Property Tax Late Fees During COVID-19

Property Tax Late Fees During COVID-19

Do you still have to pay property taxes during COVID-19? Can any property tax late fees be waived?

As many homeowners know, property taxes are paid yearly in two installments.  The second installment was due on April 10, 2020.  With the financial hardships of COVID-19, many homeowners understandably could not meet the tax deadline.  California did not extend the deadline, and local governments were without authority to extend.  As lobbyist against extension expressed, an extension would have threatened government services needed during the pandemic.  There is some relief, however.  Per California Revenue and Tax Code Section (“R&T Code”) 4985.2, local tax collector offices, such as the Los Angeles County Tax Collector, are empowered to waive property tax late fees.  Below is a discussion on whether or not you qualify for having the late fee cancelled.

According to an organization of California tax collectors about 20 to 40 percent of property taxes are paid through mortgage escrow accounts.  By design, the loan servicer collects a portion from your loan payment and applies that portion to the yearly assessed property taxes.  For homeowners under this latter group, assuming you made your loan payments, your loan servicer likely paid your second tax installment in time.  Thus, these homeowners need not concern themselves with any property tax late fees.

However, late fees still apply to those homeowners who pay tax installments directly to the tax collector and failed to meet the April 10, 2020 deadline.  Counties across California typically impose a 10 percent penalty fee for failing to pay the tax bill by April 10, 2020, with an additional 1.5 percent fee for each month thereafter that the tax bill continues to be late.

For counties such as Los Angeles, the tax collector’s office has announced that they will work with homeowners during these difficult times and waive late fees as long as homeowners can demonstrate an inability to pay due to “reasons related to COVID-19.”  This authority stems from R&T Code 4985.2.  In part, R&T Code Section 4985.2 provides,

Any penalty, costs, or other charges resulting from tax delinquency may be canceled by the auditor or the tax collector upon a finding of any of the following: (a) Failure to make a timely payment is due to reasonable cause and circumstances beyond the taxpayer’s control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect, provided the principal payment for the proper amount of the tax due is made no later than June 30 of the fourth fiscal year following the fiscal year in which the tax became delinquent.

How local governments will interpret the law is left to be determined.  Los Angeles County Treasurer-Tax Collector Keith Knox stated that he plans to broadly interpret “reasons related to COVID-19.”  For example, the homeowners who are eligible to have the late fee waived include those who were hospitalized because of COVID-19.  Other eligible homeowners include those who lost their job because of a closure of a non-essential business.  Eligibility also extends to parents/homeowners who were unable to work because they had to stay home and look after their children.

Residents of Los Angeles county can request to have the late fee cancelled by going to the Tax Collector’s website.  Select R&T Code 4985 if COVID-19 is the reason your tax payment is late.  You will then be asked to answer a short questionnaire.

Our real estate attorneys at Schorr Law have a great deal of experience with real estate matters and disputes. To see if you qualify for a free 30-minute consultation contact us today!

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