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COMMITTEE REPORT
March 9, 2005
S. 490
S. Printed 3/9/05--S.
Read the first time February 15, 2005.
To whom was referred a Bill (S. 490) to amend Section 5-7-300, Code of Laws of South Carolina, 1976, relating to the collection of delinquent ad valorem property tax by a municipality, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
HUGH K. LEATHERMAN, SR. for Committee.
REVENUE IMPACT 1/
This bill is not expected to have an impact on state revenues. Local property tax collections from delinquent collections and penalties and interest are expected to increase by $100,000 in FY 2006.
Explanation
Under current law, all municipalities may, by ordinance, have a procedure for the collection of delinquent real and personal property taxes. Section 1 of this bill adds language that states payment of a lien for state or county taxes, without payment of a lien for municipal taxes, does not extinguish a lien for municipal taxes and makes the lien a first lien on the property which shall continue in full force and effect until it is legally discharged. Section 2 adds language that applies any excess money from a tax sale to any outstanding municipal tax liens on the property. Under current law, if a tax sale produces more cash than the full amount due in taxes, assessments, penalties, and costs, the overage belongs to the owner of record of the property immediately before the end of the redemption period. This bill would apply the overage to any outstanding municipal tax liens and any remaining overage after this would belong to the owner of record immediately before the end of the redemption period.
We estimate municipalities currently collect $10,000,000 in delinquent taxes and penalties and interest. Removing 14.0% of this for motor vehicles which are not covered by this Code Section leaves an estimated $8,600,000 collected in delinquent taxes and penalties and interest on the remaining real and personal property. Estimating municipalities will generate a little more than 1.0% of additional revenues from delinquent taxes and penalties and interest will bring in an additional $100,000 in FY 2006.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.
TO AMEND SECTION 5-7-300, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE COLLECTION OF DELINQUENT AD VALOREM PROPERTY TAX BY A MUNICIPALITY, SO AS TO MAKE A LIEN FOR MUNICIPAL TAXES WHEN PAYING A LIEN FOR STATE OR COUNTY TAXES, A FIRST LIEN WHEN PAYMENT OF A MUNICIPAL LIEN IS NOT MADE; AND TO AMEND SECTION 12-51-130, AS AMENDED, RELATING TO THE EXECUTION AND DELIVERY OF A TAX TITLE, SO AS TO PROVIDE THAT IF THE TAX SALE OF AN ITEM PRODUCES MORE CASH THAN THE FULL AMOUNT DUE, THE COVERAGE MUST BE APPLIED TO ANY OUTSTANDING MUNICIPAL TAX LIENS ON THE PROPERTY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 5-7-300(A) of the 1976 Code is amended to read:
"(A) All municipalities of the State may provide by ordinance a procedure for the collection of delinquent real and personal property taxes, except taxes on motor vehicles. The municipal governing body may provide for a penalty not exceeding fifteen percent of the taxes levied for nonpayment of these taxes payable when the taxes become delinquent. The property taxes levied, with any penalty added for nonpayment when due and costs of execution, are a lien upon the property upon which the tax is levied until paid. The lien is paramount to all other liens except the lien for county and state taxes. Payment of a lien for state or county taxes, without payment of a lien for municipal taxes, does not extinguish a lien for municipal taxes and makes the lien a first lien on the property which shall continue in full force and effect until legally discharged."
SECTION 2. Section 12-51-130 of the 1976 Code, as last amended by Act 399 of 2000, is further amended to read:
"Section 12-51-130. Upon failure of the defaulting taxpayer, a grantee from the owner, a mortgagee, a judgment creditor, or a lessee of the property to redeem realty within the time period allowed for redemption, the person officially charged with the collection of delinquent taxes, within thirty days or as soon after that as possible, shall make a tax title to the purchaser or the purchaser's assignee. Delivery of the tax title to the clerk of court or register of deeds is considered 'putting the purchaser, or assignee, in possession'. The tax title must include, among other things, the name of the defaulting taxpayer, the name of any grantee of record of the property, the date of execution, the date the realty was posted and by whom, and the dates each certified notice was mailed to the party or parties of interest, to whom mailed and whether or not received by the addressee. The successful purchaser, or assignee, is responsible in the amount of fifteen dollars for the cost of the tax title plus documentary stamps necessary to be affixed and recording fees. The successful purchaser, or assignee, shall pay the amounts to the person officially charged with the collection of delinquent taxes before delivery of the tax title to the clerk of court or register of deeds and, upon payment, the person officially charged with the collection of delinquent taxes is responsible for promptly transmitting the tax title to the clerk of court or register of deeds for recording and remitting the recording fee and documentary stamps cost. If the tax sale of an item produced more cash than the full amount due in taxes, assessments, penalties, and costs, the overage must be applied to any outstanding municipal tax liens on the property. Any remaining overage belongs to the owner of record immediately before the end of the redemption period to be claimed or assigned according to law. These sums are payable ninety days after execution of the deed unless a judicial action is instituted during that time by another claimant. If neither claimed nor assigned within five years of date of public auction tax sale, the overage shall escheat to the general fund of the governing body. Before the escheat date unclaimed overages must be kept in a separate account and must be invested so as not to be idle and the governing body of the political subdivision is entitled to the earnings for keeping the overage. On escheat date the overage must be transferred to the general funds of the governing body."
SECTION 3. This act takes effect upon approval by the Governor.
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