45th legislature - STATE OF NEW MEXICO - first session, 2001

RELATING TO TAXATION; PROVIDING OPTIONS FOR COUNTIES TO ENFORCE COLLECTION OF DELINQUENT PROPERTY TAXES ON REAL PROPERTY; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-38-42 NMSA 1978 (being Laws 1979, Chapter 343, Section 1) is amended to read:

"7-38-42. COLLECTION AND RECEIPT OF AND ACCOUNTING FOR PROPERTY TAXES--APPLICATION OF RECEIPTS TO DELINQUENT TAXES.--

A. The county treasurer has the responsibility and authority for collection of taxes and any penalties or interest due under the Property Tax Code, [except for] including the collection of delinquent taxes, if the county has elected to do so pursuant to Section 7-38-61.1 NMSA 1978. In the absence of such an election, the department has exclusive authority to collect delinquent taxes, penalties and interest [authorized to be collected by the department under] pursuant to Section 7-38-62 NMSA 1978.

B. Property taxes, penalties and interest collected shall be receipted and accounted for in accordance with law and regulations of the department of finance and administration.

C. Any payments received by the treasurer or the department as payments for property taxes, penalties or interest shall be first applied to the oldest outstanding unpaid property taxes, penalties or interest accrued in prior property tax years on the property identified and described in the property tax bill for which payment is tendered or, if the payment cannot be identified with a particular year's property tax bill, then the payment shall be applied first to the oldest liability for property taxes, penalties and interest shown in the treasurer's records under the name of the paying taxpayer. In applying the foregoing requirements for applications of payments and in the adoption of any regulations to implement those provisions, the following additional rules shall apply:

(1) applications of payments to prior year's delinquent taxes, penalties and interest shall not be made for more than ten years prior to the year of payment unless the treasurer's records show that the property for which taxes are delinquent has been deeded to the state of New Mexico and that property has not been sold by the state pursuant to applicable law;

(2) after application of payment received, if all or part of the payment has been applied to a prior year's delinquent taxes, penalties or interest, the receipting authority shall issue a receipt to the paying taxpayer showing the application of the payment and indicating any balance due for taxes, penalties or interest to bring the property tax payment status current; and

(3) the failure of a receipting authority to apply a payment as required under this subsection or the failure to issue a required receipt to the taxpayer of the status of his account shall not relieve the taxpayer of liability for taxes, penalties or interest he would otherwise be required to pay nor does action or inaction by the receipting authority act to estop the collecting authority from taking any action to collect or enforce the payment of taxes, penalties and interest legally due."

Section 2. Section 7-38-48 NMSA 1978 (being Laws 1973, Chapter 258, Section 88, as amended) is amended to read:

"7-38-48. PROPERTY TAXES ARE A LIEN AGAINST REAL PROPERTY FROM JANUARY 1--PRIORITIES--CONTINUANCE OF TAXING PROCESS.--Taxes on real property are a lien against the real property from January 1 of the tax year for which the taxes are imposed. The lien runs in favor of the state and secures the payment of taxes on the real property and any penalty and interest that [becomes] become due, except that if a county has elected to collect delinquent taxes pursuant to Section 7-38-61.1 NMSA 1978, the lien runs in favor of the county. The lien continues until the taxes and any penalty and interest are paid. The lien created by this section is a first lien and paramount to any other interest in the property, perfected or unperfected. The annual taxing process provided for in the Property Tax Code shall continue as to any particular property regardless of prior tax delinquencies or of pending protests, actions for refunds or other tax controversies involving the property, including a sale for delinquent taxes."

Section 3. Section 7-38-50 NMSA 1978 (being Laws 1973, Chapter 258, Section 90, as amended) is amended to read:

"7-38-50. DELINQUENT TAXES--CIVIL PENALTIES.--

A. If property taxes become delinquent, a penalty of one percent of the delinquent taxes for each month or any portion of a month they remain unpaid shall be imposed, but the total penalty shall not exceed five percent of the delinquent taxes except that, when the penalty determined under the foregoing provisions of this subsection is less than five dollars ($5.00), the penalty to be imposed shall be five dollars ($5.00). A county may suspend for a particular tax year application of the minimum penalty requirements of this subsection by resolution of its county commissioners adopted not later than September 1 of that tax year. A copy of any such resolution shall be forwarded to the county treasurer.

B. If property taxes become delinquent because of an intent to defraud by the property owner, fifty percent of the property taxes due or fifty dollars ($50.00), whichever is greater, shall be added as a penalty.

C. An additional penalty to defray costs of collection shall be imposed if the county has elected to collect delinquent taxes and has referred the collection of the delinquent taxes, penalties and interest to a private attorney. The additional penalty shall be no greater than thirty percent of the amount of taxes, penalties, interest, costs and expenses due at the time of collection. A penalty assessed pursuant to this subsection shall be used to pay the private attorney employed by the county when the delinquent taxes, penalties and interest are collected."

Section 4. Section 7-38-51 NMSA 1978 (being Laws 1973, Chapter 258, Section 91, as amended) is amended to read:

"7-38-51. NOTIFICATION TO PROPERTY OWNER OF DELINQUENT PROPERTY TAXES.--

A. In respect to any tax that is delinquent for more than thirty days as of June 30 of each year, the county treasurer shall mail a notice of delinquency at least thirty and no more than sixty days before September 1 to:

(1) the owner of the property as shown on the property tax schedule at the address of the owner as shown on the most recent property tax schedule; and

(2) any person other than the owner to whom the tax bill on the property was sent.

B. The notice required by this section shall be in a form and contain the information prescribed by [division] department regulations and shall include at least the following:

(1) a description of the property upon which the property taxes are due;

(2) a statement of the amount of property taxes due, the date on which they became delinquent, the rate of accrual of interest and any penalties that may be charged;

(3) a statement that if the property taxes due on real property are not paid within three years from the date of delinquency, the real property will be sold and a deed issued by the [division] department; [and]

(4) a statement that if property taxes due on personal property are not paid, the personal property may be seized and sold for taxes under authority of a demand warrant; and

(5) a statement that the delinquent taxes have been referred for collection to a private attorney pursuant to Section 7-38-61.1 NMSA 1978, if that is the case, and that an additional civil penalty of up to thirty percent of the taxes, penalties, interest, costs and expenses due will be incurred if the taxes are not paid before September 1."

Section 5. Section 7-38-53 NMSA 1978 (being Laws 1973, Chapter 258, Section 93) is amended to read:

"7-38-53. COLLECTION OF DELINQUENT PROPERTY TAXES ON PERSONAL PROPERTY--ASSERTION OF CLAIM AGAINST PERSONAL PROPERTY.--A county treasurer may collect delinquent property taxes on personal property by asserting a claim against the owner's personal property for which taxes are delinquent. A claim shall be asserted by service of a demand warrant by the county treasurer, an employee of his office designated by him, a private attorney retained by the county pursuant to Section 7-38-61.1 NMSA 1978 or the county sheriff upon any person in possession of the personal property subject to the claim."

Section 6. Section 7-38-60 NMSA 1978 (being Laws 1973, Chapter 258, Section 101, as amended) is amended to read:

"7-38-60. NOTIFICATION TO PROPERTY OWNER OF DELINQUENT TAXES.--By June 10 of each year, the county treasurer shall mail a notice to each property owner of property for which taxes have been delinquent for more than two years and whose delinquent tax account has not been referred for collection pursuant to Section 7-38-61.1 NMSA 1978 or, if referred, has been returned. The notice shall be in a form and contain the information prescribed by department regulations and shall include the following:

A. a description of the property upon which the taxes are due;

B. a statement of the amount of property taxes due, the date on which they became delinquent, the rate of accrual of interest and any penalties or costs that may be charged;

C. a statement that the delinquent tax account on real property will be transferred to the department for collection;

D. a statement that if taxes due on real property are not paid within three years from the date of delinquency, the real property will be sold and a deed issued; and

E. a statement that if taxes due on personal property are not paid, the personal property may be seized and sold for taxes under authority of a demand warrant."

Section 7. Section 7-38-61 NMSA 1978 (being Laws 1973, Chapter 258, Section 100, as amended) is amended to read:

"7-38-61. REAL PROPERTY TAXES DELINQUENT FOR MORE THAN TWO YEARS--TREASURER TO PREPARE DELINQUENCY LIST--NOTATION ON PROPERTY TAX SCHEDULE.--

A. By July 1 of each year, the county treasurer shall prepare a property tax delinquency list of all real property for which taxes have been delinquent for more than two years. The tax delinquency list shall contain the information and be in a form prescribed and submitted by the date required by department regulations. The county treasurer shall record the tax delinquency list in the office of the county clerk. There shall be no recording fee for recordation of the tax delinquency list. The updated final property tax sale list shall be recorded with the office of the county clerk the day following the sale of the property. There shall be no recording fee for recordation of the final property tax sale list.

B. Except for accounts referred for collection pursuant to Section 7-38-61.1 NMSA 1978, and not returned, the county treasurer shall make a notation on the property tax schedule indicating that the account has been transferred to the department for collection at the time the tax delinquency list is mailed to the department."

Section 8. A new section of the Property Tax Code, Section 7-38-61.1 NMSA 1978, is enacted to read:

"7-38-61.1. [NEW MATERIAL] COUNTY ELECTION TO COLLECT DELINQUENT TAXES ON REAL PROPERTY--AUTHORITY TO CONTRACT FOR THE COLLECTION OF DELINQUENT TAXES.--

A. Commencing in the 2002 tax year, a county may elect to assume authority for collection of delinquent property taxes due on real property in the county, including authority to sell the property pursuant to the provisions of Sections 7-38-65 and 7-38-66 NMSA 1978. In the absence of that election by a county, the department retains authority to collect delinquent taxes, penalties, interest and costs on property submitted on a tax delinquency list until the taxes, penalties, interest and costs are collected or the property is sold pursuant to Sections 7-38-65 and 7-38-66 NMSA 1978. To make the election, the board of county commissioners, with the express concurrence in writing of the county treasurer, shall adopt a resolution to assume the authority and shall deliver or mail a copy of the resolution to the department no later than thirty days after its adoption and at least thirty days prior to July 1 of the tax year to which the resolution first applies.

B. A county that has assumed authority under Subsection A of this section is authorized to request competitive proposals pursuant to the applicable provisions of the Procurement Code from qualified attorneys and may execute a professional services contract with a successful offeror for the collection of delinquent taxes, penalties and interest due thereon that are owed to the county or taxing jurisdictions for which the county collects the taxes.

C. Having assumed authority to collect delinquent taxes due on real property, the county may elect to return that authority to the department. To make this election, the board of county commissioners shall adopt a resolution returning the authority and shall deliver or mail a copy of the resolution to the department at least eighteen months prior to the beginning of the tax year to which the return of authority is to apply.

D. The department may prepare and require the use of model resolutions for use of the counties in assuming and returning authority as provided in this section.

E. As used in this section, "qualified attorney" means an attorney licensed to practice in New Mexico and who carries professional liability insurance in an amount determined adequate by a board of county commissioners, which amount shall be specified in the request for proposals."

Section 9. A new section of the Property Tax Code, Section 7-38-61.2 NMSA 1978, is enacted to read:

"7-38-61.2. [NEW MATERIAL] SUIT TO COLLECT DELINQUENT TAXES AND INTEREST AND PENALTIES.--At any time after a tax on property becomes delinquent, a county or its retained attorney may file suit seeking a personal judgment against the taxpayer. The suit shall be filed in a court of competent jurisdiction for the county in which the tax was or is imposed."

Section 10. A new section of the Property Tax Code, Section 7-38-61.3 NMSA 1978, is enacted to read:

"7-38-61.3. [NEW MATERIAL] RECOVERY OF COSTS AND EXPENSES IN COLLECTION SUIT.--

A. In addition to other costs authorized by law, a county or its retained attorney is entitled to recover from the delinquent taxpayer the following costs and expenses if successful in a suit to collect a delinquent tax:

(1) court costs;

(2) costs of filing for record any notice of lis pendens against property;

(3) expenses of a tax sale; and

(4) reasonable expenses that are incurred by the county or its retained attorney in determining the name, identity and location of necessary parties and in procuring necessary legal descriptions of the property on which a delinquent tax is due.

B. Each item specified by Subsection A of this section is a charge against the property and a personal obligation of the property owner and shall be collectible in the same manner as the taxes, penalties, interest and costs due by him."

Section 11. A new section of the Property Tax Code, Section 7-38-61.4 NMSA 1978, is enacted to read:

"7-38-61.4. [NEW MATERIAL] COSTS OF PUBLICATION.--

A county shall pay the cost of publishing notices of sale or other notices necessary in a suit to collect delinquent taxes. The county is entitled to reimbursement from other taxing units that are parties to the suit for their proportionate share of the publication costs on satisfaction of any portion of the tax indebtedness before further distribution of the proceeds. A county shall not be required to pay a word or line rate for publication of citation or other required notice that exceeds the rate that the newspaper publishing the notice charges private entities for similar classes of advertising."

Section 12. Section 7-38-62 NMSA 1978 (being Laws 1973, Chapter 258, Section 102, as amended) is amended to read:

"7-38-62. AUTHORITY OF DEPARTMENT AND COUNTY TO COLLECT DELINQUENT PROPERTY TAXES [AFTER RECEIPT OF TAX DELINQUENCY LIST]--USE OF PENALTIES, INTEREST AND COSTS.--

A. After the receipt of the tax delinquency list, the department has the responsibility and exclusive authority to take all action necessary to collect delinquent taxes shown on the list unless the county has assumed authority pursuant to Section 7-38-61.1 NMSA 1978 to collect delinquent taxes due on real property. In that case, the county or its retained attorney has the same authority as that granted to the department in Subsection B of this section.

B. This authority includes bringing collection actions in the district courts based upon the personal liability of the property owner for taxes as well as the actions authorized in the Property Tax Code for proceeding against the property subject to the tax for collection of delinquent taxes.

C. For delinquent taxes being collected by the department, payment of delinquent taxes listed and any penalty, interest or costs due in connection with those taxes shall be made to the department if occurring after the receipt by the department of the tax delinquency list; however, the department may authorize county treasurers to act as its agents in accepting payments of taxes, penalties, interest or costs due.

D. Penalties, interest and costs due received by the department under this section shall be retained by the department for use, subject to appropriation by the legislature, in the administration of the Property Tax Code."

Section 13. Section 7-38-65 NMSA 1978 (being Laws 1973, Chapter 258, Section 105, as amended) is amended to read:

"7-38-65. COLLECTION OF DELINQUENT TAXES ON REAL PROPERTY--SALE OF REAL PROPERTY.--

A. The department or a county having authority pursuant to Section 7-38-61.1 NMSA 1978 may collect delinquent taxes on real property by selling the real property on which the taxes have become delinquent. The sale of real property for delinquent taxes shall be in accordance with the provisions of the Property Tax Code. Real property may be sold for delinquent taxes at any time after the expiration of three years from the first date shown on the tax delinquency list on which the taxes became delinquent. Real property shall be offered for sale for delinquent taxes either within four years after the first date shown on the tax delinquency list on which the taxes became delinquent or, if the department or county is barred by operation of law or by order of a court of competent jurisdiction from offering the property for sale for delinquent taxes within four years after the first date shown on the tax delinquency list on which the taxes became delinquent, within one year from the time the department or county determines that it is no longer barred from selling the property, unless:

(1) all delinquent taxes, penalties, interest and costs due are paid by the date of the sale; or

(2) an installment agreement for payment of all delinquent taxes, penalties, interests and costs due is entered into with the department or county by the date of the sale pursuant to Section 7-38-68 NMSA 1978.

B. Failure to offer property for sale within the time prescribed by Subsection A of this section shall not impair the validity or effect of any sale which does take place."

Section 14. Section 7-38-68 NMSA 1978 (being Laws 1973, Chapter 258, Section 108, as amended) is amended to read:

"7-38-68. INSTALLMENT AGREEMENTS.--

A. The [division] department or a county that has authority to collect delinquent taxes pursuant to Section 7-38-61.1 NMSA 1978 may enter into an installment agreement for the payment of all delinquent property taxes, penalties, interest and costs due with respect to either real property or a manufactured home with the owner of the real property or manufactured home whose taxes have become delinquent and whose account for all or part of the delinquent taxes has been transferred for collection to the [division] department or retained for collection by the county. Execution of an installment agreement under this section by a property owner is an irrevocable admission of liability for all taxes that are the subject of the agreement. The installment agreement shall be in writing and shall not extend for a period of more than thirty-six months. Interest shall accrue on the unpaid balance during the period of the installment agreement. The rate of interest shall be one percent a month, and no other interest on that portion of the principal representing unpaid taxes shall accrue while an installment agreement is in effect. [The division shall not enter into] An installment agreement with a property owner shall not be entered into on or after the date of the initial sale of real property or manufactured home for delinquent taxes whether or not the real property or manufactured home is sold and a deed issued as a result of that sale. Unless a county has authority to collect delinquent taxes pursuant to Section 7-38-61.1 NMSA 1978, the [division] department shall promulgate regulations establishing requirements for a minimum down payment and substantially equal monthly payments for installment agreements.

B. An installment agreement prevents any further action to collect the delinquent taxes stated in the agreement as long as the terms of the agreement are met.

C. The [division] department or a county having authority to collect delinquent taxes pursuant to Section 7-38-61.1 NMSA 1978 may proceed under the Property Tax Code to collect the property taxes, penalties, interest and costs due and unpaid if:

(1) installment payments are not made on or before the dates specified in the agreement;

(2) the property owner fails to pay other property taxes when required; or

(3) any other condition contained in the agreement is not met.

D. For the purpose of computing the time when real property or a manufactured home may be sold for delinquent taxes, the date of original delinquency shall be used when the delinquent taxes have been the subject of an installment agreement that was subsequently breached by the property owner.

E. If an owner of real property or a manufactured home enters into an installment agreement and subsequently breaches the agreement under this section, neither the [division] department nor the counties shall [not] enter into another installment agreement with that property owner for the payment of the delinquent taxes that were the subject of the installment agreement.

F. Alphabetically indexed and serially numbered records of installment agreements must be kept in the office of the director and made available for public inspection."

Section 15. Section 7-38-69 NMSA 1978 (being Laws 1973, Chapter 258, Section 109, as amended) is amended to read:

"7-38-69. DISTRIBUTION OF AMOUNTS COLLECTED UNDER INSTALLMENT AGREEMENTS.--Amounts that represent delinquent taxes collected under installment agreements entered into by the department [that represent delinquent taxes] or a county pursuant to Section 7-38-68 NMSA 1978 shall be remitted to the county treasurer of the county to which the net taxable value of the property is allocated for distribution to the governmental units. Amounts collected that represent penalties, interest and costs shall be retained by the department in accordance with Section 7-38-71 NMSA 1978. Money collected shall be remitted at the times and in the manner required by applicable law and the regulations of the department of finance and administration. When the department has received payment in full of delinquent taxes, penalties, interest and costs paid under an installment agreement, the department shall notify the county treasurer of that fact, and the county treasurer shall make an entry on the property tax schedule indicating that the delinquent property taxes, penalties and interest have been paid."

Section 16. Section 7-38-70 NMSA 1978 (being Laws 1973, Chapter 258, Section 110, as amended) is amended to read:

"7-38-70. ISSUANCE OF DEEDS AS RESULT OF SALE OF REAL PROPERTY FOR DELINQUENT TAXES--EFFECT OF DEEDS--LIMITATION OF ACTION TO CHALLENGE CONVEYANCE.--

A. Upon receiving payment for real property sold by the department for delinquent taxes, the [division] department shall execute and deliver a deed to the purchaser. If the property was sold by a county pursuant to its authority pursuant to Section 7-38-61.1 NMSA 1978, upon receiving payment the county treasurer shall execute and deliver a deed to the purchaser.

B. If the real property was sold substantially in accordance with the Property Tax Code, the deed conveys all of the former property owner's interest in the real property as of the date the state's lien for real property taxes arose in accordance with the Property Tax Code, subject only to perfected interests in the real property existing before the date the property tax lien arose.

C. After two years from the date of sale, neither the former real property owner shown on the property tax schedule as the delinquent taxpayer nor anyone claiming through him may bring an action challenging the conveyance.

D. Subject to the limitation of Subsection C of this section, in all controversies and suits involving title to real property held under a deed from the state issued under this section, any person claiming title adverse to that acquired by the deed from the state [must] or the county shall prove, in order to defeat the title, that:

(1) the real property was not subject to taxation for the tax years for which the delinquent taxes for which it was sold were imposed;

(2) the [division] department or the county failed to mail the notice required under Section 7-38-66 NMSA 1978 or to receive any required return receipt;

(3) he, or the person through whom he claims, had title to the real property at the time of the sale and had paid all delinquent taxes, penalties, interest and costs prior to the sale as provided in Subsection E of Section 7-38-66 NMSA 1978; or

(4) he, or the person through whom he claims, had entered into an installment agreement to pay all delinquent taxes, penalties, interest and costs prior to the sale as provided in Section 7-38-68 NMSA 1978 and that all payments due were made timely."

Section 17. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2001.