Tax collection statutes are complex. People engaged in tax collection should carefully read the statutes before commencing their responsibilities.
At town meeting, a town must choose one of the following five procedures to collect taxes:
- The town may vote to elect a tax collector who would collect both current and delinquent taxes. 17 V.S.A. § 2646(8 and 9); 24 V.S.A. § 1528.
- By not indicating how the town wishes taxes collected, the first constable automatically becomes the collector of taxes. 24 V.S.A. § 1529.
- The town may vote to have the treasurer collect taxes. 32 V.S.A. § 4791. The town may also vote to have delinquent taxes collected by the collector of taxes, by the collector of delinquent taxes, or by the constable (if neither collector is elected). 24 V.S.A. § 1529.
- If the town has adopted the town manager form of government, it can also vote to have the manager collect taxes (but only delinquent taxes if the town has voted to have the treasurer receive current taxes). 24 V.S.A. § 1236(10). Or,
- If the town is without a tax collector, the selectboard can hire one (even a non-resident) to collect what the treasurer does not. 32 V.S.A. § 4799.
The town may set the date that taxes are due (32 V.S.A. § 4773), may vote to have them paid in installments (32 V.S.A. §§ 4871–4872) and may vote whether to allow discounts for early payment (32 V.S.A. §§ 4773, 4872). If the town does not establish a due date, the date is established according to the following:
- If the treasurer collects current taxes, the treasurer must post and publish notices and set a date not less than 30 days from the notice being mailed as the date taxes are due, and mail tax bills to each taxpayer. 32 V.S.A. § 4792. Taxes go delinquent the day after the date established for payment, and the warrant for collection of delinquent taxes is turned over to the delinquent tax collector. 32 V.S.A. § 4793.
- If a tax collector collects current taxes, he or she must give notice of at least 30 days as to when and where taxes can be paid and must mail tax bills to each taxpayer. 32 V.S.A. § 4772. Taxes are delinquent the day after the date established for payment of taxes or 30 days from the date of mailing the notice if no date was established.
Once taxes are delinquent, the collector may charge 8% commission. 32 V.S.A. § 1674. The town may also vote to charge interest on delinquent taxes at a rate of up to 1% per month for the first three months and 1_% thereafter. 32 V.S.A. § 5136.
Collectors of delinquent taxes have the following options when delinquent taxpayers own property:
1. Distrain the property of the owner and sell it at public auction (32 V.S.A. §§ 5191–5193) after properly attaching a tax lien in the case of personal property (32 V.S.A. §§ 5061–5079);
2. Bring suit in court against the property holder to recover the tax and costs (32 V.S.A. §§ 5221–5227) after properly attaching a tax lien in the case of personal property (32 V.S.A. §§ 5061–5079); or
3. Sell the real estate against which the tax was applied (32 V.S.A. §§ 5251–5263).
These are complicated processes that must be followed correctly and legally. A lawyer should be consulted when initiating any of the above proceedings.
The following are four rules of thumb:
- There is an automatic tax lien on real estate as soon as the grand list is lodged in the town clerk’s office;
- Taxes "run" with the property. If the property is sold with taxes outstanding, the property is still subject to the lien and tax sale — meaning it is up to the new owner to assure the taxes are paid;
- Acceptance of full or partial payment of overdue taxes shall not preclude the town from collecting the remaining balance of taxes, and any interest or penalties thereon;
- Once a tax bill or warrant is issued, it must be either paid in full or fully abated or some combination thereof. The criteria for abatement are very limited! (See 24 V.S.A. § 1535.) A town cannot "write-off" delinquent taxes — they must either be paid or abated in full.
For further information, consult VLCT’s Handbook for Delinquent Tax Collectors.