Many self serving articles

about Georgia tax laws have been published with the intent of misleading

and scaring the public. Taxes are necessary for Governments to provide

services such as: police and fire protection, roads, education, and social

services.

Fulton County, the largest

county in Georgia, billed $1.2 Billion in property taxes in 2003, representing

27% of all property taxes collected in the state. Property taxes contribute

80 percent of the revenue in the Fulton County budget. Already, the Tax

Commissioner's Office has collected 99% of taxes billed in July 2003.

If you ever wondered why Fulton County does not suffer the same degree

of fiscal woes as the state and other municipalities, locally and nationally,

one of the primary reasons is the 99 percent plus collection rate the

Tax Commissioner has achieved for the county, the city of Atlanta, Fulton

County Board of Education, and the Atlanta School Board since 1999.

Since 1997, revenue collections

have far exceeded anticipated revenue, resulting in budget surpluses,

fully funded reserves, and the highest bond ratings.

Taxes are billed July 1 every

year, with due dates of August 15 and October 15 for the City of Atlanta

and Fulton County respectively. Taxes become delinquent after those dates

and by law interest accrues at one percent a month on the unpaid balance.

A one-time penalty of 10 percent is assessed on the unpaid balance after

90 days.

Georgia law requires liens

or fi fas be attached to delinquent property taxes and recorded in the

Office of the Clerk of the Superior Court. Before liens are placed on

properties the law requires the Tax Commissioner give property owners

a 30 day notice of intent to fi fa� by mail.

This thirty day letter must

be in writing, must notify the property owner the taxes are unpaid, and

unless paid, a lien shall be issued unto the property and filed with the

Clerk of Superior Court. The primary purpose of the lien is to notify

the world at large of the defective property title. Secondarily, the lien

protects governments' right to collect delinquent taxes.

Under Georgia law, anyone can

purchase liens from the tax office by making a demand on the Tax Commissioner.

Tax Commissioners have no discretion

in the matter. Refusal to transfer liens on demand will result in a Tax

Commissioner being held in contempt of court. Since the mid 1800s Georgia

law has allowed the transfer of property tax liens and their foreclosure

all over the United States, Georgia being no exception, to shift the burden

and cost of delinquent tax collection from the public sector to the private

sector.

After lien transfer, interest

accrues at the rate of one percent per month on the unpaid balance just

as it would have if the liens were held by the county tax office.

Since 1994, when lien purchasers

were invited to the county by the Board of Commissioners with a bulk lien

purchase contract, only 2 to 3 percent of tax collections have been generated

through lien transfers.

In other words, 96 percent

to 97 percent of taxpayers pay taxes directly to the tax office without

lien transfers.

Legislation introduced by Rep.

Douglas Dean in 2002 struck down the Georgia statute requiring prospective

lien purchasers to give 60 days notice to property owners by certified

mail before liens could be transferred. Since then, no notice is required

prior to transfer, which has hurt property owners.

Lien purchasers do not have

property rights. They cannot trespass on the property; they cannot collect

rent; they cannot evict a tenant or property owner. Lien holders only

have the right to receive payments to satisfy the liens in the same manner

as the Tax Commissioner would have done. If a lien holder pays taxes on

a property, the property owner can consider it a gift.

Once a lien has been transferred,

the Tax Commissioner has no further involvement in the collection process.

Ultimately, when liens are not satisfied the law gives the lien purchaser

the right to have the Sheriff levy and foreclose on the property. The

Sheriff conducts this foreclosure sale on the courthouse steps at 10 a.m.

on the first Tuesday of the month.

Georgia law requires the Sheriff

to give a 20-day statutory notice to the owner of record of the property

as well as to the recorded owner of each security deed affecting the property

prior to foreclosure. The notice must be by registered or certified mail

to the appropriate parties. The law also stipulates that for tax liens,

written certified notice be sent the defendant ten days prior to sale,

to the defendant's last known address as listed in the records of

the Tax Commissioner.

After sale on the courthouse

steps the successful bidder receives a tax deed from the Sheriff. The

purchaser at the sale has no immediate right of possession and by law

the property owner or any person having the right, title, or interest

in or lien upon the property can redeem it from the tax deed holder. This

redemption can occur at any time within twelve months of the sale or foreclosure,

and at any time after the sale until the right of redemption is barred.

The right of redemption can only be barred one year after the sale. After

the right of redemption is barred, the deed holder has to file a quiet

title action in order to gain full control of the property.

As an illustration of how the

redemption process works, take for example a $200,000 property being foreclosed

for tax lien and Sheriff costs, totaling $5,000. The opening bid would

be $5,000. If the winning bid, for example, is $100,000, then this amount

becomes the cost basis for all redemption calculations.

Under existing law the redemption

price, shall be the amount paid for the property by the purchaser after

the sale for taxes, plus any special assessments on the property, plus

a premium of 20 percent of the amount for each year or fraction of a year

which has elapsed between the date of the sale and the date on which the

redemption payment is made.

After the first year there

is an additional 10 percent per year or part thereof. To redeem the property

anytime within the first year anyone having an interest in the property

can redeem it for $100,000 plus a premium of 20 percent of $100,000 -

a total of $120,000. The Sheriff would have in her tax account a surplus

or overbid amount of ($100,000 -$5,000) $95,000 for the person entitled

to receive, usually the property owner, to use towards the redemption

cost of $120,000. The property owner actually has to come up with $25,000

out of pocket in order to redeem the property. I have heard of instances

where the property owner claimed the excess funds from the Sheriff and

abandoned the property to the tax deed holder.

The issue as to what the county

should do about tax lien sales is not one that rests with the Tax Commissioner.

It is a policy issue with social, political, and budgetary implications.

Governing authorities will get the revenue required for governing. Whether

one should be overly protective of 3% of taxpayers who do not pay taxes

on time by enacting laws that ultimately require governments to raise

taxing rates thereby punishing 97 percent of public who dutifully pay

taxes is a policy and budgetary dilemma, not a collection issue.