Law Firm Explains Delinquent Tax Collections to City Council

The La Grange City Council heard a presentation last week from the law firm that collects delinquent property taxes for the City.

John Banks, a partner with the firm Perdue, Brandon, Fielder, Collins and Mott LLP, explained the collection process at the Council meeting on June 10.

“I always say we’re the good attorneys, you never pay us a penny,” Banks said. “That’s because our fee is set by statute. It’s a 20 percent add-on to the delinquent tax. When folks don’t pay their taxes, they get the privilege of paying our fee.”

Taxpayers receive their notice of appraised values in April. The local appraisal district certifies the tax rolls in July. Property owners receive their tax statements in October. They have until February 1 to pay their taxes without delinquent fees or penalties.

After Feb. 1, delinquent taxpayers begin to face penalties.

“You surely don’t want to go delinquent, because in the first month you get hit with six percent penalty and one percent interest,” Banks said. “So that $100 in tax becomes $107. Then it goes incrementally up two percent.

“Then in May, I send a letter out to tell everyone, ‘Guess what? If you don’t pay your taxes by July 1, then I’m going to punch you in the nose with 20 percent attorney’s fee,” Banks said. “There’s no blind-siding. I say this because sometimes people get upset about delinquent taxes. But man, borrow money before you let your property taxes go delinquent, because that $100 bill on Jan. 31 becomes a $133 bill on July 1. We don’t surprise people.”

Banks said delinquent taxpayers can avoid the 20 percent penalty by setting up a payment plan before July 1.

“We try to do it professionally, we try to do it efficiently,” he said.

Banks said his firm deals with far fewer delinquent taxpayers in La Grange and Fayette County than other parts of the state.

“Y’all have a desirable county to live in,” he said. “Folks don’t want to lose their property. They’re going to pay their taxes in most instances. You collect about 98 percent of the taxes before they go delinquent on July 1.”

Banks said delinquent accounts for the 2022 tax year were just 1.9 percent of the City’s total tax levy. That amounted to $15,788 in delinquent taxes for the City, compared to $813,743 in property taxes that were not delinquent.

“Very seldom will you see 100 percent collection,” Banks said. “Every county has manufactured housing. You couldn’t sell it if you had to. Businesses close down, even though you run a tight ship and try to catch them before they close down. When they close, that property goes unpaid. We’ve been fortunate, and the City has been fortunate, that we’ve kept those to a minimum.”

Banks presented numbers that showed his firm each year collected more than 90 percent of the delinquent taxes between the 2018 and 2021 tax years. For the tax year 2021, for example, the firm collected $13,023 out of the $14,445 in delinquent taxes from that year. Banks said those numbers reflect the base tax amount owed and not any interest or penalties that accumulated.

“Delinquent taxes are not always a bad thing for entities because you’re getting a good rate of return,” he said.