NAUGATUCK — A new tax enforcement policy outlines when delinquent properties will be sent to foreclosure for a tax sale while giving taxpayers a chance to catch up on back taxes.
Naugatuck budgets for a 96 or 97 percent collections rate each year as well as $2 million in expected back taxes to be paid off, according to Mayor N. Warren “Pete” Hess.
He said some taxpayers, who own buildings worth millions, will never get current on their taxes because they are charged 18 percent interest on what they owe.
One taxpayer in particular pays about $72,000 a year in interest alone while the amount he owes is one-tenth of what the building is worth, Hess said.
He said he doesn’t want the borough to get into a situation where it would be in jeopardy of losing its ability to collect taxes because the property owner owes more than what the property is worth.
The newly adopted policy will bring uniformity to the way the borough goes about collecting taxes so it’s fair to everyone.
The policy states that any property delinquent on taxes for more than three years will be sent to a tax sale auction unless certain conditions are satisfied.
First, the property owner must have more than 50 percent equity in the property, based on its fair market value.
Second, the taxpayer must have a written agreement with the tax collector to pay the taxes owed within five years. The taxpayer must pay all current taxes, monthly interest, and 25 percent of the principal amount due.
“The intent of this policy is to allow an opportunity for delinquent taxpayers to catch up on back taxes while at the same time ensuring that the borough will be able to collect 100 percent of all past due payments of principal and interest over a five-year period,” the policy states.
The tax collector and mayor may also transfer tax liens to a third-party corporation or lender in exchange for 100 percent of taxes, interest and fees due. Hess said some lenders will pay the taxes, then negotiate with the property owner to repay the lender at a lower rate than the 18 percent the borough charges.
“The last part gives the tax collector an additional arrow in his quiver,” Hess said.
Hess said he wanted to make a fair policy for people to get caught up if they’re able.
“This policy is designed to have us collect more in our current year taxes and even more in delinquent taxes,” Hess said. “I think it’s a fair balance.”