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CORPORATION OF THE TOWN OF RAINY RIVER
Finance Department
Collection Policy
Policy No.
F-6
SCHEDULE "A"
F - 6 : C O L L E C T I O N P O L I C Y
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Policy Statement & Rationale
Council has a fiduciary duty to all ratepayers to collect taxes as levied and wishes
to ensure the duty is satisfied.
Council wishes to ensure
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prompt, efficient, courteous and consistent services to all taxpayers of
the municipality.
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collection procedures are appropriate within the requirements of the
legislation relative to tax collection.
For the purposes of transparency and accountability, Council hereby establishes a
policy to define the actions the Town will take to collect overdue property taxes.
Scope
This document is to provide guidance to staff and to provide a basis for decision-
making relating to Tax Billing and Tax Collection procedures for all taxpayers in
the Town of Rainy River.
Policy, Procedure & Implementation
I)
Purpose
The guidelines contained in this policy serve to supplement the Provincial
legislation that govern this area, especially for situations where Provincial
legislation provides a choice, allows for Chief Administrative Officer's discretion,
and for issues on which the legislation is silent. Legislation which should be
reviewed within the context of this policy is the Municipal Act, 2001, with particular
attention to Parts VIII, IX, X, and XI.
II)
Billing
1)
A levying by-law passed by Council is required in advance of either an
Interim or Final tax billing.
2)
Interim tax billings shall be produced in March of each year based on 50%
of the annualized taxes of the property for the previous calendar year.
Outstanding charges authorized by legislation may be added to the interim
billing at one hundred percent.
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3)
The tax billing will clearly identify the municipality, property and owner,
state the demand date, the annualized taxes for the prior calendar year, the
percentage used to calculate the interim taxes up to a maximum of 50%,
and calculated taxes levied and any arrears owing against the property.
4)
Final tax billings are produced subsequent to the passing of the annual
municipal budget and are based on tax rates established by by-law from
the budget requirements of the Municipality and the Ministry of Finance,
in relation to the education tax rate. The tax billing will be calculated to
produce a tax billing equal to the current market value assessment and the
appropriate tax rate, all local improvements charges, area charges, business
improvement area charges and any special charges levied by the
municipality or provincial government. The tax bill will fully comply with
the Standardized Tax Bill format as defined by legislation.
5)
The Municipal Act requires tax billings be post marked and mailed not
later that twenty one calendar days prior to the due date. The Municipality
will endeavor to post mark and mail the tax billing no less than twenty-
eight calendar days prior to the due date wherever possible.
6)
Bill messages may be used on the face or reverse of the tax billing. All
messages must be approved by the Chief Administrative Officer.
III)
Due Dates
Due dates for the payment of taxes shall be dependent, in the case of the Final
Bill, on the final approval of the budget by Council and the subsequent passing of
a levy by-law. Notwithstanding that there may be fluctuations as a result of
budget approval, tax billings will normally be as follows:
> Interim Billing
March 31st
> Final Billing
July 31st
IV)
Minimum Bills
In accordance with the provisions permitted in the Municipal Act, section 355 (1),
the Town will have a minimum tax bill at the amount permitted under the Act.
The amount levied in excess of assessment times the tax rate becomes part of the
general funds of the municipality. The rationale behind this provision is to ensure
the issuance of tax bills is cost effective for the municipality. The amount of
minimum billing shall be clearly defined by a Municipal By-law.
V)
Settlement of Accounts
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1)
Payment will be in the form of cash, cheques, money orders, debit card,
bank drafts, internet or telephone banking made payable to the Town of
Rainy River. Cheques which are post-dated to the tax due date will be
accepted and held by the Municipal Office.
2)
Third party cheques will not be accepted. A cheque payable to the
property owner and the Town of Rainy River will not be considered to be
a third party cheque and is to be accepted as payment.
3)
Should a credit appear on the tax account as a result of an overpayment, it
will be applied to subsequent installments not yet due in the current year.
However, at the written request of the taxpayer, a refund cheque will be
requisitioned, after allowing sufficient time (15 business days) for the
taxpayer's cheque to clear their financial institution. The minimum
amount for a refund request to be processed will be $25.
4)
If two cheques are returned for non-sufficient funds on a taxpayer's
account, personal cheques from that taxpayer, for any financial transaction
within the municipality, will no longer be accepted unless they are certified.
This restriction will be placed on the individual for a period of two years
on the first restriction, and if there is a subsequent reoccurrence of two
more non-sufficient funds payments, personal cheques will no longer be
accepted from the individual.
5)
Should payments of a tax account be tendered in US funds, it will be
accepted at the exchange rate established by the financial institution
holding the accounts of the municipality on the day of deposit.
VI)
Collection - Payment Incentives
There are five basic incentives set out by legislation to promote timely payment of
taxes as follows:
➢ Penalty/Interest
➢ Bailiff Action
➢ Collection Agency
➢ Rent Attornment
➢ Tax Registration/Tax Sale
1)
Late Payment Charges
The rate at which penalty and interest is charged is set by the Municipal
By-Law. Currently, the rate is established under the provision of the
Municipal Act Section 345. The municipality may review the rate each
year, but cannot exceed the maximum percentage established at 1.25% per
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month. The purpose of the penalty is to persuade ratepayers to pay on
time. Penalty and interest shall be charged as set out in the legislation.
2)
Bailiff Action
Section 349 of the Municipal Act, provides that 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.
The Municipality may issue a warrant to distrain for property taxes if the
taxes remain unpaid for a period of fourteen days after the installment due
date. Further information regarding Bailiff Action is provided within the
policy.
3)
Collection Agency
A collection agency is a third-party agency, called such because such
agencies were not a party to the original contract. The Town assigns
accounts directly to such an agency on a contingency-fee basis, which
usually initially costs nothing to the Town, except for the cost of
communications. Tax accounts assigned are those which the Chief
Administrative Officer deems as having a high probability of collection
and shall fall within the schedule below:
i) In the first year of this policy, property tax accounts that are at
risk for falling under the Tax Sale process at the beginning of the
following year or are currently at risk.
ii) At the end of August of the second year, property tax accounts
that are at the risk for falling under the Tax Sale process at the
beginning of the following year.
iii) At the end of October of the second year, property tax
accounts that will be within one year of the Tax Sale process at the
beginning of the following year.
iv) At the end of August of the third year and subsequent years,
property tax accounts that will be within one year of the Tax Sale
process at the beginning of the following year.
4)
Rent Attornment
Under Section 350(1) of the Municipal Act, where taxes are due upon any
land occupied by a tenant, the Municipality may give the tenant notice in
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writing requiring the tenant to pay the rent as it becomes due to the
Municipality until taxes are satisfied. It is a severe action and should only
be initiated after adequate notice. Further information regarding Rent
Attornment is provided within this policy.
After taxes have been in arrears for one year and other collection
procedures of this policy have been unsuccessful, a notice will be sent to
the taxpayer informing him of our intention to proceed with rent
collection and allowing the taxpayer a final opportunity to make suitable
payment arrangements within fourteen (14) days.
If taxes remain unpaid after the 14 day grace period, the tenants of the
rental property will be informed by letter to direct their rental payments to
the Municipality. A copy will be sent to the land owner.
Rents will continue to be collected until such time as all penalties, interest,
and taxes have been collected or an alternative arrangement has been
negotiated between the property owner and the Municipality.
5)
Tax Registration/Tax Sale
Properties which are eligible for tax registration under the Municipal Act.
The property owner or interested party has one year from the date of
registration in which to redeem the property for all taxes, interest and
penalty outstanding, including any associated costs. A contracted tax
registration firm may be used to process the required statutory
notices/declarations. The administration fee associated with this process
is in addition to the charges by the third party firm who completed the
required statutory notices/declarations and will be defined in the Tariff of
Fees By-Law of the Municipality.
Registration is a last resort and should be avoided if possible by
encouraging the ratepayer to either make full payment or arrival at a
mutually agreed upon payment plan.
It is imperative that the schedule for registration be adhered to. Letters
and correspondence should encourage payment. It is only as a last resort
that the property would become subject to tax registration. Further
information regarding tax sales is provided within this policy.
At any time during the year in which tax registration has been commenced
on a property, the property owner may request an extension to the time
afforded to pay the taxes and other amounts owing. An extension
agreement may be negotiated and approved as per the current legislation.
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6)
Additional Collection Tools
The following additional tools are available to assist in the collection of
realty taxes:
➢ Reminder Notices
➢ Form or personalized letters
➢ Telephone follow up
➢ Interviews
➢ Title Searches - Interested Party Notification
VII)
Steps and Timing of the Collection Procedure
1)
Interim Tax Notices are sent in March and Final Tax Notices in July
(subsequent to the passing of the Municipal Budget). Tax arrears owing at
the time of the billing are included on each tax notice.
2)
Late payment charges are charged according to municipal by-laws (penalty
- first day of default and interest is charged on the first day of each month
thereafter).
3)
Reminder notices for the current year are sent prior to the 15th day of the
months of February, May, September, and October. Notices for amounts
less than $15.00 will not be mailed.
4)
Any notice 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. Failure to notify the Municipal Office of
an address change in writing is not an error. Section 343 of the Municipal
Act identifies that tax bills shall be sent to the taxpayer's residence or place
of business or of the premises where the taxes are payable for, unless the
taxpayer directs the municipality otherwise. The direction for the delivery
of tax bills continues until it is revoked in writing by the taxpayer (343(8)).
5)
Priority of tax accounts for collection is:
i. Tax Accounts with three or more previous years outstanding
ii. Tax Accounts with two previous years outstanding
iii. Tax Accounts with one previous year outstanding
iv. Tax Accounts with current year only outstanding
6)
For tax accounts which indicate previous year's taxes owing, a collection
letter is sent by February 15th of the current year to the property owner(s)
advising of the tax arrears situation and asking for payment in full or
satisfactory payment arrangements to be made by a given date. If
acceptable payment arrangements are made, the account is monitored for
compliance and follow-up is done by telephone or in writing as required.
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Telephone contact is only used when the taxpayer has provided the
municipality with a telephone number.
7)
Satisfactory payment arrangements would be a series of post-date cheques
of a commitment to make payments on prearranged dates via telephone or
internet banking or in person.
8)
A series of letters will be sent with the arrears notices depending on the
status of the tax arrears. The letters are documented in Schedule A -
Letters 1 through 4.
9)
If no reply is received from the notices a final notice will be sent by
registered mail by October 15th of the second year of arrears stating that
failure to reply may result in the account being forwarded to a bailiff to
collect the outstanding taxes, which will result in additional costs to the
property owner. Costs associated with preparation and mailing of the final
notice will be added to the property tax account
10)
If there is no reply to the final notice, a sub search of title may be done to
obtain information on any mortgage holders or interested parties. The
mortgage holder(s) is then notified in writing of the outstanding taxes and
payment in full is requested. In most cases, the mortgage holder will pay
the taxes or ensure that the property owner does. This action will be used
no earlier that the fourth quarter of the year after the taxes were levied.
These costs will be added to the property tax account.
11)
A bailiff may be used if no reply to the final notice is received within 30
days of the mailing or there is no response for the mortgage holder. Costs
associated to this action are the responsibility of the property owner and
are deducted by the Bailiff, in accordance with legislation, prior to the
remittance of payment to the municipality.
Once an account has been forwarded to a Bailiff for collection purposes,
the property owner must deal directly with the Bailiff and make payments
directly to the bailiff. The Municipality should not accept payments from
property owners in this case as it blurs the line of accountability and
record keeping in regard to collection efforts and costs.
12)
If a property is in the position that a tax arrears certificate could be
registered and an application is made to divide land that is assessed as one
block into two or more parcels, if each parcel is one that can be legal
conveyed under the Planning Act, the applicant cannot proceed, whether or
not the tax arrears certificate has actually been registered. (Municipal Act,
(356(3)))
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13)
All costs incurred for collection to obtain information and/or collect tax
arrears are payable by the property owner and are added to the tax
account (section 349(1)). These costs may include, but are not limited to:
➢ All title search fees
➢ All corporate search fees
➢ Registered mail
➢ Administrative charges
➢ All site visits
These fees will be charged as outlined in the Miscellaneous User By-Law
of the Town of Rainy River.
14)
If rent attornment is chosen as a collection tool, the Chief Administrative
Officer will give notice to the tenant in writing requiring the tenant to pay
the rent normally paid to the Landlord, to the Town of Rainy River as it
becomes due, until the amount of taxes due and any unpaid costs are paid
in full.
The tenant is required by section 350(1) of the Municipal Act to comply
with this notice.
The Chief Administrative Officer has the same authority as the landlord of
the premises to collect the rent by seizure or otherwise to the amount of
the taxes due and unpaid costs, but by collecting the rent, the municipality
does not assume the responsibilities of the landlord.
Amounts paid as a result of rent attornment, may be deducted by the
tenant from the rent paid to the landlord.
VII)
Late Payment Charge Adjustments
Late payment charges are adjusted only in the following circumstances:
➢ Taxes are adjusted under Section 354, 357, or 358 of the Municipal
Act;
➢ Taxes are adjusted following an Assessment Review Board
Decision
➢ Taxes are adjusted in accordance with a decision of the Courts
➢ The interest or penalty was charged as a result of the Municipality's
error or omission. It shall be at the direction of the Chief
Administrative Officer to decide whether or not the interest
amount should be adjusted in such cases up to the amount
budgeted for write-offs in the annual budget and no more than the
purchasing policy limits.
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Appendix A
Sample Letters
Letter 1 - February 15, 20??
Dear (Taxpayer)
Payments of property taxes are the lifeblood of our Municipality. These
taxes go towards providing the necessary services and facilities which make
Rainy River the great place it is to live in. When taxes remain unpaid, it
forces the Town to arrange short-term borrowings to finance our cash
shortfall. These borrowings are expensive and consequently, impact the
costs of running the Town and ultimately can result in increased taxes
and/or service reductions.
As you can see from the statement attached, your property taxes are
presently in arrears. Should you have a problem with your bill, please
contact me at your earliest convenience at 807-852-3978.
If you have made a payment prior to receiving this notice, please disregard it
and accept our apologies for the inconvenience.
Yours truly,
Veldron Vogan, AMCT
Chief Administrative Officer
Town of Rainy River
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Appendix A
Sample Letters
Letter 2 - September 15, 20??
Dear (Taxpayer)
Your taxes have now been in arrears for over 12 months. Commencing
with the first day of the month following the month in which your taxes
went into arrears, interest has been accruing at a rate of 1.25% per month or
15% per annum. These are very high rates considering a consumer bank
loan is currently much less.
While the preferred method for payment of taxes in full when due, the
Town of Rainy River does accept partial payment of tax balances. Should
your situation find this to be a more suitable arrangement, we would be
willing to negotiate a mutually satisfactory payment plan. Please contact me
at your earliest convenience at 807-852-3978 to further discuss this option.
Please be advised that your account may be turned over to a
collection agency. The collection agency currently charges an
additional fee of 30% of the outstanding balance. A transfer of your
account to the collection agency may result in notations being place
on your credit report and may impact your ability to obtain credit in
the future.
If you have made payment prior to receiving this notice, please disregard it
and accept our apologies for the inconvenience.
Yours truly,
Veldron Vogan, AMCT
Chief Administrative Officer
Town of Rainy River
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Appendix A
Sample Letters
Letter #3 - February 15, 200?
Dear (Taxpayer)
Taxes on your property have remained unpaid for over one year. They are
continuing to accrue interest at the rate of 1.25% per month or 15% per
year. This situation creates problems for both parties; the Town having a
shortfall in cash flow and the property owner who is having a considerable
interest charge applied each month.
The Town of Rainy River would like to see this balance cleared up as soon
as possible. If your financial situation is such that payment in full is
impossible, please contact me at your earliest convenience at 807-852-3978
to discuss other suitable arrangements.
Please be advised that your account may be turned over to a
collection agency. The collection agency currently charges an
additional fee of 30% of the outstanding balance. A transfer of your
account to the collection agency may result in notations being place
on your credit report and may impact your ability to obtain credit in
the future.
If you have made payment prior to receiving this notice, please disregard it
and accept our apologies for the inconvenience.
Yours truly,
Veldron Vogan, AMCT
Chief Administrative Officer
Town of Rainy River
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Appendix A
Sample Letters
Letter #5 - October 15, 20??
IMPORTANT NOTICE TO THE PROPERTY OWNER
Dear (Taxpayer)
REGARDING
Roll Number 59-42-000-000-?????-0000
OUTSTANDING TAXES $xx,xxxx (As of today's date)
PROPERTY ADDRESS
??? NNNNNN, NG, RAINY RIVER
Please be advised that effective January 1, 20?? the above noted property
will be eligible for Tax Registration as outlined within the Municipal Act. The
balance shown on the correspondence provides the outstanding taxes and
late payment charges owing on account to the date of this letter. Late
payment charges are added on the first day of each month of default at the
rate of 1.25%.
Under current legislation, the Town of Rainy River may commence tax sale
proceedings by registering a tax arrears certificate on title of the property if
the account remains unpaid after December 31, 20??. All costs associated
with filing the necessary lien documents, estimated at $1,000 - $4,000 will be
added to the property tax account. Once the certificate of tax arrears is
registered, no partial payments on account will be accepted. However, the
property owner or any party having an interest on the property, will have
one year to redeem the property by paying the full cancellation price which
includes all taxes, accumulated penalties and interest plus all administrative
costs owing at the date of payment. Failing this, the property will be
offered for sale through a public tendering process.
Prior to registering the tax arrears certificate, a title search will be conducted
by the Town of Rainy River and the cost of the search will be added to your
tax account.
To avoid incurring these costs and jeopardizing the ownership of your
property, please ensure that all tax arrears are paid by December 31, 20??.
Should the account remain unpaid after December 31, 20??, no further
notice will be provided prior to the municipality's lien action. This office
urges you to take action.
Please be advised that your account may be turned over to a
collection agency. The collection agency currently charges an
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additional fee of 30% of the outstanding balance. A transfer of your
account to the collection agency may result in notations being place
on your credit report and may impact your ability to obtain credit in
the future.
If you have any questions relating to this correspondence or if additional
information is required, please contact the undersigned as soon as possible
at 807-852-3978.
If you have made payment prior to receiving this notice, please disregard it
and accept our apologies for the inconvenience.
Yours truly,
Veldron Vogan, AMCT
Chief Administrative Officer
Town of Rainy River
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Appendix A
Sample Letter #6
Collection of Rents - Landlord
Dear (Landlord)
Where property taxes are outstanding on a rental property, pursuant to
Section 350(1) of the Municipal Act, the Municipality can direct tenants to
pay rent owed to the landlord to the Municipality.
There currently exists a balance of unpaid taxes on your property. Efforts
to recover payment on this account have been unsuccessful. Therefore, if
you do not contact our office at 807-852-3978, to make arrangements within
14 days, the Town of Rainy River will direct your tenants to pay their rents
to the Municipality.
I hope to hear from you before the expiration of the grace period so
suitable payment arrangements can be made and collection of your tenant's
rents can be avoided.
Please be advised that your account may be turned over to a
collection agency. The collection agency currently charges an
additional fee of 30% of the outstanding balance. A transfer of your
account to the collection agency may result in notations being place
on your credit report and may impact your ability to obtain credit in
the future.
If you have made payment prior to receiving this notice, please disregard it
and accept our apologies for the inconvenience.
Yours truly,
Veldron Vogan, AMCT
Chief Administrative Officer
Town of Rainy River
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Appendix A
Sample Letters
Letter #7 - Collections of Rents - Tenants
Dear (Tenant)
Where property taxes are outstanding on a property which is rented,
pursuant to Section 350(1) of the Municipal Act, the Municipality may direct
the tenant to pay rent owed to the landlord to the Municipality.
There currently exists a balance of unpaid taxes on the property which you
are renting. The Town of Rainy River therefore requests you to pay your
monthly rent to the following address:
Town of Rainy River
Attention: Chief Administrative Officer
201 Atwood Avenue
P.O. Box 488
Rainy River, Ontario
P0W 1L0
You will be notified when to cease making payments to the Municipality as
soon as this balance has been brought to current.
If you require any additional information on the above, please do not
hesitate to contact the undersigned at 807-852-3978. Your immediate
attention to the very important matter would be greatly appreciated.
Yours truly,
Veldron Vogan, AMCT
Chief Administrative Officer
Town of Rainy River
cc. Property Owner
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ADOPTION & REVIEW GUIDELINES
Approved by Motion #08-209 on October 20, 2008
Reviewed/Revised by Res. # 17-165 on December 11, 2017
Approximate date of next review ________________ _______, 20____
REFERENCES:
POLICY AREA
POLICY NUMBER
Finance
Section F-6
_____________
_____________