Woman Lost Property at Tax Sale

Woman Lost Property at Tax Sale

Shortly after January 1, county delinquent tax collection authorities will start notifying some Pennsylvania property owners that they are delinquent in their payment of their real estate taxes. Eventually, that real estate will be sold at tax sale if the taxes remain unpaid. If you receive a delinquent tax notice in the upcoming months, don’t delay, resolve the payment promptly and make sure you have paid the taxes in full.

A Pennsylvania widow was shocked to learn that she lost her home at tax sale, and she was successful in her appeal to challenge the sale. The widow was not familiar with her real estate taxes because her husband had customarily taken care of the payments. When he died, she used the life insurance proceeds to pay off the home mortgage. But she failed to pay part of the delinquent taxes and then received a delinquent tax bill with penalties and interest. She promptly paid the delinquent tax bill of $897.19 in full. But because interest of $6.90 was accruing each month, and because another interest charge was imposed after she mailed her check, she was left with a balance due of $6.90. Several months later, the tax collection bureau billed her $28.25, a sum consisting of the interest balance of $6.90, plus postage and costs. The widow didn’t pay the $28.25.

The following year, the widow again paid her taxes late, and the total due, with penalties and interest was $3,990.03. The bill did not include the previous year’s balance of $28.25 and the tax collection bureau apparently did not send any further requests for the $28.25 from the previous year.

Because the $28.25 was over a year overdue, and because it caused the widow’s home to be on the delinquent tax list, her home went up for tax sale and was purchased by a bidder. When she discovered what had happened, she immediately requested a hearing to set aside the sale. The county court simply reviewed the record, found the sale legal and denied her any relief.

On appeal, the appellate court reversed the county court, finding that fundamental state and federal principles of constitutional law demand “the most rigorous due process standards” when government deprives an owner of property. The widow was entitled to a hearing, in which the collection bureau was responsible to prove that she had actual notice of the scheduled sale. The appeals court returned the case to the county for further hearing and proof.

Notices from tax collection authorities must be taken very seriously by property owners. In order to hold all property owners accountable to pay their real estate taxes, Pennsylvania law provides an orderly process for the forced sale of real estate burdened by delinquent taxes. Be sure your real estate taxes are current, and if they are not, pay careful attention to all notices regarding your delinquent taxes. If you have actual notice of a tax sale, even if you think the sale is a mistake, don’t ignore the notice. You could lose your property.

Cite

Battisti v. TCB of Beaver County, 76 A.3d 11 (Pa. Cmmwlth. 2013).

Changes to Pennsylvania Inheritance Tax Impact Family Businesses

Changes to Pennsylvania Inheritance Tax Impact Family Business

Very recent changes to Pennsylvania inheritance tax law make it more affordable for families to pass on interests in family businesses. See 72 P.S. §9111.

Businesses in existence for five years, with book value assets worth less than $5 million, and with fewer than 50 full-time employees can take advantage of the new law. All owners must be family members. Businesses with a principal purpose of managing investments or income producing assets are excluded from the protection of the new law.

Now when an owner dies, if he or she leaves an interest in a qualified business to a son or daughter, husband or wife, brother or sister or other limited lineal or ancestral relatives, the inherited interest is not subject to inheritance tax.

Before the Act was passed, when small business owners died, their heirs were subject to Pennsylvania inheritance taxes on the share of the business each inherited. Pennsylvania inheritance tax rate are based on the relationship of the beneficiary to the decedent. Spouses pay no inheritance tax, but parents, children and grandchildren pay 4.5%, siblings pay 12% and all other beneficiaries pay 15%. The law was passed to protect small business owners from the drain of cash or assets triggered by inheritance taxes on the share left by a deceased family member.

The relatives who inherit a share of the business must keep the business in family hands, continuing to maintain the business in the ownership of family members, for at least 7 years. They are required to report to the state every year confirming continued family ownership or they risk losing the exemption of the new law, and then must pay inheritance taxes.