Request By:
Mr. Christopher S. Combs
Estill County Attorney
Estill County Courthouse
P.O. Box 505
Irvine, Kentucky 40336
Opinion
Opinion By: Steven L. Beshear, Attorney General; By Alex W. Rose, Assistant Attorney General
In your letter of March 9, 1982, you requested the answer to several questions dealing with powers of arrest of city police officers and the collection of delinquent taxes. You asked five questions concerning the collection of delinquent real property taxes.
(1) What type of notice is sufficient to inform a delinquent taxpayer that his certificate of delinquency has been purchased by the county or another buyer and, more specifically, is it permissible to send such notice by certified or registered mail considering the requirements of KRS 134.500?
KRS 134.500 (1) states as follows:
"Within fifty (50) days after the issuance of a certificate of tax delinquency to the state, county and taxing district, the county attorney shall cause a notice of the purchase to be served by the sheriff on the person in whose name the property was assessed, and advise him that the certificate is a lien of record against his land that bears interest at twelve percent (12%) per annum, and if not paid the county attorney will proceed as provided by law to collect same. A copy of the return of the sheriff shall be filed in the office of the county clerk in the manner prescribed by the department of revenue. Failure to prepare such notice shall not affect the validity of the claim of the state, county, and taxing district. "
The above language mandates service of the notice by the sheriff and thus it would not be permissible to send such notice by certified or registered mail. If the notice is not prepared, the only consequence is to deny the county attorney his 20% fee.
(2) Is there any way of filing an actual lien in the county court clerk's office on the property based upon the certificate of delinquency?
KRS 134.470 provides in relevant part as follows:
"An uncollectible tax bill or a certificate of delinquency a certificate of delinquency shall embrace the entire tax claim, including the lien provided in subsection 1 of KRS 134.420, and shall continue to be a personal obligation of the delinquent taxpayer. . ."
Additionally, KRS 134.420(1) states in material part as follows:
"The state and each county, city or other taxing district shall have a lien on the property assessed for taxes due them respectively for five (5) years following the date when the taxes become delinquent, and also on any real property owned by a delinquent taxpayer at the date when the sheriff offers the tax claims for sale as provided in KRS 134.430 and 134.440."
When the above statutes are read in conjunction with the wording of KRS 134.500(1), it is apparent that the state, county and other taxing districts have a lien against the taxpayer's land as soon as the taxes become delinquent. When the certificate of delinquency is issued at the sale of the tax bill by the sheriff, it becomes the evidence of the lien against the taxpayer's property. Therefore, the certificate of delinquency should be filed in the county clerk's office so as to effectuate the above wording. The copy should be filed in the same manner as all other tax liens against property are filed in the county clerk's office. It should be filed immediately after the sheriff settles with the state pursuant to KRS 134.450(3) and the county clerk must maintain an index of all certificates of delinquency so filed.
Even if no such lien has been filed, the Kentucky Court of Appeals in the case of Midland-Guardian Company vs. McElroy, Ky. App., 563 S.W.2d 752 (1978), at page 754, in discussing lien priorities between the lien granted by KRS 134.420(1) and a purchase money mortgage, stated as follows:
"The state and each county, city or other taxing district shall have a lien on the property assessed for taxes due them, respectively, for five years following the date when the taxes become delinquent. . . this lien. . . shall have priority over any other obligation or liability for which the property is liable.
This section simply means, as applied to this case, that any taxes by the city of Walton or by Boone County assessed against the particular real estate would have a priority over the recorded mortgage."
Thus, so much of the lien as remains after the sale of personalty, as provided in KRS 134.430, shall constitute a first lien against the assessed real estate subject to the tax lien.
(3) Is it permissible to provide delinquent taxpayers with a second notice prior to sale of the property?
KRS 134.500(2) provides as follows:
"The county attorney shall prosecute the remedy or remedies provided in this chapter that are most likely to effect collection of the amount due on the certificate of deliquency. Upon the failure of the county attorney to give the notices provided in this section, or to prosecute the remedies for collection of certificates within twelve (12) months after the right to collect accrued, or to duly complete the performance of any other duties necessary to collect the claims of the state, county and taxing districts for taxes, the department of revenue may perform such duties."
The above statutory language authorizes the county attorney to take those actions he deems suitable, necessary and proper for collection of the tax. Under the statutory scheme of the Commonwealth, the sheriff must sell uncollectible tax bills on real property prior to making his settlement and, if no one bids on these uncollectible tax bills, he must purchase them for the state, county and taxing districts and, at the time they are sold to these taxing districts, they are then termed certificates of delinquency. Within fifty days thereafter the county attorney must prepare and have the sheriff serve the required notice upon the delinquent taxpayer. No further collection action is authorized by the county attorney until the expiration of the three-year redemption period arising after the sale of the first certificate of delinquency.
At the expiration of three years from the date of sale of the first certificate of delinquency, the right to collect the amount due on it has accrued. The county attorney is then empowered to prosecute the remedy or remedies most likely to effect collection. Such remedies are set forth generally in KRS 134.490 and authorize the county attorney to have the sheriff distrain and sell personalty prior to any sale of real property. If you believe that a second notice sent to the delinquent taxpayer at the expiration of the redemption period may prove effective, you have the authority to prepare such a notice and mail it to the taxpayer.
(4) If there is one certificate of delinquency that is at least three years old, can all other delinquent tax bills against the same taxpayer be joined together with it and collected in one action?
This matter was addressed in OAG 77-183 in the following words:
"The county attorney or any other owner of a delinquent tax bill must wait three years to sue under the terms of the statute. In other words, there must be a delinquent tax bill three years old before suit can be filed. At that time all delinquent tax bills may be included in the suit up to eight years old."
KRS 134.470 allows the bringing of an action on tax liens that are less than three years old provided one certificate of delinquency exists for which the three-year redemption period has expired as demonstrated by the following language from KRS 134.470:
"If the owner of a certificate of delinquency proceeds to enforce satisfaction of the certificate, he may include all other certificates held by him against the same delinquent taxpayer. . . ."
This rule is slightly different where the taxpayer has sold the property subject to lien and the action is for a lien foreclosure. In such a case, the proceeding for that tax lien is governed by the time applicable to the particular property subject to the lien.
(5) Due to the high cost of collection and the extremely low funding available for collection activities, is attempting initially to collect only tax bills of $100 or more, a reasonable classification based upon necessity for equal protection purposes?
Where the governmental action treats similar situations differently, the type of classification is of great importance. Where fundamental rights are affected or the classification is suspect, i.e., based upon race, religion, national origin, sex, etc., such governmental action and the laws on which it is based are subject to strict scrutiny. In this situation, however, no category requiring a strict scrutiny is present and thus the governmental action will be upheld so long as it is possible to conceive a rational basis for the government's choice and, as long as the governmental action is legitimate, reasons of convenience or efficiency will suffice to uphold it. See New Orleans v. Dukes, 427 U.S. 297 (1976).
Your proposed action of collecting tax bills of high dollar value first appears to be a reasonable classification based upon necessity in order that you not deplete your operating budget. After collecting the larger bills, however, if funds remain with which to continue to collect delinquent tax bills, you must do so.