Maine Municipal Tax Collectors' & Treasurers' Association
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Posted by Darlene Beaulieu (Manchester) June 15, 2005:

Does anyone deduct from the vendors any outstanding taxes due? If so, do you have a policy for vendors who owe on Real Estate/Personal Property Taxes to your town?

On a similar note, do you have employees who are required to do payroll deduction for outstanding taxes?

Also, if someone in your town/city apply for a building permit, do you check to make sure that all taxes due are paid in full. If so, do you have a policy in place?

I would appreciate any input as well as any copies of those policies.

Responses:

I’ve been waiting to see if you get any responses today, but apparently everyone is either on vacation, sleeping (unlikely given our line of work) or waiting for a list a responses as well. The only policy we have in place is an order from the Municipal Officers to apply payments received against the oldest outstanding bill. This is even a little tricky, because if the taxpayer has three different accounts, and directs his payment to be applied to the first one, you can’t apply the payment to the others, even if the other two accounts have an outstanding amount that is older. There are other little “technicalities” such as the law refers only to payments received from an individual, not a corporation or other legal entity. This all leads me to believe that it may not be as easy as it sounds to simply take from what is owed to a vendor and apply it to the vendor’s taxes…or for that matter, taking from an employee for what an employee owes. We have employees who request to have deductions taken from their paychecks and held in an account until tax time. They have to sign an agreement to have the deduction (for their employee file) and the check is issued to the employee—not the town-- who then in turn pays their taxes, shops for Christmas or whatever. I believe that as an employer, you have to have documentation in an employee’s file for all deductions taken from their check other than State or Federal mandated or court ordered deductions. The employee must agree to all other deductions in writing.

I think that last idea might work though and I was curious to see how others responded to this one. It actually raised a few ideas here. Currently, our ordinance does not allow the Code Officer to refuse an individual a permit if they have current violations. It is really something that should be considered. However, to be able to deny a permit if taxes are unpaid might be a different story. It’s nothing I would attempt without consulting with MMA or a local attorney. I have a feeling that the leverage received through law for municipalities to collect real estate taxes is foreclosure and the State would not tolerate much more than that. (Tammy Getchell, Mapleton, Chapman, Castle Hill)

Last year, we implemented a new policy regarding building permits and outstanding taxes. We had several situations where the city issued building permits for properties that had been acquired by the city for unpaid taxes. Basically, these people were doing home improvements and not paying any taxes. After speaking with our attorney, our city manager issued a memo stating a new procedure when somebody applies for a building permit.

Basically, A permit cannot be issued if there are liens against the property. However, there were several details that had to worked out. For example the city cannot deny a state permit for unpaid taxes.
If you are interested in the details just let me know. I would be happy to go over them with you. Just give me a call 582-2223 (Michelle Fournier, Gardiner)

Several years ago the Town of Lisbon did withhold monies from a vendor for outstanding personal property taxes. Under Title 36, SS 905 Municipalities may set off moneys due against taxes. SS 905 Reads: "Municipalities may set off moneys due against taxes. Subject to the approval of the municipal officers, the treasurer or any disbursing officer of any municipality may, and if so requested by the tax collector shall, withhold payment of any money then due and payable to any taxpayers whose taxes are due and wholly or partially unpaid, to an amount not in excess of the unpaid taxes together with any interest and costs. The sum withheld shall be paid to the tax collector, who shall, if required, give a receipt in writing therefor to the officer withholding payment and to the taxpayer. The tax collector's rights under this section shall not be affected by any assignment or trustte process." You may want to check with Maine Municipal Legal Department to make sure this law has not been repealed. MMA 1-800-452-8786 Legal Dept. Hope this helped. (Betty Sigurdsson, Lisbon)

If an employee chooses to payroll deduct for taxes they can, but we do not have any policies on anything else. (Laurie Boucher, Richmond)