Agenda Text
title
City Treasurer responding to #189600 re: processing partial payments.
body
Official Text
To the Honorable Board:
Thank you for your inquiry as to why the City of Somerville does not accept partial payments for excise bills that are issued annually.
Under MGL Chapter 60A, all Massachusetts residents who own and register a motor vehicle must annually pay a motor vehicle excise. Also, under MGL Chapter 59, Section 2, it is important to note that every motor vehicle, whether registered or not, is subject to taxation, either as excise or personal property, for the privilege of road use, whether actual or future. The excise is levied by the city or town where the vehicle is principally garaged and the revenues become part of the local community treasury.
Local tax collectors are responsible for collecting the motor vehicle and trailer excise. Collectors may appoint deputy tax collectors or may enter into agreements with collection agencies to assist them in the collection of delinquent accounts. Money collected on all bills, excluding deputy tax collectors’ fees, is put into the municipal treasury. Generally, tax collectors and deputy tax collectors do not accept partial payment of an excise bill. Taxpayers should be prepared to pay the full amount due. There are no special considerations for financial hardship.
The State is responsible for setting and administering guidelines related to excise taxes. The City conforms to all of the guidelines relating to the collection of excise taxes. Excise bills contain legal verbiage mandated by the Department of Revenue: "If not paid when due, subject to penalties of interest, demand charges, and fees, interest accrues on any unpaid balance until the date of payment at an annual rate of 12%". In addition, the City prints a taxpayer message on the bills stating the demand fee was increased to $30.
There are no provisions under statute, which allow any municipality to establish payment plans or the acceptance of partial payments for excise taxes. "Payment Plans" are only established under law for Tax Title properties. These plans are a legal agreement in which both the taxpayer and Treasurer agree to with a specific amount being paid each month. Penalties and interest continue to accrue.
The State strongly recommends municipalities refrain from accepting partial payments, which would inhibit the City from moving forward with the collection process outlined by Law (chapter 60). Even with a partial payment, penalties and interest would continue to accrue. The City is required to send a demand notice in order to move forward with this collection process to insure the collection of its’ revenue. The City is required by Law to follow this process. (Ch 60 and 60A).
The State does not specifically state that it is illegal for a collector to accept partial payments, but does strongly recommend that collectors refrain from accepting them. There are several reasons for them taking this approach.
Statute mandates the original bills are payable in full within thirty days of issue. Once past the due date, interest must accrue. The collection steps in the mandated process involve additional fees being added to an outstanding excise bill over a period of several months. The collector has strict guidelines as to what reasons are allowed under law for rescinding these penalty fees. For example, statute clearly states that even if a taxpayer did not receive the original bill they are liable for any additional fees and interest once the due date has passed.
The State recognizes that many taxpayers who did not pay the original bill attempt to send in the original amount of the bill when they receive notices reflecting additional penalty amounts and assume they have fulfilled their obligation. Statue does require that when monies are received for balances that have accrued penalties and interest that it be applied to the penalties and interest first. This would leave a principal balance that would still accrue interest and further penalties. In cases such as this, if the municipality accepted this partial payment, the taxpayer would incur additional penalties because their account would still have a principal balance.
The Treasurer's office is always open to discussing any issues within the initial thirty-day period. When this occurs, the Treasurer's office has the opportunity to outline the collection steps and timelines, allowing the taxpayer to determine what actions should be taken on their part to avoid incurring any penalties.
Please contact me if you have any further questions.
Sincerely,
Elizabeth A. Craveiro
CMMC/Treasurer