is made. 616.X Notes Payable--Current Debit 616.X Treasurer's Agent Salary Debit 616.X Interest on Note Payable Debit 616.X Note Borrowing Costs and Fiscal Agent Fees Debit 616.X Cash Credit The final payment of principal is made. 616.X Notes Payable--Current Debit III. DELINQUENT PROPERTY TAXES PURCHASED FROM UNITS (March settlement) 616.X Cash--Note Payment Reserve Credit During March 20X2, each unit settles with the treasurer. When funds are on hand, the treasurer writes a check on the DTRF in the amount of its delinquent taxes as recorded 616.X XX Taxes Receivable --Delinquent Real Debit 3/11

47 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 in its delinquent tax roll (MCL , ). 616.X Cash Credit IV. PROPERTY OWNERS PAY DELINQUENT TAXES From March 1, 20X2, all taxes are paid to the treasurer along with interest and property tax administration fee (PTAF). Expense of sale (accounts and ) is also charged beginning October 1, 19X4 (MCL , , b(6)). 616.X Cash Debit 616.X XX 616.X Taxes Receivable--Delinquent Real Due to State of Michigan --State Tax Credit Credit 616.X Interest on Taxes Credit 616.X Property Tax Administration Fee (borrowing) OR Credit 616.X Due to General Fund --Property Tax Administration Fee (no borrowing) Credit 616.X Due to General Fund--County Expense of Sale Credit To simplify receipting, the Expense of Sale (account 449) is shown above as a 616.X1 Fund Payable (account ) during the year, then at year-end the balance in account is transferred to the General Fund. If there is no borrowing, the PTAF (account ) is likewise transferred to the General Fund 616.X X Due to General Fund --Property Tax Administration Fee (no borrowing) Due to General Fund--County Expense of Sale Debit Debit 616.X Cash Credit Cash Debit Property Tax Administration Fee (no borrowing) Credit County Expense of Sale Credit A portion of interest included in delinquent tax collections may be used to offset DTRF costs; and the treasurer may be paid an agent fee (MCL c(3)) subject to subsection (16). The board of commissioners must approve requisitions of supplies and materials prior to the ordering and payment of agent fees by resolution for the tax year (MCLA c(3)). If the General Fund provides salaries, supplies and/or materials for delinquent tax collections, the DTRF may reimburse the General Fund. A county treasurer elected or appointed to office after the effective date of PA 123 (10/1/99) is not eligible for payment for services as agent for the county. 616.X Treasurer's Agent Fee Debit 616.X Employer's Social Security Debit 616.X Office Supplies Debit 616.X Office Equipment Debit 616.X Cash Credit ALTERNATIVE: Set up a payable for payment to the treasurer at a later date. If the year's DTRF is closed to the control DTRF, this payable would be transferred to the control DTRF. 616.X Treasurer's Agent Fee Debit 616.X Treasurer's Agent Fee Payable Credit The board of commissioners may transfer a DTRF surplus to the General Fund (MCL b(7)). If Borrowing Alternative C is used, notes and interest must be fully retired before any surplus is transferred. 616.X Transfer Out Debit 616.X Cash Credit Cash Debit Transfer In Credit V. IF MAY TAX SALE IS HELD; OWNERS HAVE ONE YEAR TO REDEEM PROPERTY (Under Old Process Prior to PA 123 of Effective December 31, 2003, the May tax sale process by the county treasurer as defined in MCL is repealed by PA 123 of Effective December 31, 2006, the process to purchase state bids after the tax sale as defined by MCL is repealed.) At the May tax sale, property may be purchased for delinquent taxes, subject to redemption by the original (The entry for purchases or for owner redemption of lands bid to the state in the 6 months following the sale is the same as in IV, except that interest is computed at 1.25% per month on 4/11

48 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 owner. On the first Tuesday of May 19X5, lands delinquent for taxes are sold. Unsold properties are bid to the state (MCL , and ). the sale price from May 1, 19X5 to April 20, 19X6 if purchasing (MCL ), or to before the next sale if redeeming (per MCL )). VI. MAY TAX SALE CANCELED UNDER PA 123 OF 1999 (per example on pg. 10 and 11) The May tax sale was repealed by Public Act 123 of Unsold properties are no longer bid to the State of Michigan. (MCL , and are repealed effective December 2003 and 2006, respectably) Section 60 authorizes the treasurer to cancel the 2000 tax lien sale and the 2001 tax lien sale. If both years are canceled, 1997 and 1998 delinquent taxes will be subject to forfeiture and foreclosure under PA 123 of Although PA 123 repealed the May Tax Sale, property still may be sold for the delinquent taxes through forfeiture and subsequent foreclosure by the foreclosing governmental unit. The entry for the redemption of property is similar as noted above and in IV. However there will be additional fees. The statute provides that forfeited property may be redeemed at any time before 21 days after entry of a foreclosure disclosure judgment and is recorded as revenue to the FGU. The person with a legal interest in the property must pay all of the following: (1) total of unpaid taxes, interest, penalties and fees for which the property was forfeited, (2) additional interest at a non-compounded rate of 0.5 percent per month (3) all recording, service of process, and notice fees. Accounting for the 1997 delinquent taxes redemption would be recorded the same as in prior years noted in Numbered Letter 7-88 issued August 17, 1988 by Treasury within the Delinquent Tax Revolving Fund Cash XX Taxes Receivable --Delinquent Real Property Tax Administration Fee (borrowing) or Due to General Fund--Property Tax Administration (no borrowing) Due to General Fund--County Expense of Sale Due to State of Michigan State Tax Interest on Taxes Accounting for the 1999 delinquent taxes redemption would be recorded as follows with the new fees under Act Cash XX Taxes Receivable --Delinquent Real Property Tax Administration Fee (borrowing) or Due to General Fund --Property Tax Administration (no borrowing) Interest on Taxes Title Search Fee (new) Due State of Michigan Title Search Fees (County Opts Out) Forfeiture Certificate Recording Fee Receivable Due to County Register of Deeds Redemption Certificate Fee Notice Fees-Mail (new) October 1 Fee (new) Note: Forfeited property is not redeemed from forfeiture and subsequent foreclosure unless the total amount of all taxing years are paid in full. That includes any additional costs and interest non-compounded at 1.5% per month on the base tax for each delinquent tax year added from March 1 to date that all redemption rights expire. All redemption rights expire if the redemption is not made within 21 days after the foreclosure judgment is entered on the property and no appeal is filed. Partial payments can be made but the property is not redeemed from forfeiture and subsequent foreclosure until each forfeited parcel has a zero balance due on all tax years. Given these statutory provisions of PA 123 of 1999, the costs of redemption from forfeiture and subsequent foreclosure for the March 1, 2001 forfeiture year, is shown in the example noted based on the following assumption. Assumption: one parcel with 1997 and 1999 tax years with unpaid balances for each year on March 1, Both tax years forfeited must be paid within 21 days after the foreclosure judgment is entered in order to redeem the parcel from forfeiture and succeeding foreclosure. Example: February and March Redemption Cost Calculation plus Accounting for Fees Assume that the property owner paid the delinquent 1997 and 1999 taxes subject to forfeiture and the 2000 tax sale was cancelled. The following accounting entries would be made with the new fees as required by Act 123 of 1999 based on the following information Tax Years Unpaid Base Tax 4% Administration Fee (not less than $1.00) $ $ % Interest Per Month (36 mo) (12 mo) 5/11

49 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 $10 Expense of Sale $15 October Fee February Total Due $ $ Computation of the Amount Due on March 1, Tax years Forfeited February Delinquent Amount Due $ $ Add February delinquent due plus additional fees added on March 1, forfeiture date Additional.5% Interest Added to the Prior 12 Months $6.00 (12 mo) $ 7.20 (12 mo) 1.5% Interest for March 1.50 (1 mo) 1.80 (1 mo) Title Search Fee Forfeiture Certificate Recording Fee(1) Redemption Certificate Recording Fee(2) Cost of June Notice (3) Cost of September Notice (4) Cost of February Publication (5) Total Additional Fees Added on March 1 Forfeiture Date $7.50 $ (1) Forfeiture Certificate Recording fees are $9.00 first page and $2.00 each additional page unless the State and Register of Deeds allows recording one generic Forfeiture Certificate with an appended list of parcels forfeited. If an appended list is approved, the recording fee for each parcel would be calculated as (cost of recording/number = cost of recording each parcel) (2) Redemption Certificate Recording fee is $9.00. Each parcel shall have a separate Redemption Certificate recorded. Notice Fee Example (3) June notice stamps and envelopes = ($1,500/800 parcels) $1.88 per parcel (4) September notice stamps and envelopes = ($1,200/500 parcels) $2.40 per parcel (5) Optional pre-forfeiture publication = ($850/300 parcels) $2.83 per parcel Redemption Amount Due March 1, 2001 = $ Section 78g(3)(c) states: All recording fees and all fees for service of process or notice. The costs of the June and September notices and optional preforfeiture certified mail publication notice may be added to the 1999 tax year redemption under 78g(3)(c). Costs for the 1999 parcel for redemption could also include: (6) FGU show cause hearing notice certified mailing costs and circuit court foreclosure hearing costs (Section 78i(2)) (7) Personal property visit process service costs for occupant/posting notice of FCU show cause hearing and circuit court hearing (Section 78i(3)(a-d) assuming both notices served on one visit. (8) Publication costs for service of process for FGU show cause hearing for persons entitled to receive notice and whose address can not be ascertained or unable to serve those persons (78i(6)). (9) $9 recording fee for FGU show cause hearing and circuit court hearing notice proof of service on persons entitled to receive notice (78 i (4)) assuming both notices were served at the same time and 1 page proof of notice recorded. (10) $9 recording fee for service of notice of the FGU show cause hearing and circuit court foreclosure hearing on occupants of the properties subject to foreclosure (78 i (3)(4)) assuming both notices served at the same time and 1 page proof of notice recorded. (11) $9 and $2 per each additional recording fee for publication of FCU show cause hearing and circuit court hearing notice publication (78 i (6)) assuming notices with an appended list of properties to equal more than a one page recording. 6/11

50 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 VII. AFTER THE MAY TAX SALE, UNPAID DELINQUENT TAXES ARE CHARGED BACK TO LOCAL UNITS. THE COUNTY POLICY WILL DETERMINE WHETHER THE CHARGE BACKS OCCUR IMMEDIATELY AFTER MAY TAX SALE OR AT A LATER DATE. TAX TRIBUNAL ADJUSTMENTS ARE LIKEWISE CHARGED BACK. (Under Old Process Prior to PA 123 of 1999) Because unpaid property taxes are ultimately the liability of the local taxing units (MCL b(1)), the treasurer charges taxes unpaid by first recording the liability Payment of the liability by the levying unit is recorded. Alternatively, at the next March settlement the treasurer may deduct the amount due from the payment to the local treasurer. VIII. DTRF 616.X1 IS CLOSED TO THE GENERAL FUND The DTRF 616.X1 is closed out on December 31, 19X5. Where tax anticipation notes have been issued, all principal and interest debt must be retired. The accumulated surplus in Fund 616 belongs, according to statute, to the General Fund. This money should be transferred to the General Fund. Good and consistent management would require that the surplus be reserved for the purchase of additional delinquent taxes, or immediately advanced to another DTRF for the purchase. IX. ENTRIES TO RECORD THE COLLECTION OF TAXES 616.X XX Due from Other Units of Government Debit 616.X Due from Other Funds Debit 616.X XX Taxes Receivable--Delinquent Real Credit 616.X Cash Debit 616.X XX Due from Other Units of Government Credit 616.X Due from Other Funds Credit 616.X Transfer Out Debit 616.X Cash Credit 616.X XX Taxes Receivable--Delinquent Real Credit Cash Debit Transfer In Credit END OF YEAR 616.X Retained Earnings Debit 616.X to X to 999 All Revenue and Transfer In Accounts All Expenditure and Transfer Out Accounts Debit Credit Entries to record the collection of taxes after chargeback to the tax assessing units (delinquents or redemptions) include: 616.X Cash Debit 616.X Due to Other Funds Credit 616.X Due to Cities Credit 616.X Due to Schools Credit 616.X Due to Townships Credit 616.X Due to State of Michigan --State Tax Credit X. ENTRIES TO RECORD THE SALE OF FORFEITED PROPERTY 616.X Revenue--Interest Credit 616.X Property Tax Administration Fee Credit Entries to record the sale of forfeited property for the unpaid 616.X Cash Debit taxes, interest and fees if the property is not redeemed. The proceeds from the sale must be deposited into a "restricted account" created for each year a property sale is held. The restricted account should be established in the Delinquent Property Tax Revolving Fund based on the year of the sale. Activity #254 should be used to account for the sale proceeds and the authorized expenditures from the proceeds. 616.X Charge for Services--Sales Credit CHART OF ACCOUNTS USED IN ACCOUNTING FOR DELINQUENT TAXES The following account numbers are in accordance with the Uniform Chart of Accounts (UCA), Michigan Department of Treasury, Where the UCA does not specify an account, an appropriate open account number has been recommended. Further information on the purpose of these accounts is provided below and/or in the UCA, as referenced. DELINQUENT TAX REVOLVING FUNDS (616.XX) ASSET ACCOUNTS REFERENCE 001 Cash a, UCA 007 Cash--Note Payment Reserve a 026.XX Taxes Receivable--Delinquent Real b, UCA 081.XX Due from Other Units of Government c, UCA 084 Due from Other Funds UCA Forfeiture Certificate Recording Fee Receivable d 129 Unamortized Note Discount UCA 7/11

51 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of Office Equipment UCA 198 Long-Term Advances to Other Funds UCA LIABILITY ACCOUNTS 204 Treasurer's Agent Fee Payable e 207 Notes Payable--Current UCA 214 Due to Other Funds UCA Due to General Fund--Property Tax Administration Fee Due to General Fund--County Expense of Sale m, UCA 221 Due to Cities UCA 222 Due to County--R of D Redemption Certificate Fee f 225 Due to Schools UCA 226 Due to Townships UCA Due to State of Michigan--State Tax g, UCA Due to State of Michigan--Title Search Fee (Opt out Counties Only) 307 Notes Payable--Long Term UCA 314 Advances from Other Funds UCA FUND EQUITY ACCOUNTS 395 Retained Earnings UCA 396 Retained Earnings Reserved for Notes Payable UCA 8/11 l, UCA h, UCA 397 Retained Earnings Reserved for Delinquent Property Tax Sales u, UCA ACTIVITY ACCOUNTS REVENUE ACCOUNTS Treasurer--Delinquent Tax--Prior to Act 123 Process Other Treasurer's Activities--Delinquent Tax Property Sales--After Act 123 Process 445 Interest on Taxes k, UCA 447 Property Tax Administrative Fee (if borrowing) l, UCA 639 Title Search Fee n 641 Pre-forfeiture Mailing Notice Fee (Cost) o 665 Interest on Investments--Regular p, UCA 670 Interest on Note Reserve Investments p, UCA 676 Reimbursement q, UCA Premium/Discount on Note Proceeds UCA EXPENDITURE ACCOUNTS 702 Treasurer's Agent Fee r, UCA 715 Employer's Social Security r, UCA 726 Office Supplies r, UCA 807 Other Contractual Services--Title Search Company s 980 Capital Outlay r, UCA 995 Interest on Note Payable UCA 997 Note Borrowing Costs and Fiscal Agent Fees t 999 Transfer Out UCA GENERAL FUND (101) ASSET ACCOUNTS 001 Cash UCA 020 Taxes Receivable--Real Property--Current Levy UCA 084 Due from Other Funds UCA 198 Long-Term Advances to Other Funds UCA OTHER CREDITS 339 Deferred Revenue--Real Property--Current Levy UCA FUND EQUITY ACCOUNTS 369 Fund Balance Reserved for Advances to Other Funds UCA 390 Fund Balance UCA REVENUE ACCOUNTS 402 Current Property Taxes--Allocated UCA 412 Delinquent Real Property Taxes UCA 422 Redemptions and Reconveyance UCA I, UCA j, UCA REFERENCE

52 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of Interest on Taxes UCA 447 Property Tax Administration Fee (if no borrowing) l, UCA 448 Processing Fee on Redemptions UCA 449 County Expense of Sale m, UCA 699 Transfer In UCA TRUST AND AGENCY FUND ASSET ACCOUNTS 001 Cash UCA LIABILITY ACCOUNTS Due to State of Michigan--Expense of Sale UCA Due to State of Michigan--Title Search Fee (Opt Out) 274 Undistributed Tax Collections UCA ACCOUNT DESCRIPTIONS FOR DELINQUENT TAX REVOLVING FUND(S) h, Optional a) ACCOUNT 007, CASH--NOTE PAYMENT RESERVE, provides a restricted cash account for a note reserve "fund," if the note payment reserve is established in the note resolution according to MCL d(6)(c). A portion of note proceeds is recorded in account 007 according to the resolution. The "purchase" of delinquent taxes is made from account 001. The balance in account 007 must equal any note payment reserve required in the note resolution or note convenants. This note payment reserve is pledged to repay principal and interest on the notes or the purchase of notes, and may be used to retire the notes and accrued interest. In any case, this account must be maintained until final payment of bonds and interest is made. At that time, the reserve fund cash will be used in making the final payment. (per Letter #99-June 14, 1982) NOTE: Joint or combined investments with other DTRF cash accounts or other county funds can be made (unless restricted in the note resolution or by note covenants) where detailed accounting is maintained which shows the amount invested for each fund, and where the interest earned is prorated to the funds with money in the combined investment. b) ACCOUNT 026.XX TAXES RECEIVABLE--DELINQUENT REAL, records delinquent taxes purchased by the county treasurer from local taxing units and county funds. Delinquent taxes equal the unpaid property taxes levied plus the local Property Tax Administration Fee of 1% if the unit elected to levy that fee (MCL (6)). THE ACCOUNT SHOULD BE POINTED OFF TO ALLOW A SEPARATE SUB-ACCOUNT FOR EACH TAXING UNIT OR FUND (i.e., account records delinquent taxes for township 14). If tax anticipation notes have been issued, the delinquent taxes receivable, interest and PTAF are pledged for payment on the notes (MCL c(4)). Collection and receipting procedures are discussed in MCL There must be detail sub-accounts for each taxing unit and they must be balanced to the controls monthly. c) ACCOUNT 081.XX, DUE FROM OTHER UNITS OF GOVERNMENT, is used here for simplicity. We recommend that a separate account for each unit type (accounts , UCA) be used, and that the account number be pointed off where multiple units of the same type exist. In any case, detailed sub-ledgers listing the amount due from each taxing unit must be maintained and reconciled to the control account. d) ACCOUNT , FORFEITURE CERTIFICATE RECORDING FEE RECEIVABLE, is used to record the forfeiture certificate recording fee paid to the register of deeds from the delinquent tax revolving fund prior to the collection of the actual fees. The amount must be recorded as a receivable (asset account) in the Delinquent Tax Revolving Fund for the year which it s added to the parcel under the receivable account number as "Forfeiture Certificate Recording Fee Receivable" with the off-setting credit to cash. At the time of redemption of the property, debiting cash and crediting the account will eliminate the asset account. The cost is $9.00 for the first page and $2.00 for each additional page assessed to each parcel forfeited. The MCL g (2) states that within 45 days after forfeiture, the county treasurer is required to file with the register of deeds a certificate placing parties on notice that property has been forfeited. It also must state that title to the property will be lost 21 days after entry of a foreclosure judgment. The county treasurer must forward a copy of each certificate to the State Treasurer if that county elects to have the State foreclose on tax-delinquent property within that county. e) ACCOUNT 204, TREASURER'S AGENT FEE PAYABLE, records the portion of the interest on delinquent taxes (recorded in account 445) which, on approval of the board of commissioners, may be restricted for payment to the treasurer as an agent fee. The fee due to the treasurer should be computed at least annually and recorded by a debit to account 702 and a credit to account 204 or, if paid when earned a credit to account 001. The payment should be included in the payroll system so that the taxes withheld and the W-2 form are proper. (f) ACCOUNT 222, DUE TO COUNTY REGISTER OF DEEDS--REDEMPTION CERTIFICATE FEE, the amount collected for the redemption certificate when the property is redeemed is due to the Register of Deed s Office. The amount should be recorded in the Delinquent Tax Revolving Fund for the year in which it s added to the parcel under the liability account 222 Due to the County-Register of Deed for the "Redemption Certificate Recording Fee." The statute provides that forfeited property may be redeemed at any time before 21 days after entry of a foreclosure judgment and is recorded as revenue to the FGU. The amount should be transferred to the general fund and recorded under the Register of Deed s Office revenue account 422 for redemption certificate recording. Note: The person with a legal interest in the property must pay all of the following to redeem the property: (1) total of unpaid taxes, interest, penalties and fees for which the property was forfeited; (2) additional interest at a non-compounded rate of 0.5 percent per month; and (3) all recording, service of process, and notice fees. g) ACCOUNT , DUE TO STATE OF MICHIGAN--STATE TAX, records the state portion of the County Expense of Sale fee. See account 449 for details. (h) ACCOUNT , DUE TO STATE OF MICHIGAN--TITLE SEARCH FEE (Opt out Counties Only)--If the county has opted out and allows the State to foreclose property under the tax reversion process, the county treasurer must collect $175 statutory fee for the title search to be transmitted to the State of Michigan. In this case, the amount should be recorded as a liability Due to the State of Michigan when collected under accounts number The liability may be set up either within the Delinquent Tax Revolving Fund or as a liability in the Trust and Agency Fund. i) ACTIVITY ACCOUNT 253, TREASURER--DELINQUENT TAX (Prior to Act 123 process) All activity prior to the property tax foreclosure process which occur under the regular delinquent property tax process should be accounted for under activity 253. j) ACTIVITY ACCOUNT 254, OTHER TREASURER S ACTIVITIES--DELINQUENT TAX PROPERTY SALES (After Act 123 process) All revenue and expenditures after the property tax foreclosure process goes into activity 254 within the delinquent tax revolving fund. The act states the foreclosing governmental unit must deposit the proceeds from the sale of tax delinquent property into a "restricted account" created for each year a property sale is held. The restricted accounts should be established within the Delinquent Property Tax Revolving Fund based on the year of the sale. This activity (Activity # Delinquent Tax Property Sales) is used to record the sale proceeds and the authorized expenditures of the proceeds. When the forfeited property is sold, the proceeds from the sale should be recorded in the Delinquent Property Tax Revolving Fund under revenue account number 642 "Charge for Services-Sales." 9/11

53 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of 1999 k) ACCOUNT 445, INTEREST ON TAXES, records interest collected on delinquent property tax payments. The interest is calculated by month or any fraction thereof as follows, subject to exceptions in MCL (3) and higher rates provided for taxes levied December 1 of (see MCL ). Interest is 1% per month or fraction of a month on delinquent taxes paid during the period from March 1 following the tax levy until May 1, proceeding the May tax sale applying to that tax year (MCL (3) and (1)). The interest rate may be changed by act of the legislature. Interest is 1.25% per month or fraction of a month beginning on May 1 of the year the lands are listed to be sold for delinquent taxes at the May tax sale. This rate applies whether the original property owner redeems the property, or another party buys the tax lien at the May tax sale or thereafter. (MCL , , and ). l) ACCOUNT 447, PROPERTY TAX ADMINISTRATIVE FEE (formerly known as the collection fee), records the county Property Tax Administration Fee (PTAF) which is included in all delinquent property tax collections. The PTAF is the greater of 4% of the delinquent taxes paid or $1.00 (MCL (1), (6) and b(6)). Where the issuance of notes has been authorized, the PTAF is credited to the DTRF. Expenses of borrowing must be repaid from the PTAF. The balance of the PTAF may be pledged by resolution to the note repayment (MCL d(6)(a) or transferred to the General Fund (MCL (2)). WHERE NOTES HAVE NOT BEEN AUTHORIZED, THE PTAF IS GENERAL FUND REVENUE. Alternatively, the PTAF may be recorded upon collection as a DTRF payable in Account , then transferred to the General Fund at the end of the year. m) ACCOUNT 449, COUNTY EXPENSE OF SALE, records the county portion of the Expense of Sale Fee (account records the state portion). The county portion reimburses the county for the expenses incurred in preparing the list of delinquent lands for sale. The fee is to go to the General Fund as revenue (MCLA (1)). The fee is $10.00 from October 1, preceding the May tax sale at which the property would be sold for delinquent taxes ($5.00 for the county and $5.00 for the state). n) ACCOUNT 639, TITLE SEARCH FEE--If the property is forfeited to the county treasurer under MCL g, the county treasurer must add a $175 statutory fee, as adjusted under 78p, to each parcel of property for which the delinquent taxes, interest, penalties and fees remain unpaid. The amount should be recorded as revenue (if the County is the FGU) in the Delinquent Tax Revolving Fund for the year in which it s added to the parcel under revenue account number 639 as "Title Search Fee." Note: The actual amount recorded for the expense of the title search may be more than the title search fee. o) ACCOUNT 641,PRE-FORFEITURE MAILING NOTICE FEE (or OCTOBER 1 st FEE). For certified abandoned property, on the October 1 immediately succeeding the date that unpaid taxes are returned to county treasurer for forfeiture, foreclosure, and sale under section 60a(1) or (2) or returned to the county treasurer as delinquent under section 78a, the county treasurer must add a $15.00 fee, as adjusted under section 78p, on each parcel of property for which the delinquent taxes, interest, penalties, and fees remain unpaid. Record as revenue in the Delinquent Tax Revolving Fund for the year in which it s added to the parcel under revenue account number 641 as "Pre-forfeiture mailing notice cost." p) ACCOUNT 665, INTEREST ON INVESTMENTS--REGULAR; AND ACCOUNT 670, INTEREST ON NOTE RESERVE INVESTMENTS, record interest on investments. Where a note reserve exists (account 007), the interest on investment of the note reserve is recorded separately. q) ACCOUNT 676, REIMBURSEMENT--Upon the request of a holder of a tax lien purchased under the Michigan tax lien sale and collateralized securities act (MCL to MCL ), and payment to the county treasurer of the actual costs incurred in complying with that request, the county treasurer shall provide a list identifying the parcels of property for which a notice is required under sections 78 to 78l. Record the revenue as account number 676 for "reimbursement" of costs incurred in complying with the request within activity 254 in the Delinquent Tax Revolving Fund. r) ACCOUNT 702, TREASURER'S AGENT FEE; ACCOUNT 715, EMPLOYER'S SOCIAL SECURITY; ACCOUNT 726, OFFICE SUPPLIES; AND ACCOUNT 980, CAPITAL OUTLAY, (plus others as needed) record the expenses of administering a DTRF if the board of commissioners has authorized payment of the expenses from that DTRF. Expenses incurred in the administration and collection of delinquent taxes may be expensed to the DTRF. Expenses may be up to the limit of 5% of the treasurer's office budget for the year or the applicable 1/27 or 3/64 of the interest collected each month in all delinquent tax revolving funds, whichever is smaller. Of the amount specified, the treasurer is entitled to an agent fee limited to the lesser of 20% of the total allocation for the delinquent tax administration expenses, or 20% of the treasurer's authorized salary (MCL c(3)). The balance, after deducting the agent's fee, may be spent for any other cost attributed to collecting delinquent taxes. Unexpended administration expenses, excluding the agent's fee, will remain in the delinquent tax funds. Capital assets may be purchased but are titled in the name of the county. Note: Public Act 123 of 1999 amended this section (MCL c). Section 16 was added and states that a county treasurer elected or appointed to office after the effective date (October 1, 1999) of the amendatory act is not eligible for payment for services as agent for the county. To be eligible for payment of agent fees, the county treasurer must have held office on the effective date of amendatory act and had not vacated the office, after the effective date of the amendatory act that added this subsection. s) ACCOUNT 807, OTHER CONTRACTUAL SERVICES--TITLE SEARCH COMPANY--The expense of the title search may be more than the title search fee. The expense to the vendor or title search company should be recorded as "Other Contractual Services" under activity 254 within the Delinquent Property Tax Revolving Fund t) ACCOUNT 997, NOTE BORROWING COSTS AND FISCAL AGENT FEES, records the expenses of borrowing from the DTRF which are to be repaid from the PTAF (see Item g, above). u) FUND EQUITY ACCOUNT 397, RETAINED EARNINGS--RESERVED FOR DELINQUENT PROPERTY--The foreclosing unit must direct the investment of surplus funds and credit the interest and earnings from the investments to an restricted activity. The revenue and expenditures in activity 254 must be closed to a separate restricted earnings account in the fund equity. RECONCILEMENT OF DELINQUENT TAXES RECEIVABLE Tax Rolls to General Ledger The delinquent taxes receivable control account 026 for every tax year and every DTRF should be reconciled periodically, but at least annually. The reconciling procedures include the preparation of an adding machine tape of the unpaid real property taxes for the specific month ending date of a delinquent tax roll or rolls for the applicable tax year. The total amount of the unpaid delinquent real taxes indicated by the adding machine tape should equal the balance recorded in the Taxes Receivable--Delinquent Real sub-ledger account for the applicable tax collecting unit. 10/11

54 6/9/2014 TREASURY Delinquent Tax Revolving Funds Revisions to Accounting after Public Act 123 of /11

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79