Request By:
Mr. Jonathan A. Mason
Denicola & Mason Company, L.P.A.
901 Fifth & Race Tower
120 West Fifth Street
Cincinnati, Ohio 45202
Opinion
Opinion By: Steven L. Beshear, Attorney General; By Alex W. Rose, Assistant Attorney General
In your letter to the Attorney General you ask what is the maximum allowable interest and penalty permitted under the Kentucky Revised Statutes that cities of the fifth class may levy on delinquent ad valorem taxes.
KRS 92.540(2) states as follows:
"The city legislative body of each city of the fifth or sixth class shall provide by ordinance a system for the assessment, levy and collection of all city taxes, not inconsistent with the statutes relating to revenue and taxation in cities of those classes. The system so adopted shall conform, as nearly as circumstances permit, to the provisions of the statutes relating to assessment, levy and collection of state and county taxes."
The statutes relating to revenue and taxation of cities of the fifth and sixth class are KRS 92.280, 92.281, 92.290, 92.300, 92.310, 92.520, 92.530, 92.540, 92.637, 92.640, 92.700, 92.750 and 92.810. None of these statutes deal with the questions of interest or penalty.
The state and county system for the assessment, levy and collection of taxes is found in KRS Chapters 132, 133 and 134. KRS Chapter 134 addresses the collection of taxes and in KRS 134.460 an interest rate of twelve percent (12%) is allowed. KRS 134.020 provides for a six percent (6%) penalty except that a two percent (2%) penalty applies in cases in which the taxes become delinquent on January 1 and are paid by the end of January. After January 31, however, the six percent (6%) penalty applies in all cases.
It is, therefore, our opinion that a fifth class city may charge an interest rate of twelve percent (12%) and a penalty of six percent (6%).