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MI

Bill

A 5220

Permits municipalities to waive interest on certain delinquent property tax payments delivered after required due date.

2026-2027 Regular Session Introduced by Mike Inganamort and 1 co-sponsor

Municipalities can waive or reduce interest on late property tax payments due to postal delays, disasters, or shutdowns, with required resolutions and notices.

Introduced, Referred to Assembly State and Local Government Committee
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WeVote Research Nonpartisan
Bill Summary · A 5220

Summary of Assembly Bill A-5220 (Session 222, New Jersey)

Purpose and Intent

  • This bill would authorize municipalities to waive interest on certain delinquent property tax payments that arrive late due to postal delays after the required due date.
  • It adds explicit discretionary authority for local governing bodies to forgives interest under specified circumstances, providing a mechanism to address genuine mailing issues without penalizing taxpayers.

Key Provisions and Changes

  • R.S.54:4-67 (amended text)

  • discretionary interest policy (paragraph 1):

    • Municipalities may set a discount rate (up to 6% per year) for payments made on or before the 30 days prior to delinquency, after applying the property tax credit.
    • Municipalities may set the interest rate for nonpayment (up to 8% per year on the first $1,500; 18% on amounts above $1,500) calculated from when the tax was due to payment.
    • A 10-day grace provision: if an installment is paid within 10 days after becoming payable, no interest may be charged, subject to local adoption.
    • Special disaster-related exception: in cases of flood, hurricane, or other natural disasters, interest may be waived if a state of emergency is declared within a specified window and the municipality adopts a resolution, applying interest waiver if payment is received by the first day of the next calendar month.
    • Municipal clerks must notify the Director of the Division of Local Government Services about adoption of such disaster-related waivers.

  • Eligible resident/shutdown-related waivers (paragraph 4):

    • Defines eligible residents (federal employees furloughed or contractors affected by a federal shutdown who receive unemployment benefits or whose pay is delayed/diminished).
    • If a shutdown persists beyond certain thresholds, and the municipality adopts a resolution, interest may be waived if the property tax installment plus any available tax credit is paid by the next installment date.
    • Requires documentation to verify shutdown-related pay disruption.
    • Clerk must notify the Director within three business days of adoption.

  • USPS/mail-check related waivers (paragraph 5):

    • Provides a pathway to waive interest if a paper check was mailed on time (postmarked at least one day before the due date), properly addressed, but not delivered before the end of the municipality’s grace period due to USPS mishandling.
    • Requires the governing body to adopt a resolution waiving interest for such cases, and proof from the taxpayer is required.
    • Clerk must notify the Director of Local Government Services of such resolution.

  • Notice and changes to rates (subsection b):

    • If the governing body changes interest rates or end-of-year penalties, it must provide advance notice to taxpayers before taxes are due, via multiple channels (bulletin board, website, newspaper, mail, or electronic/digital notices).

  • Property levy purchaser provisions (subsection c):

    • If the municipality has sold its levy, the purchaser’s interest rates must align with the municipality’s rates, and delinquent interest collected prior to payment by the purchaser is not included in the purchaser’s amounts.

  • Extensions and directing authority (subsection d):

    • The Director has authority to temporarily extend tax payment deadlines for taxing districts (county, school, etc.) when time periods are extended for installments.

  • Definitions:

    • “Delinquency” means total unpaid taxes and municipal charges after applying credits, remaining until fully paid.
    • A separate fiscal-penalty framework exists for large delinquencies (over $10,000) with potential penalties up to 6% for the most recent fiscal year, distributed between the holder/purchaser and municipality depending on redemption timing.

  • Effective date and applicability:

    • The act would take effect immediately and apply to payments due 90 days after enactment.

Who Would Be Affected

  • Municipalities: Provided with discretionary authority to waive interest under specified circumstances; must adopt resolutions and follow notice requirements.
  • Taxpayers (property owners): Eligible for interest waivers if their late payment results from postal mishandling, or during disasters/shutdowns, provided documentation and resolutions are in place.
  • Municipal staff and auditors: Responsible for notification requirements to the Director and for implementing resolution-driven waivers.
  • Tax sale levy purchasers: Affected by alignment of interest rates and treatment of delinquency penalties relative to the municipality’s new policy.

Procedural and Timeline Considerations

  • Local adoption required: Municipal governing bodies must adopt resolutions to implement waivers.
  • Notices: Required to inform taxpayers of rate changes before next due date; multiple channels permitted.
  • State oversight: Certain waivers (notably disaster/shutdown-based) require director approval if municipalities are under specific state supervision or recovery regimes.
  • Effective date: Immediate effect; applies to delinquent payments due 90 days after enactment.

Practical Implications

  • Increases municipal flexibility to prevent punitive interest for genuine mailing or extraordinary events.
  • Encourages municipalities to consider local circumstances (disasters, USPS delays, federal shutdowns) when assessing penalties.
  • Could reduce delinquency collection friction by acknowledging administrative delays beyond taxpayers’ control.

Note: This summary reflects the text as introduced and does not account for potential amendments or subsequent floor actions.

Compiled from official sources — confirm details with the bill’s official record.

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