“Don’t do it,” said Bee County Tax Assessor-Collector Linda Bridge.
“I want the public to know that our office will work with taxpayers and help them work out a payment plan,” Bridge said.
In most cases, a plan is not only possible, but in the end it will save the property owner considerable money that would, otherwise, go into the coffers of the tax lien transfer company in the form of “usurious” interest payments.
In Texas, the 83rd Legislature is considering steps to prevent property tax loans from breaking the financial backs of property owners who owe delinquent taxes.
Bridge cited a recent article in Forbes that explained the problems with those transfer companies.
The article, dated Jan. 20, says that transfer companies can turn a $10,000 tax bill into a $15,000 to $18,000 bill by adding interest rates.
“It’s a pretty significant issue here because Texas derives lots of dollars from our property-tax system because we don’t have an income tax,” Texas Rio Grande Legal Aid attorney Robert Doggett told Forbes.
“Some taxpayers have only two or three years of back taxes that could be better paid off through a payment plan,” Bridge said.
However, there are some taxpayers who could benefit from the services of a tax transfer company.
That would include property owners who have a history of defaulting on payment plans. “For them, this could be an option,” Bridge said, because they are not considered very credit worthy.
However, Bridge warned those who might need that service to make sure they avoid high interest payments.
The tax assessor-collector said she could point to at least seven taxpayers out of the nine who have recently turned to a tax transfer company that could have gotten a better deal by arranging a payment plan through her office.
Bridge said she is not sure how many delinquent taxpayers have signed agreements with transfer companies.
Bridge said there are three alternatives for paying property taxes that could make those payments easier.
1. Escrow payments in the event that the taxpayer is current on back taxes. That allows the property owner to make monthly payments. And the tax office at 411 E. Houston St. has a night deposit box and a drive through window so that taxpayers need not get out of their vehicles to make the payments.
2. Payment plans.
3. Quarterly payments may be arranged by property owners who are over the age of 65 or disabled.
However, those payments must begin by Jan. 31. “Feb. 1 is too late.” Bridge said. And quarterly payments may be made for the current year only.
Property tax lending is legal in Texas, Steve Scurlick, executive vice president of the Independent Bankers of Texas, told Forbes. But bankers are looking into ways of dealing with the problem through new legislation in an attempt to see that delinquent taxpayers do not fall into a high interest rate trap.