County Recovers Millions In Delinquent Taxes

— When the state land commissioner visited Fayetteville last week, it meant tax dollars for local governments and a last shot for property owners long overdue in paying their taxes.

Commissioner John Thurston’s visit coincided with the annual sale of local parcels on which property owners are delinquent in paying their annual property taxes.

Real estate property owners who don’t pay taxes owed to local schools and governments have years of opportunity to remit payment before their land is forfeited to the state for sale, usually at pennies on the dollar of their value, through yearly auctions in all 75 counties.

One way or another, counties recoup unpaid taxes from either the property owner, who gets more than four years to pay delinquent taxes, plus penalties, or from new owners who purchase forfeited land at the auctions.

In recent years, the amount of delinquent taxes recouped through the process has totaled millions of dollars more than just five years ago. Those getting caught up just before their land sells are paying taxes that went delinquent at the height of last decade’s recession, state officials said.

Washington County collected in 2011 more than $2.5 million from delinquent taxes and interest from owners who did not pay taxes in 2006. Some of that money also came from land purchases by new owners who got property through public auction, according to data released by the Arkansas Commissioner of State Lands Office. Five years ago, the county collected $263,180 from delinquent taxes that began in 2002.

By The Numbers

Public Auctions

The Commissioner of State Lands Office held public auctions last week of forfeited properties with delinquent taxes of more than four years. The land office will hold the revenue received from the sales for more than a year before it’s distributed to counties to give original land owners their full opportunity to reclaim their properties.

Washington County

Number of parcels sold: 24

Total amount purchased: $244,542

Total paid in delinquent taxes: $50,652

Benton County

Number of parcels sold: 55

Total amount purchased: $1,289,330

Total paid in delinquent taxes: $309,109

Source: The Commissioner of State Lands Office

Benton County collected $3.95 million last year compared to $441,877 in 2007.

The lands office processes delinquent taxes of more than one year or sells forfeited land. Thurston visited Washington and Benton county officials this week as part of a statewide tour where he presents symbolic checks of last year’s collections.

“We want the public to know what their government is doing,” Thurston said from Washington County Judge Marilyn Edward’s office. “Most people in the state, for one, don’t know what the land office does.”

David Ruff, Washington County tax collector, said his office waits one year before sending delinquent property information to the state land commissioner’s office. The state office then takes over collection of unpaid taxes for three years before it puts the land up for sale through public auction, said Phillip Carper, land sales associate for the land office.

In that three-year period, property owners can redeem their property by paying unpaid taxes, a flat $25 and a 10 percent penalty charged by the land office, along with percent in interest that goes to the county, Thurston said.

Once delinquent tax payments reach county coffers, that revenue is distributed to school districts and cities, Ruff said. Of the $2.5 million collected last year, 80 percent was sent to school districts, he said. The remainder is split between the county and the cities where the property sits, he said.

“Most of our property is redeemed,” said Nikki Heck, land office public relations director. “We want to give people their property back. We don’t want to sell it.”

However, sell it they will.

When properties are sold, the original owner has a last-ditch 30 day period during which they can reclaim their property, according to state law. Original owners also have the option to attempt to reclaim their property through civil court for an additional year after the 30-day window, Heck said, but that rarely happens.

Land office data shows the majority of the land sold at auctions are reclaimed by original owners within 30 days.

Of the 44 properties sold in last year’s auction in Washington County, seven made it past the 30-day window and into the hands of new owners. Of the 44 properties in Benton County last year, 17 cleared the 30-day window.

If a property is reclaimed by the original owner, the money paid at the auction is refunded, Heck said.

Lisa Groves, a real estate investor whose company is based in Bryant, won the bidding over three other interested buyers and paid $76,000 for property originally priced at the auction for $23,380.

The condominium on Chevaux Drive was originally priced as the taxable value listed in the county’s property records. The taxable value is a dollar figure that equals 20 percent of a county’s appraised value. The records show the assessed value to be $116,900. Groves also paid an additional $7,105 in delinquent taxes.

“Once in while you’ll get lucky,” Groves said. “If we end up with this property, we can rent it and hold it and sell in a few years when the value goes up and make money on it.”

Of the 24 parcels sold Wednesday, 13 sold for the taxable value.

“You can get properties for pennies on the dollar,” Groves said. “People don’t pay their taxes. All you have to do is pay their taxes and any fees that go along with that and you can pick up the property for a little more than nothing.”

Chuck Wood, Lincoln city manager, also attended last week’s auction. Using city dollars, Wood purchased property on North Street in his city for $4,660 plus $1,222 in delinquent taxes. County records show the property appraised at $23,300.

The city may use the property as a park.

“That home was condemned because of health hazards,” Wood said.

The city placed a $5,400 lien on the property to cover the cost of the home’s demolition. Neighborhood children could benefit from the purchase.

“We don’t have anything in that particular neighborhood for kids to do or playground equipment,” Wood said.

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