Prop­erty taxes due April 10 — for now

San Francisco Chronicle (Sunday) - - BUSINESS REPORT - KATHLEEN PEN­DER Net Worth

Cal­i­for­nia county tax col­lec­tors can­not ex­tend the April 10 dead­line for mak­ing the sec­ond half of 2019­20 prop­erty tax pay­ments, but they can waive late­pay­ment fees and in­ter­est un­der cer­tain cir­cum­stances, ac­cord­ing to a memo sent out by the Cal­i­for­nia As­so­ci­a­tion of County Trea­sur­ers and Tax Col­lec­tors.

After the In­ter­nal Rev­enue Ser­vice and Cal­i­for­nia Fran­chise Tax Board ex­tended their April 15 in­come tax dead­lines until July 15, many read­ers have been ask­ing whether the April 10 prop­erty tax would also be ex­tended as a re­sult of the coron­avirus.

Al­though the sec­ond in­stall­ment was tech­ni­cally due February 1, penal­ties do not ap­ply until after April 10. And they’re stiff — 10% of the amount due if you are even one day late. (Mailed pay­ments are con­sid­ered on time if they are post­marked by the due date.) If the pay­ment is still delin­quent after June 30, in­ter­est starts ac­cru­ing at the rate of 1.5% per month, which equates to 18% a year.

Be­cause the April 10 due date is set in state law, only the Leg­is­la­ture could change it, said Keith Wil­liams, who is Mari­posa County’s tax col­lec­tor and the as­so­ci­a­tion’s cur­rent pres­i­dent.

How­ever, there are two rev­enue and tax code sec­tions un­der which prop­erty own­ers could pay their tax after April 10 and avoid penal­ties, but it’s not en­tirely clear how th­ese ex­cep­tions would ap­ply in cases re­lated to coron­avirus dis­rup­tions, and it could vary by county. The code sec­tions were not writ­ten with epi­demics in mind.

One is if the county tax col­lec­tor’s of­fice is closed on April 10, in which case taxes are not due until the of­fice re­opens and penal­ties would not ap­ply until after that date.

This code sec­tion states that if April 10 “falls on Satur­day, Sun­day or a le­gal hol­i­day, the time of delin­quency is at 5 p.m., or the close of busi­ness, which­ever is later, on the next busi­ness day. If the board of su­per­vi­sors, by adop­tion of an or­di­nance or res­o­lu­tion, closes the county’s of­fices for busi­ness prior to the time of delin­quency on the ‘next busi­ness day’ or for that whole day, that day shall

be con­sid­ered a le­gal hol­i­day for pur­poses of this sec­tion.”

Some county tax col­lec­tor of­fices, in­clud­ing Marin’s, are still open to the pub­lic un­der the shel­terin­place or­der ex­emp­tions for es­sen­tial ser­vices. Some are closed now, but could re­open on or be­fore April 10. As long as the of­fice is open to ac­cept pay­ments on April 10, then an ex­cep­tion to the due date would not ap­ply, ac­cord­ing to Dan Mierzwa, Yuba County’s tax col­lec­tor and the as­so­ci­a­tion’s leg­isla­tive chair.

If a tax col­lec­tor’s of­fice is closed on April 10, it gets hazy.

Tech­ni­cally, this ex­cep­tion would not ap­ply un­less the board of su­per­vi­sors closed the of­fice,

Mierzwa said. Most shel­ter­in­place or­ders have come from may­ors, pub­lic health de­part­ments or Gov. Gavin New­som. San Ma­teo County is pre­par­ing a res­o­lu­tion that would al­low the Board of Su­per­vi­sors to close the county of­fices so that code sec­tion could ap­ply. Some coun­ties don’t think that is nec­es­sary.

The sec­ond code sec­tion says a county can waive penal­ties for an in­di­vid­ual tax­payer if a late pay­ment “is due to rea­son­able cause and cir­cum­stances be­yond the tax­payer’s con­trol, and oc­curred notwith­stand­ing the ex­er­cise of or­di­nary

care in the ab­sence of will­ful ne­glect.”

In nor­mal cir­cum­stances, fi­nan­cial hard­ship, un­em­ploy­ment, busi­ness fail­ure or even bank­ruptcy “is not a jus­ti­fi­ca­tion” for a waiver, Mierzwa said. He be­lieves the Leg­is­la­ture would have to ex­pand this sec­tion to cover peo­ple who lost their jobs be­cause the gov­ern­ment or­dered their work­place shut down.

Many county tax col­lec­tors have posted no­tices on their web­sites say­ing the tax is due April 10 and prop­erty own­ers should pay if they can, be­cause coun­ties, cities, schools and spe­cial dis­tricts rely

on that money — es­pe­cially now. But if they can’t, they should ap­ply for a penalty waiver and sub­mit doc­u­men­ta­tion.

“Be­fore, I couldn’t con­sider the fact that the per­son didn’t have money” to pay the tax, said Roy Given, Marin County’s tax col­lec­tor. “That is their re­spon­si­bil­ity. Be­fore to­day, if you were ad­mit­ted to a hos­pi­tal and un­able to take care of your af­fairs, that could be a rea­son (for a waiver). Now that has changed be­cause the par­a­digm is dif­fer­ent. I’m go­ing to look at each in­di­vid­ual and make that de­ci­sion.”

The San Fran­cisco tax col­lec­tor “has a process in place for tra­di­tional waivers, we have to de­cide whether the process will re­main the same” in the case of the coron­avirus, said Molly Co­hen, the of­fice’s act­ing pol­icy di­rec­tor.

Even if they could, extending the dead­line could be prob­lem­atic for

coun­ties. Many home­own­ers have al­ready paid their prop­erty taxes through­out the year with their mort­gage pay­ment. Their loan ser­vicers hold this money, or more of­ten send it to a third­party pro­ces­sor that holds it, “until al­most the last minute,” said Ge­off Neill, a leg­isla­tive rep­re­sen­ta­tive with the Cal­i­for­nia State As­so­ci­a­tion of Coun­ties. “If you ex­tend the dead­line, those com­pa­nies will take a huge por­tion of rev­enues and set it to a new last minute.”

He added that the IRS or state can ex­tend the April 15 in­come­tax fil­ing dead­line be­cause they con­tinue to get taxes through­out the year, through pay­roll de­duc­tions. Coun­ties only get paid twice a year, and count on that money com­ing in at spe­cific pe­ri­ods, in some cases to pay off short­term debt that comes due within the same fis­cal year. If the money didn’t come in, they couldn’t bor­row money across fis­cal years with­out voter ap­proval.

That’s why coun­ties have re­serves to cover short­falls.

Even if county of­fices are shut down, most ac­cept tax pay­ments by phone, mail or on­line. Some closed of­fices have drop boxes for pay­ment. Credit card pay­ments gen­er­ally in­cur a fee, debit card pay­ments do not, but check with your county. Some coun­ties, in­clud­ing San Fran­cisco and Santa Clara, ac­cept par­tial pay­ments.

“If you have the means and abil­ity, you should pay on time,” said Brad Marsh, a tax at­tor­ney with Green­berg Trau­rig. If you can’t, “doc­u­ment the rea­sons you can’t. Do it to­day. Then at­tempt to get penal­ties re­moved.”

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