James City County filed five delinquent tax lawsuits against local property owners over the last six months, the first suits of this type since 2014.
But property owners can expect to see more routine legal action as the county looks to claw back overdue tax money.
The county signed a contract with Taxing Authority Consultant Services or TACS in May 2018, according to James City County Treasurer Jennifer Tomes. The corporation is a third-party law firm that works with government entities to collect delinquent taxes in Virginia.
“We turn it over to them for collections. So there will start to be more litigation and more tax sales as they get more things in the queue,” Tomes said. “It will be more often, that’s kind of what we’re looking for.”
The firm adds a 20 percent collection fee to the taxpayer before litigation and 25 percent after a suit is filed. Because TACS charges the taxpayer, the contract costs the county nothing.
The firm is based in Henrico County and works with about 65 localities across the state including Warren County, Fairfax County, and Bedford County and Richmond City.
The five suits referenced were the only ones on file at the Williamsburg-James City County Circuit Court as of Feb. 27.
James City County rarely has filed property tax lawsuits due to a lack of expertise and cumbersome workload involved in litigation, the same reasons why localities across the state have operated through third-party law firms for years.
York County has used the Law Office of James W. Elliott since 1982, according to the firm, which also represents localities across the state such as Gloucester and Newport News.
York Treasurer Candice Kelley said their firm collected around $10,000 in delinquent real-estate taxes for the county last year, which was everything owed.
Elliott said the county sends about 10 cases to him every year. Because they stay up to date there is almost no need for litigation.
The City of Williamsburg conducts delinquent tax collection entirely within its finance department. However, the city has almost no problem with delinquency and collects about 98 percent of the around $10 million that’s owed each year, according to Finance Director Barbara Dameron.
Jane Trimble, the city’s senior revenue specialist, has worked in the city for almost 20 years and said she has only seen two properties sold in a tax sale.
However, where the City of Williamsburg collects around $10 million in real estate tax every year, York County expects to collect around $89 million and James City County expects to collect $99 million in 2019. The variations are because the localities differ in size, property types and number of taxable properties.
Tomes said the county’s prior treasurer tried to litigate the taxes in-house, but Tomes felt they needed more help.
James City County turns over information on delinquent real estate taxes once they are a year past due. In Virginia, the statute of limitations for real-estate debt is 20 years.
All five residential parties sued so far have outstanding taxes from 2015, with the most owed from a single property around $43,000. The owners of another property — a six-bedroom, four-bathroom home with an assessed value of more than $1 million — owe more than $30,000 in property tax.
The homes in question span the county, from Lanexa to the slice of James City that cuts into York County in Penniman.
How much is owed
In James City County, TACS has collected 44 percent or $692,000 of the $1.7 million the county turned over to them in May.
Property taxes are collected twice a year, in December and June. By the end of February 2019, the county was owed a total of $957,000 in delinquent real-estate taxes.
John Rife, a TACS lawyer who filed the suits on behalf of the county said about one in five lawsuits will result in a tax sale. And the longer a property has tax delinquencies, the more likely it is to go to tax sale.
Often, those sold are family homes which have been passed down and have no single owner. Of the five suits filed in James City County, one has no known property heir.
If delinquent homeowners fail to sign payment agreements, tax liens or other types of collection negotiations, TACS will file suit, which may ultimately end up in a property tax sale.
“We try to collect it by other means first with the understanding real estate is somewhat unique,” Rife said. “We want to make sure we don’t wrest that away from the hands of the owner.”
According to Virginia law, there must be at least three years of outstanding taxes before a property with an assessed value of more than $100 thousand can be subject to sale.
“Our goal is to get the taxes paid, not to sell the property,” Tomes said. “The sale of the property is the last resort.”
Martin can be reached at (757)-243-3685, by email at firstname.lastname@example.org or on Twitter at @SaraRoseMartin.