Annual property taxes in Texas are some of the highest in the country. With no personal income tax, Texas is dependent on the revenue from property taxes in order to pay for essential resources for its citizens, including public schools, libraries, emergency services, road maintenance, and community safety measures. Because the revenue from property taxes is so important, the state adds severe penalties and interest to unpaid property tax bills.
The penalties and interest accumulate steadily for the first few months, but on July 1, an additional penalties fee of up to 26.6% is added to the outstanding property tax accounts. Texas laws dictate that, as of this date, tax collectors may pursue lawsuits against delinquent account holders to collect unpaid taxes. In this blog, we will discuss the property tax collection process in Texas as well as what happens when collection firms get involved.
Texas does not have state property tax; the counties implement local property taxes levied by local taxing units. This means that the local property taxes are assessed, collected, and used locally. More than 4100 local governments throughout Texas, including school districts, cities, counties, and various special districts, collect and spend these local property taxes.
Depending on the county, the responsibility of property tax collection usually falls on the county tax assessor-collector. Once the property tax is collected, it is transferred to each taxing unit in amounts that meet their established tax rates.
Bear in mind that even though many taxing units have contracts with appraisal districts to collect their taxes, appraisal districts do not levy property taxes. If you are curious about the local taxing units’ tax rates and budgets, it is your responsibility to contact the taxing units in your district to obtain the correct information.
Every year on July 1, almost all taxing entities hand over their delinquent tax roll to the law firms hired to collect outstanding property taxes. This means that, in addition to the 15-20% collection fee that is added to the delinquent accounts (depending on the county), delinquent taxpayers will need to deal with a law firm instead of their local taxing entity. Taxpayers that attempt to call the tax assessor’s office to discuss their delinquent account may be redirected to the responsible law collection law firm from July 1.
Although each law firm’s collection office deals with delinquencies differently, they will all eventually initiate a foreclosure lawsuit against delinquent taxpayers. While some start in July, others may wait a while. There is no way to predict when a taxpayer will face litigation, however, larger counties seem to be more aggressive. Historically, the higher the amount owed, the higher the likelihood of being sued.
The process usually starts with a demand letter being sent to the property. This letter states that, should there be no response from the property owner, the collection firm will move forward with the suit.
If the property owner does not pay their outstanding balance, the collection law firm may go to the district court to file a foreclosure lawsuit and obtain a court order to foreclose on the property. The notice of foreclosure is then served, in person, by a county constable. If the property owner cannot be found, the firm can choose to place a notice in the local newspaper and serve a “notice by publication.”
The taxpayers are responsible for all costs related to the lawsuit, which can amount to thousands. Taxing entities will sue for a full financial judgment, including the original tax amount, law firm collection fees, court costs, abstract fees, attorney fees, interest, and penalties.
After the lawsuit has concluded, the court will award a judgment (usually in favor of the taxing entity or entities) and will order the property to be sold in order to satisfy the judgment amount. Entities can recover only the taxes that are delinquent at the time of judgment (including penalties, interest, and fees). Liens will remain on the property for any subsequent taxes or amounts owed.
Partnering with a trusted property tax lender like AFIC is one of the best ways to get back on track if you fall behind on your property taxes. A property tax loan transfers the lien on your property to the lender, so you don’t need to worry about penalties, interest, fees, and lawsuits. The property tax loan company will pay the outstanding amount and work with you to create a solution that works for your budget and specific circumstances.
American Finance & Investment Co., Inc. (AFIC) offers our clients an affordable, hassle-free way to manage their Texas property taxes and avoid crippling penalties and interest. We can ensure that your account with the local government tax office is paid in full and will work out a manageable repayment plan for you. AFIC can provide you with an instant quote by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits:
We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans, please contact our experienced team at AFIC today.
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YOUR TAX OFFICE MAY OFFER DELINQUENT TAX INSTALLMENT PLANS THAT MAY BE LESS COSTLY TO YOU. YOU CAN REQUEST INFORMATION ABOUT THE AVAILABILITY OF THESE PLANS FROM THE TAX OFFICE.
If you are over 64 or disabled, don’t get a property tax loan, contact your tax office about a deferral.
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