Tax Installment Plan Could Offer Some Help

Friday, 19 September, 2008

For nearly a decade, there's been a way, but not much of will to pay real estate property taxes in installments.

That's about to change. For the second time, Beaufort County is getting ready to pass an ordinance that sets up the procedures for paying property taxes over the course of the year rather than in one lump sum.

The idea is to give people without a mortgage escrow account a vehicle to pay their taxes without the sticker shock of a single payment. It's a good idea if it helps provide the structure and self-discipline to set aside the money for that annual property tax bill.

People who work to keep heirs property in the hands of families have pushed for it and say it will help.

Time will tell whether that's true. The council first approved a quarterly installment plan in 2001 in response to a petition signed by about 800 people.

But few people have used it, according to county treasurer Joy Logan.

Logan hasn't exactly pushed it either. Her office hasn't had the computer wherewithal to handle installment payments. Even now, the treasurer expects to have to handle the transactions by hand for the first few months until a new computer system is operational.

Logan said in 2007 that some of the people who had tried the installment plan didn't like having to come to the county office every three months to pay the bill and didn't like getting a handwritten receipt. The chance for error also increases.

Given some of the record-keeping problems we've seen over the years that certainly would be a deal killer.

Changes in state law in 2006 have made a new ordinance necessary. State law now says counties may offer a five-installment plan. People who elect to participate must notify the county between Dec. 1 and Jan. 15. The first payment is due Feb. 15 and the last is due Nov. 15. The payments would be based on the estimated amount owed.

A hurdle for those first signing up is that the 2008 tax bill is due Jan. 15, and the first installment on the 2009 bill will be due Feb. 15.

James Mitchell, president of the Native Island Business and Community Affairs Association on Hilton Head Island, rightly notes that those who have a problem paying the current year's taxes probably aren't going to be able to make that first payment on Feb. 15.

But if a payment plan will help, you have to start somewhere.

The money paid under the plan goes into an interest-bearing account, but that interest goes to the county to help pay for administering the program.

Certainly, a taxpayer would be better off setting aside the money in his or her own interest-bearing account. That way, money earned would go to the taxpayer. Local groups should encourage the people they're trying to help to do just that.

Over the years, at least one local bank offered unsecured loans to people who needed money to pay their tax bills. A borrower paid interest on the loan, but it did provide a way to borrow money to pay the bill.

The county's installment plan at least provides an interest-free way to pay the bill.

The full County Council still must approve the ordinance; the council's Finance Committee approved it Monday.

In the meantime, the treasurer's office should do all it can to educate property owners about their options.

The installment plan isn't foolproof, but it's a far less risky way to help people hold on to heirs property than the custom of asking bidders at the county's annual tax sale not to bid against family owners.

Source: http://www.beaufortgazette.com/