Property Tax Collection Policy (CP-2024-09)

Midland, Ontario

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CORPORATE POLICY MANUAL Policy Name: Property Tax Collection Policy Policy Number: CP-2024-09 Adopted: October 16, 2024 (Date) Division/Department: Finance Authority: Confirmatory By-Law # COW-2024-54 Supersedes: none Review by Date: Last Modified: February 20, 2019 Purpose The purpose of this policy is to establish the responsibilities, internal controls, authorizations and procedures ensuring the timing, accurate and efficient preparation and collection of property taxes. Policy Statement This policy takes its authority from Section 286 of the Municipal Act, 2001 which states that the Treasurer is responsible for invoicing, collection, and reconciliation of all accounts receivable in the Town: "A municipality shall appoint a treasurer who is responsible for handling all of the financial affairs of the municipality on behalf of and in the manner directed by the council of the municipality, including, a) collecting money payable to the municipality and issuing receipts for those payments; b) depositing all money received on behalf of the municipality in a financial institution designated by the municipality; c) paying all debts of the municipality and other expenditures authorized by the municipality; d) maintaining accurate records and accounts of the financial affairs of the municipality; ..." Definitions For the purposes of this Policy: "Council" means the Council of the Corporation of the Town of Midland. Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 2 of 11 "MPAC" means the Municipal Property Assessment Corporation which is responsible for determining the assessed value of all classes of assessment in the Province of Ontario. MPAC administers all phases of property assessment including appeals of assessment. "PAP" means the Pre-Authorized Payment Plans, one of the payment options offered by the Town to the residents to pay their property taxes. It includes two options - the 10 Month Plan and the Due Date Installation Plan. "Penalty and Interest" means the late payment charges applied by the Town of Midland for non-payment of taxes or any installments by the due date, in accordance with Section 345 of the Municipal Act, 2001. The Town shall set the penalty and interest at the rate of 1.25%, or the highest rate allowed under the Act, on all taxes due and unpaid. "Property Taxes" means the total amount of taxes for municipal, county and school board purposes levied on a property and includes other amounts as may be added to the tax roll under applicable provincial legislation. "Supplementary Taxes" means the total amount of supplementary taxes for municipal, county and school board purposes levied on a property due to change in assessed value, change in classification or change in its use, as may be added to the tax roll under the authority of Section 33 and 34 of the Assessment Act. "Tax Arrears" means any portion of Property Taxes that remain unpaid after the date on which the taxes are due. "Tax sale" means the sale of land for Tax Arrears according to the proceedings prescribed under the Municipal Act, S.O. 2001, c.25 and O. Reg. 181/03 Municipal Tax Sales Rules, as amended by Ontario Regulation 571/17. "Treasurer" means the Chief Financial Officer of the Town of Midland responsible for fulfilling the duties referenced in the Municipal Act. This title is interchangeable with Director of Finance or designate for the purpose of this policy. Scope 1. General a. The Town of Midland will follow a prescribed policy for the billing and collection of property taxes. This policy will conform to current legislation and the Municipal Act, 2001. Where this policy contradicts legislation of the Province of Ontario or the Government of Canada, the legislation shall be followed. b. The Town of Midland Water and Wastewater billing and collection process is covered under a separate Water and Wastewater By-law and is not impacted by this tax collection policy. However, in the case when outstanding water and wastewater balances are transferred to the actual tax roll, this policy will apply to those amounts that have been added, including the activity fee per the Town's Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 3 of 11 Fees and Charges By-law and collected by the Treasurer as all other taxes or levies. c. Any unpaid municipal charges or any other fees and charges which should be levied pursuant to any statute or by-law against the respective property chargeable therewith and the same shall be added in the same manner to the collector's roll, including the activity fee per the Town's Fees and Charges By-law and collected by the Treasurer as all other taxes and levies. d. This policy will provide an open, transparent and consistent framework for all billings and ongoing collection process. Municipal staff and Council should reference this document when communicating with the public regarding property taxes. e. As property tax billing and collection is the primary source of revenue for the Town of Midland, this policy will help to: i. Establish consistent guidelines to be followed with regard to the billing and collection of property taxes; ii. Streamline activities and set out appropriate steps required for collection of past due property taxes; and iii. Ensure a clear and consistent written policy for the municipality f. Ensure all activities conform to the current legislation. Real property tax is levied on the assessment for real property within the Town of Midland in accordance with Section 307(1) of the Municipal Act, 2001. 2. Issuance of Property Tax Bills The following guidelines apply to the issuance of property tax bills: a. To comply with the required statutory notice, Interim Tax Bills will be prepared and issued in January of each year for all properties. - The amount billed will be based on fifty percent (50%) of the previous year's total taxes as well as fifty percent (50%) of any Local Improvement, or Business Improvement Area charges or other special charges as may be required under provincial legislation. - Amounts deemed to be taxes, or charges having a priority lien status will be included on the interim bill at one hundred percent (100%). These items may include, but are not limited to, outstanding water and wastewater fees. Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 4 of 11 b. To comply with the required statutory notice, Final tax Bills will be prepared and issued in June of each year for all properties. - The amount billed in each instance will be calculated based on the assessment value on the returned assessment roll and the final tax rates as approved by Council through the annual budget and the associated Tax levy By-law passed in accordance with Section 312(2) of the Municipal Act, 2001. c. All property taxes due in any calendar year may be paid in four installments without penalty or interest on the 20th day of the designated month or the business day immediately following the 20th day of the designated month should the 20th occur on a weekend or statutory holiday. d. Installment due dates for all property class are as follows: - Interim billing - February and April - Final billing - August and October e. Property tax bills will contain all required information as set out in Section 343(2) of the Municipal Act, 2001 and any other information deemed necessary by the Treasurer. 3. Mailing a. Where allowed by legislation, and where available, provision of tax bills, arrears notices, and other related correspondence may be provided electronically as set out in Section 343(6.1) of the Municipal Act, 2001. b. The Town will strive to provide taxpayers with at least the minimum notice requirements as set out in Section 343(1) of the Municipal Act, 2021, that indicates such notice be no less than twenty-one (21) calendar days prior to the applicable due date. When possible, the Town will mail the bills in advance of this statutory notice requirement. c. It is the taxpayer's responsibility to notify the Town of Midland in writing of any mailing address changes. Section 343(6) of the Municipal Act, 2001 identifies that property tax bills shall be sent to the taxpayer's last known residence or place of business or to the premises in respect of which the taxes are payable, unless the taxpayer or the taxpayer's lawyer directs the Treasurer in writing to send the bill to another address. This direction continues until it is revoked in writing. Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 5 of 11 4. Deemed Received a. Any tax bill, arrears notice, or other related correspondence sent by ordinary mail, is considered delivered to and received by the addressee unless the notice is returned by the Post Office or an error in the mailing address is proven by the taxpayer. b. Failure to receive a tax bill does not exempt a taxpayer from paying the taxes, penalty and interest will be added as a result for the non-payment of taxes or any instalments by the due date. 5. Supplementary Property Tax Billings a. Omissions - Section 33 of the Assessment Act allows for the taxation of real property that has been omitted from the returned assessment roll. This provision allows for taxation in the current year, plus an additional two preceding years. The applicable tax rates for the effective years will be applied. b. Additions - Section 34 of the Assessment Act allows for the taxation of new assessment that has increased the value of the property since the return of the last revised assessment roll. These taxes apply only to the current taxation year. c. Supplementary property tax bills will be generated per the applicable assessment data from MPAC per the schedules on Appendix 1, and will be processed and mailed in the same manner as the interim and final tax bills. Installment due date(s) for supplementary property taxes will be set by the Treasurer and will provide the taxpayers at least twenty-one (21) calendar days prior to the due date. 6. Application of Payment a. Section 347(1) of the Municipal Act, 2001 outlines how payments are applied to outstanding balances: i. The payment shall first be applied against late payment charges (penalty and interest) owning in respect of those taxes according to the length of time the charges have been owing, with the charges imposed earlier being discharged before charges imposed later (i.e. longest outstanding penalty and interest/late payment charges are discharged first). ii. After all outstanding late payment charges are discharged, the payments Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 6 of 11 shall be applied against taxes owning according to the length of time they have been owing, with taxes imposed earlier being discharged before taxes imposed later. b. Section 347(2) of the Municipal Act, 2001 specifies that, subject to the approval of the Treasurer, a part payment on taxes may be applied in a manner different than that set out in Section 347(1). c. Section 347(3) of the Municipal Act, 2001 stated that no part payment shall be accepted on a tax account where a tax arrears certificate has been registered against the property unless an extension agreement has been formally executed by the Treasurer. d. Section 341 of the Municipal Act, 2001 provides that a municipality may apply refunds from appeals to the current tax liability. The Town will apply any refund resulting from an appeal, request for reconsideration, or other legislative reduction first to the taxpayer's account to reduce any outstanding balance. A taxpayer may request in writing a refund of any remaining credit balance. 7. Accepted Payment Methods a. Payments are payable to the "Corporation of the Town of Midland", 575 Dominion Avenue, Midland, ON, L4R 1R2 and must be received at the Municipal Town Office on or before the installment due date to avoid penalty and interest. b. The following payment methods are accepted for property taxes: i. Payments may be received in person during regular business hours at the Municipal Town Office (575 Dominion Avenue, Midland), by cash, cheque, debit card and credit cards* (*2.4% convenience fee apply to credit card payments); ii. Cheques may be dropped into the after-hours mailbox located outside the west entrance of the Municipal Town Office; iii. Cheques may be mailed; however, the cheques must be received at the Municipal Town Office on or before the installment due dates to avoid penalty and interest; iv. Payments may be made by telephone or internet banking. Taxpayers wishing to pay in this manner need to be aware that currently the typical Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 7 of 11 processing time for Canadian financial institutions to transfer payments to the Town's account can be at least three (3) business days. This means that payments made in this manner should incorporate sufficient lead time in advance of the due date. v. Payments may be made in person at most Canadian financial institutions. As noted in (iv) above, the typical processing time for Canadian financial institutions to transfer payments to the Town's account can be at least three (3) business days. This means that sufficient payment processing time should be considered when making payments at financial institutions to ensure payments are received in advance of the due date. c. The Town offers two (2) Pre-Authorized Payment (PAP) Plans to taxpayers. Taxpayer who wishes to enroll to the PAP Plan, their property tax account must be in good standing with no arrears. A complete Pre-Authorized Payment (PAP) Agreement must be submitted, including a void cheque (or authorized banking information provided by taxpayer's bank) to the Town for approval before the PAP enrollment deadline. The Town has the authority to add supplementary tax levies, other unpaid levies, and/or other fees and charges to the automatic withdrawals of the PAP Plan if applicable. The two (2) Pre-Authorized Payment (PAP) Plans are: i. 10 Month Plan - a monthly plan over ten months from January to October ii. Due Date Installment Plan - an installment plan with four withdrawals each year, as per due dates indicated on interim and final tax bills d. Payments may also be accepted on behalf of the taxpayer/property owner paid by a mortgage company or financial institution. e. US cash will not be accepted. Payment tendered by cheque or bank draft in US funds will be accepted based on the exchange rate established by the Town's bank on the day of the deposit less a 5% charge for administration. f. Payments that are returned by the bank marked with a reason such as "insufficient funds or non-sufficient funds", "Frozen account", "account closed", "payer deceased" or etc., will be subject to an NSF fee as set out in the Town of Midland's By-law that establishes the comprehensive Town rates and fees schedule. g. A taxpayer enrolled in a PAP Plan who has had a payment dishonored by the bank will be automatically removed from the PAP Plan, and service fees for Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 8 of 11 the dishonored payment will be applied to the taxpayer's property tax account. Taxpayer may re-enroll to the PAP Plan by submitting a new PAP Agreement once the account is paid in full. If the tax account has two or more payments dishonored by the bank within six (6) months, the taxpayer may re-enrol by submitting a new PAP Agreement after keeping their tax account current for twelve (12) months. 8. Collection Methods There are four basic remedies used by the Town to enforce payment of property taxes owing: a. Penalty and interest - Late payment charges shall be assessed at the rate of 1.25% or the highest rate allowed under the Municipal Act, and will be added to all past due accounts following the installment due dates and monthly thereafter until paid. Penalty and interest will not be compounded and will only be added to accounts with balances over $10.00. b. Rent Attornment - Under the provision of Section 350 of the Municipal Act, 2001, rent attornment is available for tenant occupied properties. Where taxes are owed in respect of any land occupied by a tenant, the Treasurer may give the tenant notice in writing requiring the tenant to make their rent payment to the Town to pay up the amount of outstanding taxes due on the tenanted property. c. Bailiff Action - Bailiff action as provided for in Section 349(1) of the Municipal Act, 2001, may be used for all properties. Taxes may be recovered with costs as a debt due to the municipality from the taxpayer originally assessed for them and from any subsequent owner of the assessed land or any part of it. d. Tax Registration / Tax Sale / Sale of Land for Tax Arrears - Tax registration and sale falls under Part XI of the Municipal Act, 2001 and the Municipal Tax Sales Rules as specified in O. Reg. 181/03 which allowed sale of land to proceed for those properties that are in arrears for the current and preceding two years. Ontario Regulation 571/17 amended this provision by reducing it by one year to those properties that are in arrears for the current and preceding year. i. Under this policy, generally properties will be eligible for tax sale and the tax registration process will begin when the arrears exceed three years. ii. In some circumstances with properties deemed to be high risk, at the recommendation of the Treasurer and, upon Council's approval, the tax Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 9 of 11 registration process will begin when the arrears exceed two years. Taxpayers or interested parties have one year from the date of tax registration in which to redeem the property for all taxes, penalty and interest outstanding plus associated legal, tax sale and/or administrative costs. The Town may use an external party/firm to process all required statutory notices as part of the tax registration process, subject to additional fees and charges added to the tax account per Town's Fees and Charges By-law. e. For the purpose of administering the Municipal Tax Sales procedures, Council authorized the Treasurer to enter into extension agreements in accordance with the Municipal Act, S.O. 2001, c.25 and O. Reg. 181/03 Municipal Tax Sale Rules, as amended by Ontario Regulation 571/17. 9. Outstanding Taxes General Notice Procedures a. Arrears notices will be mailed four times annually in March, May, September, December to all taxpayers with outstanding balances over $10.00. Additional charges apply per Town's Fees and Charges By-law. b. Affixed to the September and December arrears notices for those properties approaching three years in arrears will be a notice that states "Your property is going to be eligible for Tax Sale. Please contact [Finance Department contact name and phone number] to avoid having your property registered for Tax Sale". c. Affixed to the March arrears notices for those properties now three years in arrears will be a notice that states "Your property is now eligible for Tax Sale and will be registered shortly. Please contact [Finance Department contact name and phone number]" immediately. d. By April 30th, taxpayers who have received notice of impending tax registration per this policy and who have not contacted the Finance Department or after contact but have not provided full payment as stipulated on the date of contact will receive a final notice that the Town will be proceeding with the tax registration process. e. The final notice will be mailed in May together with the May arrears notices for those properties that have not provided full payment, with a notice that states "Your property is now eligible for Tax Sale and will be registered shortly. Please contact [Finance Department contact name and phone number]" immediately. Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 10 of 11 f. The Treasurer has the authority to exercise discretion in the application of these policies where unusual circumstances are apparent. The guiding principles for this discretion shall be ensuring legislative requirements are met, ensuring fairness to all taxpayers, and that the overall best interests of the Town are met. g. Late payment charges (penalty and interest) are adjusted when the following situations arise as set out in Section 345 of the Municipal Act: i. A change under the Assessment Act of the followings, 120 days after the day the municipality is notified of the change by the assessment corporation, the Assessment Review Board or a court, 1. in an assessment on a property 2. in the property class in which a property is placed, or 3. if parts of a property are placed in different property classes, in the allocation of the assessment on the property between the parts ii. Deemed by the Treasurer, that the interest or penalty was charged as a result of an error of a municipality, local board or other body for which the tax was being raised. iii. In extraordinary circumstances deemed appropriate by the Treasurer, upon written request, the Treasurer shall have the authority to approve such write-offs of interest and penalty for amounts of up to $100.00 once per tax account during the lifetime of the ownership. References and Related Policies This Policy is to update previously approved Policy Number CP-2019-04. Review Cycle This policy shall be reviewed at least every four years, or more frequently as required based on legislation changes. Corporate Policy No. CP-2024-09 Property Tax Collection Policy Page 11 of 11 Property Tax Collection Policy Appendix 1 All Tax Billings Due Dates Tax Billing for All Properties Supplementary Assessment Issued by MPAC on or before Supp Billing Processed on or before Arrears Notices Issued in January January February Interim #1 February March March X April Interim #2 April May May X June June July July August Final #1 July 20th August September August 20th September X October Final #2 September 20th October November October 20th November December November 20th December X Annual Billing Supplementary Billing In the event that any of the dates above (i.e. tax bills and arrears letters issue dates, installment due dates) cannot be met due to circumstance beyond the control of the Town, the Treasurer is authorized to amend them accordingly.