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HomeMy Public PortalAboutBy-law 2022-42 Adopt a Tax Collection PolicyCORPORATION OF THE MUNICIPALITY OF TWEED BY-LAW NO. 2022-42 Being a By-law to Adopt a Tax Collection Policy for the Municipality of Tweed. WHEREAS the Municipal Act, 2001. S.O. 2021, c. 25, as amended, provides the general authority for Councils to adopt policies; AND WHEREAS the Council of the Corporation of the Municipality of Tweed deems it expedient to adopt a Tax Collection Policy for the Municipality of Tweed; NOW THEREFORE the Council of the Corporation of the Municipality of Tweed enacts as follows: 1. THAT the Tax Collection Policy attached hereto as Schedule 'A' to this By- law, is hereby adopted as the Tax Collection Policy for the Municipality of Tweed. 2. THAT Schedule 'A' attached hereto forms part of this By-law. 3. THAT this By-law shall come into force and take effect immediately upon the passing thereof by the Council of the Corporation of the Municipality of Tweed. Read a first, second, and third and final time, passed, signed, and sealed in open Council this 28th day of June, 2022. SCHEDULE 'A' TO BY-LAW NO. 2022-42 Tax Collection Policy Purpose/Background The purpose of this policy is to outline standardized processes that will ensure a transparent and efficient process for the billing and collection of property taxes. Policy Statement The Municipality of Tweed ("the Municipality") collects property taxes from property owners on behalf of the Municipality, the County of Hastings and the area school boards. The Municipality is responsible to ensure effective collection of property taxes in accordance with the Municipal Act, 2001, as amended. This policy is implemented in accordance with governing legislation and any incongruence between the policy and the governing legislation, the provisions of the governing legislation will prevail. Scope/Application This policy establishes all aspects of the collection process and identifies the responsibilities for tax billing and collection in accordance with: • Municipality of Tweed budgetary and policy requirements; • Municipality of Tweed By-laws; • The Municipal Act, 2001, as amended; • The Municipal Affairs Act, 1990, as amended; • The Assessment Act, 1990, as amended; • The Education Act, 1990, as amended; • Farm Debt Mediation Act, 1997, as amended; and • Any new legislation pertaining to property tax collection. This policy is written in compliance with the Municipal Act, 2001, ("M.A.") as amended, related to Ontario Regulations made under the M.A. and applicable Municipal by-laws, as amended from time to time. Definitions Cancellation Price — is the amount equal to all the tax arrears owing at a given point in time in respect of land, together with all current real property taxes owing, including all penalties and interest and all reasonable costs incurred by the Municipality after the registration of a tax arrears certification under M.A. (S. 373). Collection Costs — is the total costs incurred by the Municipality to obtain further information for collection purposes in compliance with the regulations during the tax sale registration process. This includes, and is not limited to, title search fees, corporate Page 1 of 12 search fees, registered mail, administrative charges, legal costs, registration fees, tax sale administration fees and the like. Due Date — is the date that property tax bill (interim, final and supplementary) installments are due to be paid to the Municipality. Extension Agreement — is an agreement between the Municipality and the ratepayer (or party of interest) to extend the period of time in which the cancellation price is to expire. This agreement freezes the tax sale registration ("T.S.R.") process. An extension agreement outlines the details of the payment plan set in place to remit payments on the T.S.R. file in order to clear the balance owing. This type of agreement becomes void if one payment is missed, and the T.S.R. file continues from the point where the agreement was frozen in the tax sale process. Interest — is the amount added to the unpaid levies form prior years in accordance with M.A. (S. 345). Municipal Property Assessment Corporation ("M.P.A.C.") - is responsible for accurately assessing and classifying properties in Ontario in compliance with the Assessment Act, 1990, as amended, and regulations set by the Government of Ontario. Penalties — are the amount added to the unpaid levies from current year in accordance with M.A. (S. 345). Property Taxes — are the total amount of levies calculated for the Municipality, County and School Board purposes and includes all amounts added to the tax roll as permitted by the Municipal Act, 2001, as amended. Property taxes are calculated based on the current value assessment ("C.V.A.") determined by M.P.A.C. multiplied by the tax rate as determined by the Municipality, County and the Minister of Finance in relation to education. Tax Arrears — are the unpaid property taxes that remain unpaid after the due date has passed. Tax Arrears Certificate ("T.A.C.") - is the instrument registered at the land registry office on a parcel register. This document indicates that the described property will be sold by public sale if all property taxes are not paid to the Municipality within one year of the registration of this certificate. Tax Sale Registration ("T.S.R.") - is the process outlined in the Municipal Act, 2001, Part XI — Sale of Land for Tax Arrears where the Municipality follows a legislated process for dealing with the sale of land for tax arrears. Responsibilities The CAO/Treasurer, Clerk/Deputy Treasurer and Tax Assistant are responsible to ensure that the property tax collection processes outlined in this policy are adhered to as well as all its applicable legislation. Page 2 of 12 The CAO/Treasurer is responsible for: • Ensuring this policy remains in compliance with legislation; • Ensuring Municipal staff are in compliance with this policy; and • Assessing overdue property tax accounts regularly to ensure tax collection processes are performed in accordance with this policy. The property owner is responsible for: • Ensuring the current value assessment as determined by M.P.A.C. is correct; • Ensuring the mailing address is correct; • Ensuring the levies are paid by the due dates; and • Ensuring the assessment roll content is correct with M.P.A.C. Practice/Procedures Billing Property taxes will be billed by interim and final tax billings as established by the Municipal by-law annually and in accordance with the Municipal Act, 2001, as amended. Property tax bills are mailed to the address of the property tax account as shown on the tax roll unless the rate payer has submitted a written request or online submission form to the Municipality requesting an alternate address. Bills are sent by standard letter mail and are considered delivered to and receive dby the addressee unless the mailing is returned to send by Canada Post. It is the ratepayer's responsibility to ensure the mailing address is correct on their tax account. Failure to notify the Municipality of an address change in writing or through the online submission form is not an error on behalf of the Municipality. Mail Cycle January Reminder Notice February Reminder Notice Farm Debt Mediation Notices prior to T.S.R. March Interim Billing (1St) 1st Installment Due (31St or next business day) April Reminder Notice May Reminder Notice June Reminder Notice 2nd Installment Due (30th or next business day) July Reminder Notice August Reminder Notice September Final Billing (1St) 3rd Installment Due (30th or next business day) October Reminder Notice November Reminder Notice Page 3 of 12 4th Installment Due (30th or next business day) December Reminder Notice Final Notice prior to T.S.R. *Supplementary and Omitted tax bills will be mailed according to the M.P.A.C. submission schedule, though not before the final tax rates have been approved. Tax Bill Format — M.A. (S. 344) The Municipal tax billing will meet all requirements of the provincially legislated standard tax bill. Arrears are included in the first installment due date amount. Installment due dates will be indicated on the payment stubs. Billing messages may be used to relay information to ratepayers (i.e. penalty and interest charge rates). Installments will also be established by Municipal by-law with two (2) installments for interim billing and two (2) installments for final billing. Interim Billing — M.A. (S. 316) Interim billing is based on 50% of the annualized taxes of the property for the previous calendar year. This does not include special charges levied. If taxes levied on a property were for only part of the previous year because of assessment charges, an amount shall be added to the levies equal to the additional taxes that would have been levied on the property if the taxes had been levied for the entire year. Final Billing — M.A. (S. 343) Final billing is based on phased -in assessment value for the current year as provided by the M.P.A.C., the tax rate applicable, and any special charges levied. Final tax bills are produced subsequent to the passing of the annual municipal budget and are based on the rates established by the by-law to meet the budget requirements of the Municipality, County of Hastings, and the Minister of Finance in relation to education. Supplementary and Omitted Assessment Billing — M.A. (S. 341) Supplementary tax bills are issued and mailed in the same manner as interim and final tax bills with the exception that it is a separate levy where a by-law is not required. The number of installments and due dates of the supplementary bills will be determined by the Tax Assistant. Penalties and interest charges will be assessed on supplementary taxes that are owing past their due date, consistent with other Municipal due dates. There are two sections of the Assessment Act, 1990, as amended, that allow for taxation of taxable property not included in the annual revised assessment roll. These deal with omissions and additions to the tax roll. • Section 33 of the Assessment Act, 1990, as amended, allows for the taxation of real property that has been omitted from the return roll. The provision allows for taxation in the current year, plus a maximum of the two preceding years. Page 4 of 12 • Section 34 of the Assessment Act, 1990, as amended, allows for the taxation of assessment that has increased in value or has been added after the return of the last revised assessment roll. These taxes apply to the current year only. Delivery of Tax Bills — M.A. (S. 343) Property tax bills and notices are mailed to the address of the property as shown on the tax roll unless the ratepayer advises the Municipality, in writing or through the online submission form, an alternate mailing address. Use of the alternate mailing address continues until it is revoked in writing or ownership of the property changes. Any bill or notice sent by standard letter mail are considered delivered to and received by the addressee unless Canada Post returns the notice to sender and an error in the mailing address is evident. Ratepayers are responsible to notify the Municipality of any changes to a mailing address(es). Failure to notify the Municipality of an address change in writing or through the online submission form, is not an error on behalf of the Municipality. Legislative requirements surrounding tax billing assist with the processing of the tax collections. Despite all efforts made, if an error or omission in the form or substance of a tax bill occurs, it does not invalidate any proceedings for the recovery of taxes. Important Dates Due dates for the payment of property taxes are determined in relation to the approval of the budget by Council and the passing of the levying by-law. Pending fluctuations as a results of the budget approval process or other unforeseeable delays, tax billing due dates will normally be as follows: • Interim bill: March 31st and June 30th — as determined by the annual Interim Billing By -Law — or the next business day • Final bill: September 30th and November 30th — as determined by the annual Final Billing By -Law — or the next business day The Municipality may have a minimum bill in the event that the amount owing is twenty- five dollars ($25) or less on a tax bill. In this case, the taxpayer shall pay the full amount in one installment on the specified due date, being the first installment date. The second installment date will not apply. Ownership Changes — A.A. (S. 17(1)) The Provincial Land Registry System is the service for the legal determinant of the ownership of land. The names of the owners on the property tax account are to agree with the ownership registered at the Land Registry Office on the parcel register. The Municipality requires the instrument (deed / transfer of land) registered at the Land Registry Office be submitted to the Tax Assistant for processing. This includes removing Page 5 of 12 a name from ownership, changing a name on title or adding a name to ownership for all tax accounts. Letters submitted by a law office do not contain all the pertinent information required for ownership changes to be processed. The property owner is responsible to ensure that their tax account has the correct mailing address. Severances/Consolidations - M.A. (S. 356) Property owners may apply for severances of their properties under the authority of The Planning Act, 1990, as amended through the County of Hastings. If granted by the County of Hastings Planning Department, the assessment values must be split between all the parcels of land. As part of their legislated services, M.P.A.C. divides the assessment information. Under the authority of The Municipal Act, 2001, as amended, (S. 356), the Treasurer may divide the assessment roll into the parcels being severed and direct the property taxes accordingly. As severed portions of the land are often sold, the Municipality will not recalculate the property taxes for a part year. It is understood that the seller's and purchaser's lawyers would allocate the levies accordingly during the sale process. The allocation of levies will be shown on the "statement of adjustments" provided to the property owners by the law office completing the title transfer. Consolidations are processed by M.P.A.C. at the written request of the property owner. Property owners should contact M.P.A.C. directly. A severance or consolidation of a parcel identification number at Land Registry Office does not constitute a consolidation or severance of a tax roll. Payments Payment methods include electronic fund transfers ("E.F.T."), telephone banking, pre - authorized payment plans, mortgage companies (on behalf of a ratepayer), cash, debit card, cheques, post-dated cheques, at financial institutions, e -transfers and at the Municipal office at 255 Metcalf Street, Postal Bag 729, Tweed, ON KOK 3J0. A payment is considered made once the funds have been received or receipted by the Municipality. Online payments normally require three (3) to five (5) business days to process and ratepayers are responsible for allowing their financial institution processing time to submit the payment to the Municipality. Ratepayers are responsible for any fees and charges that may be imposed when making payments. Post-dated cheques will be accepted and held by the Tax Assistant until the date indicated on the cheque. Should the payer request that the post-dated cheque not be processed, the Municipality is to be contacted in writing at least five (5) business days prior to the date indicated on the cheque. Page 6of12 Pre -Authorized Payment Plans The Municipality offers two (2) pre -authorized payment plans ("P.A.P."). 1. Installment due dates (Interim and Final); or 2. Monthly (1st of each month) at the set rate chosen by ratepayer. All payment plan applications must be received five (5) business days prior to the first withdrawal requested. All changes to pre -authorized payment plan applications must be submitted in writing ten (10) business days prior to the effective change. Cancellation of pre -authorized payment plans must be received in writing five (5) business days prior to the end date. Any P.A.P. dishonored payment is treated in the same manner as other forms of payment, with the same administration fees involved. The financial institution will charge their dishonored payment fee for the failed attempt. The Municipality will apply the NSF administration fee as per the User Charges By-law. When a second scheduled payment attempt is dishonored, the pre -authorized payment program will be terminated and the property owner will not be permitted to re-enter into a pre -authorized payment plan agreement for a minimum of two (2) years. An exception to this termination of access to the plan would be if the account was paid up to date within 6 months from the date of the initial dishonored date. Dishonored Payments Payments that are rejected and/or returned by any financial institution will be charged an administration fee as per the User Charges By-law. After two (2) returned payments, cheques or pre -authorized payments will no longer be available to the property owner for a minimum of two (2) years. Cash, certified cheques and/or money orders will be accepted. An exception to this termination of access to the plan would be if the account was paid up to date within 6 months from the date of the initial dishonored date. Receipts/Proof of Payment Reproduction of documents supporting payments and levy amounts will be charged an administration fee as per the User Charges By -Law. In the year of purchase/sale of a property, the Municipality does not provide documentation since the law office completes the property tax allocation on the owner's behalf. The Municipality is not involved in the allocation and is not privy to the details of the transfer. The property owner should use the statement of adjustments as provided by the law office retained for the purchase/sale of the property. Application of Payments — M.A. (S. 347) Property tax payments are applied in accordance with legislation. The payment is first applied against any late payment charges according to the length of time the charges have been outstanding, with the charges that have been outstanding the longest being Page 7 of 12 discharged first. The payment is then applied in the same manner against the property taxes owing, with the property taxes that have been outstanding the longest being discharged first. Once a property is sent to REALTAX Inc. for processing a tax arrears certificate ("T.A.C.") to be registered on title against a property, partial payments are not accepted unless the property owner and the Municipality have entered into an extension agreement. If there is no extension agreement in place, a partial payment received on a tax account with a T.A.C. registered will be returned or refunded as appropriate. Refunds/Overpayments Tax account refund requests must be submitted in writing and be accompanied with the proof of payment, letter of indemnity and statement of adjustment, where applicable. Refunds are reviewed by the Tax Assistant and approved by the CAO/Treasurer, if all the eligibility criteria have been met. Tax accounts with a balance owing will not be eligible for refunds. All levy adjustments and tax rebates processed during the year will be applied to outstanding levies. A refund may be requested in writing on property tax accounts with credit balances only. Misapplied Payments Erroneous payments made to a tax account require a written request to correct the payment application. Late Payment Charges/Collection Costs — M.A. (S. 345) Tax arrears are subject to late payment charges, the current year is imposed penalties, while the previous years are imposed interest. A penalty is imposed on the unpaid levies the first business day of each month the levies remain unpaid. In addition, as long as the property taxes remain unpaid, interest will be added on the first business day each month thereafter. Penalty and interest charges cannot be waived, except where a Municipal error has occurred. All collection costs incurred by the Municipality to obtain information for collection purposes and/or collect tax arrears are payable by the property owner and are added to the tax account. Transfer to Taxes — M.A. (S. 398) Property owner accounts with other departments throughout the Municipality, as well as the County of Hastings, having an overdue balance may have their balance transferred to their tax account and collected in the same manner as taxes. Once these amounts are transferred to the property tax accounts, they are treated as property taxes for collection purposes. Page 8 of 12 Tax Arrears Collection Property taxes are a secured special lien on land in priority to any other claim, except a claim by the Crown. Taxes may be recovered with costs as a debt due to the Municipality from the original owner and/or any subsequent owner of the property. The Municipality will primarily use the following methods to collect tax arrears: • Verbal communication, • Reminder Notices/Arrears Notices, • Final Notice before Tax Sale Registration, • Notice of Intent to Realize on Security (also known as Farm Debt Mediation Notice), • Payment arrangements, • Issue notices to interested parties, • Legal action, and • Tax Sale Registration process. Collection Steps — Early Stages Arrears Notice — In January each year, in accordance with legislation, a notice is sent to all property owners who owned taxes as of December 31st of the preceding year. Reminder Notice — Reminder notices are mailed to all property owners with an overdue amount that is within the determined threshold amount used during the tax year. Payment Arrangements — Payment arrangements must include all tax arrears, current taxes, accruing estimates of future taxes and late payment charges and be sufficient to ensure payment in full is realized within a reasonable period. Late payment charges will continue to accrue during all such payment arrangements until full payment on the account. Authorization for extending payment terms is as follows: • Tax Assistant 12 months or less, summary provided to CAO/Treasurer • CAO/Treasurer 12 months to 24 months • Council exceeding 24 months Notwithstanding any such arrangements, third party payments will be accepted for payment on account (e.g. payment from a mortgage company). If acceptable payment arrangements are negotiated, the account is monitored for compliance. Follow-up with the ratepayer is performed as required. Once a payment arrangement has been approved and accepted, if a payment is returned, the payment arrangement is deemed void. The ratepayer is advised that the payment is required in full either by cash, certified cheque or money order, or the next step in the collection process will be taken. Page 9 of 12 Collection Steps — Tax Sale Stage In addition to issuing arrears notices and reminder notices each year, the following actions will be taken once a property is two (2) years in arrears: Final Notice Prior to Tax Sale Registration — These notices are mailed to those property owners approaching two (2) years of property tax arrears in mid -December. This notice urges property owners to take action within thirty (30) days, by either making a payment equivalent to the second year of arrears plus all penalties and interest owning, full payment of taxes or negotiate suitable payment arrangements with the Municipality. Notice of Intent to Realize on Security — If a property owner fails to respond to the Final Notice Prior to Tax Sale Registration, the Municipality will send the tax file to REALTAX Inc. To prepare the Farm Debt Mediation Notices. A secured creditor, under section 21 of the Farm Debt Mediation Act, 1997, as amended, requires Municipalities to serve a farmer with a Notice of Intent to Realize on Security before taking legal action to recover debts. The Notice of Intent to Realize on Security is deemed to be effected after a fifteen (15) day waiting period and will be issued by REALTAX Inc. on the Municipality's behalf. The farmer may choose to apply to the Farm Debt Mediation Service during this period or any time afterwards. The Municipality is obliged to send the Notice of Intent to Realize on Security in the event that the property owner may own or operate land that is farmed anywhere in Canada. Through the Farm Debt Mediation Service, a property owner may have the right to apply for a stay of proceedings, during which time creditors may not begin or continue recovery or seizure action against the property owner's assets. Identification of Interested Parties — If a property owner fails to respond to the Notice of Intent to Realize on Security, a property title search is carried out by REALTAX Inc. on behalf of the Municipality in order to identify all parties with a financial interest in the property. Tax Arrears Certificate Registration — Municipal tax sale proceedings can begin once taxes have been in arrears for at least two (2) years. Once all other collection efforts have been exhausted, no payment agreements have been negotiated, and the Municipality still has been unable to secure payment of the tax arrears, the Municipality will start the tax sale registration process by directing REALTAX Inc. to register the Tax Arrears Certificate on the parcel register at the Land Registry Office. The first notice of the Tax Arrears Certificate registration is sent to the property owner(s) and all interested parties within thirty (30) days of registration. The interested parties have an opportunity to pay the arrears in order to protect their interest in the property. If full payment is not received within two hundred and eighty (280) days of the Tax Arrears Certificate registration, the Municipality issues a final notice to the property owner(s) and all interested parties within thirty (30) days after the expiry of the two Page 10 of 12 hundred and eighty (280) day period. The final notice specifies the date on which the property may be advertised for public tender if the tax arrears remain unpaid or an extension agreement is not negotiated. Once a Tax Arrears Certificate has been registered, only full payment of the cancellation price will be accepted unless an extension agreement has been negotiated. Full payment will be accepted up to the date of transfer of the property following a sale. In the event of non-payment, the Municipality will proceed with a municipal tax sale. Cancellations and Write Offs Cancellation of late Payment Charges, Penalties and Interest ("'?) Late payment charges are cancelled only in the following circumstances: • Taxes are adjusted under M.A., o S. 334 — Application for Cancellation, o S. 354 — Write-off of taxes, o S. 357 — Cancellation, reduction, refund of taxes, and o S. 358 — Overcharges. • Taxes are adjusted following a change in assessment under the Assessment Act, 1990, as amended. • Penalty and/or interest were charged as a result of the Municipality's error or omission. The amount of late payment charges cancelled is limited to the amount related to the tax reduction associated with the tax adjustment. This includes processing time one adjustment information is received by the Municipality, gross manifest errors or omissions by the Municipality. Minimum Balance Write-off A balance owing of less than $2.00 on an account after payments are received for the year will automatically be written off on December 1St each year, as it is uneconomical for the Municipality to pursue collection of these amounts. CAO/Treasurer In accordance with section 354 of the Municipal Act, 2001, as amended, Council may approve uncollectible taxes for write-off, on the recommendation of the CAO/Treasurer. Miscellaneous Bankruptcy When a property owner files for bankruptcy, the Municipality is a secured creditor, as the tax debt is a charge against the real property. The Municipality ranks in preference and priority to any other claims, except those of the Provincial and Federal Government. Page 11 of 12 A letter is forwarded to the trustee advising them of the Municipality's claim and that it is assumed property taxes will be paid once the property is sold. Discretion In order to ensure that all taxpayers are treated fairly and equitably, the CAO/Treasurer or his/her designate, has the authority to exercise discretion in the application of this policy where unusual circumstances are apparent, provided such discretion is in accordance with all applicable legislation. Reporting The Tax Assistant will maintain an Age Analysis Report (otherwise known as a Tax Arrears Report) and provide them to the CAO/Treasurer when requested and, at a minimum, on a semi-annual basis. Page 12 of 12