1. Improving Tax Compliance
Sunday ■ MAY,
3:50-4:40PM
Improving Tax Compliance
MODERATOR
Brian Seals
Taxpayer Services Supervisor, Lakewood, CO
Carla de la Pava
SPEAKERS
Treasurer, Arlington County, VA
Adam Langley
Senior Research Analyst, Lincoln Institute of Land Policy
#GFOA2017

2. IMPROVING TAX COMPLIANCE
Carla de la Pava
Treasurer
Arlington County, VA
Adam Langley
Senior Research Analyst
Lincoln Institute

4. 0.24%

5. IMPROVING TAX COMPLIANCE:

6. QUALITY ASSESSMENTS
Communication
Tools
Data Analysis
CARFAX

7. ACCIDENTAL DELINQUENTS
460,000 Reminders
7,500 Robo Calls
900 Pieces of Returned Mail
Advertising/Social Media

8. PEOPLE WHO CANNOT AFFORD TO PAY
Taxpayer’s Assistance Program (TAP)
Interest free, short-term loan guaranteed by the Treasurer

9. Adam

10. THE EVADERS Impose Liens Seize Assets Bank Court Action (Judgments)
Wage
Rent
Seize Assets
Court Action (Judgments)
DMV Holds
Publish Names
Seize State Income Tax Refunds

12. Discussion
and
Questions

13. Reducing Property Tax Delinquency with Monthly Installment Payments
Adam H. Langley

14. Mortgage Escrow for Property Taxes

15. Mortgage Escrow for Property Taxes Property Tax Through Mortgage
% Homeowners Who Pay
Property Tax Through Mortgage
44%
Have Mortgage Escrow:
Pay property tax as part of mortgage bill
56%
No Mortgage Escrow
20%
Have mortgage, but no property tax escrow
36%
Do not have a mortgage
Source: American Community Survey (2015).

16. Mortgage Escrow for Property Taxes Property Tax Through Mortgage
% Homeowners Who Pay
Property Tax Through Mortgage
Under 65
65+
All Ages
55%
20%
44%
Have Mortgage Escrow:
Pay property tax as part of mortgage bill
45%
80%
56%
No Mortgage Escrow
16%
Have mortgage, but no property tax escrow
25%
63%
36%
Do not have a mortgage
Source: American Community Survey (2015).

17. Property Tax Escrow
46% of Americans couldn’t come up with $400 in emergency (Federal Reserve survey)
$400

18. Property Tax Escrow
46% of Americans couldn’t come up with $400 in emergency (Federal Reserve survey)
$400
Median Property Tax Bill = $2,259
Source: Federal Reserve Report on the Economic Well-Being of U.S. Households in 2015;
2015 American Community Survey (U.S. Census Bureau).

19. Property Tax Escrow
46% of Americans couldn’t come up with $400 in emergency (Federal Reserve survey)
$400
Median Property Tax Bill = $2,259
Monthly Bill = $188
Source: Federal Reserve Report on the Economic Well-Being of U.S. Households in 2015;
2015 American Community Survey (U.S. Census Bureau).

20. Monthly Property Taxes and Delinquency
Study of Wisconsin municipalities
Increase number of installments from two to three
→ Reduce property tax delinquency by about a third
(Waldhart and Reschovsky 2012)
Preliminary survey in Survey Monkey
Homeowners without mortgage escrow ≈ 2.5x more likely to have ever been late in paying their property tax bill relative to owners that pay property tax through mortgage

21. Monthly Property Taxes and Delinquency
Problem
Billing property taxes in one or two large lump sums
→ Financial challenges for many households
→ Some become delinquent
Solution: Options to pay property taxes monthly
Property tax escrow plans run by tax collectors (15 states)
Milwaukee: Tax bill includes monthly installment option

22. Property Tax Escrow Programs
Different names
Prepayment agreements, escrow plans, monthly payments
Local option programs
Taxpayers submit application to enroll in monthly payment plan
Several payment options available:
Check, automated monthly payment via EFT or ACH, credit/debit card
Money held in escrow account to pay off annual or biannual bills
Gov’t earn interest on escrow accounts
Reconciliation process at end of year
Final monthly bill slightly more or slightly less than first 11 bills
Taxpayers submit 13th payment or receive refund to bring into balance

23. States that Allow Pre-Payments for Property Taxes
Source: State statutes ( ).

24. Best Practices for Property Tax Escrow Plans
Outreach and advertising are critical
On payment plan for delinquent taxes
→ Enroll in monthly escrow plan for current taxes
Encourage automated monthly payments
People paying by check → Use tri-fold coupons for reminders and to make it easier to process payments
Use RFP to minimize transaction costs on automated payments

25. Monthly Installments in Milwaukee, WI
Automatic enrollment w/out application
Tax bill includes monthly option
Automatically enrolled in monthly payment plan after making first monthly installment

26. Milwaukee Tax Bill Has Option to Pay in Full or Installments
Monthly or
Full Payment
Note: Milwaukee has six taxing districts with different number of installments:
7 monthly installments (Feb-July): Includes county, state, and sewer district (Ex: $484)
10 monthly installments (Feb-Oct): Only city, school district, and technical college (Ex: $335)

27. Monthly Installments in Milwaukee, WI
Automatic enrollment w/out application
Tax bill includes monthly option
Automatically enrolled in monthly payment plan after making first monthly installment
No escrow accounts
Monthly payment goes right to receivables
Ten monthly payments; No reconciliation
Tax rates set in December
1st payment by Jan 31; Final payment Oct 31
Several payment options
Automated payments through EFT
Check
Pay at 13 U.S. Bank branches in city
Learn More:

28. Property Tax Delinquency Rate (2013)
Note: Same-year delinquency rate for cities with poverty rates above 25%.
Source: Pew Charitable Trust (2013), Delinquent Property Tax in Philadelphia.

29. Participation Rates in Four Jurisdictions
with Monthly Payments
Milwaukee (WI)
Butler Co. (OH)
Twin Falls Co. (ID)
Denton Co. (TX)
% Paying Monthly
20.8%
3.7%
2.1%
0.03%
# Taxpayers who Pay
Monthly Installments
33,753
5,700
625 50
Total Number of Accounts
162,035
155,000
30,000
143,000
Participation Rate for Homeowners without Mortgage Escrow (Estimate)
33.0%
6.5%
4.3%
0.1%
Source: Data provided from city or county treasurers.

30. Options for monthly property tax payments:
Wrap Up
½ homeowners pay property tax in 1-2 lump sums each year
Billing taxes on annual or biannual basis → Delinquency ↑
Options for monthly property tax payments:
15 states: Property tax escrow programs run by tax collectors
Milwaukee: Tax bill with option to pay monthly in Milwaukee
Contact
Adam H. Langley