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With families across OC and the state losing jobs and income from public health shutdowns, officials say those who can pay property taxes by the April 10 deadline are still required to, while people who are facing hardship from coronavirus and its related closures can request a waiver of late penalties.
County tax officials are expecting about $2 billion dollars in April, which largely finances local cities, school districts and county government operations. Another installment of taxes are due in December.
A host of landlords across the region are also facing critical cash shortfalls as their renters are experiencing virus-related layoffs or work cutbacks, and in turn are avoiding rent payments as local cities move toward eviction bans.
County and state officials, who have been grappling with the issue this week, said their aim is to provide narrowly-targeted relief for people who are losing income from the public health shutdowns.
“Current authority already authorizes the Treasurer-Tax Collector to waive penalties, costs and other charges resulting from tax delinquency due to reasonable cause and circumstances beyond their control,” said Shari Freidenrich, the county treasurer-tax collector, in an emailed response to Voice of OC’s questions Tuesday.
Under existing law, people can request that late penalties be canceled by submitting a form.
A late penalty “may be cancelled if the failure to pay on time is shown to be for reasons outside a taxpayer’s control, provided the taxpayer is not negligent,” according to state law cited on the county form.
On Tuesday, Freidenrich’s public statements and answers to emailed questions on regarding tax relief were unclear. Yet by the next day, she gave a much stronger indication that taxpayers could get some relief if they showed they had been impacted by the pandemic.
“I plan to grant waivers on penalties to taxpayers as allowed by existing law to assist them during these challenging times,” Freidenrich said in a news release Wednesday.
“For taxpayers that do not make payment of property taxes due to COVID-19 by April 10, we expect them to submit a Penalty Cancellation Request Form and documentation to support the cancellation of penalties as allowed in limited circumstances under current state law,” the release added.
An assemblywoman involved in state and county discussions said people struggling due to the virus and closures would get relief, while while people who can pay property taxes on time still are required to.
“The state’s stay-at-home order is a tremendous sacrifice for California workers, families and small businesses. People are hurting desperately,” said Assemblywoman Cottie Petrie-Norris (D-Laguna Beach).
“We want to make sure that people who have been impacted by COVID-19 do not need another unnecessary burden weighing on their minds. That being said, we do need people who can pay their property taxes to pay them,” she added. The property tax funds are needed for local governments to do its work to respond to the coronavirus crisis, she added.
On Wednesday, Orange County Supervisors’ Chairwoman Michelle Steel applauded the accommodation for local taxpayers.
“This property tax penalty review would give our Orange County property owners the safety net they need if they have been effected by circumstances of the coronavirus outbreak,” Steel said. “In this time of great stress and uncertainty, it is important that we provide as much support as we can to protect the livelihoods of our residents. This tax penalty review offers that support.”
Federal income tax deadlines have been extended by three months, to July 15. Local property taxes function differently.
While income taxes typically are paid throughout the year as part of paychecks, property taxes typically are not received by county governments until the bills are due. And those payments are typically delivered in two installments each year.
Any gap would mean that local governments may have to go into debt to borrow money to pay their bills – something county finance officials don’t want to do in the current market.
Orange County collects about $6 billion per year in property taxes, of which about 11 percent goes to the county government and the rest is split among school districts, cities, community college districts, water districts, and other agencies.
“We understand the very challenging times that taxpayers are going through. No question – it’s very unprecedented,” Freidenrich said Tuesday at the county Board of Supervisors meeting.
“This is a problem and an issue well above any county, including Orange County, to solve,” said Supervisor Don Wagner on Tuesday.
That same day, before the county’s intent had been clarified, the county’s lead attorney cast doubt on whether the law allowed waivers of late property tax penalties based on bad economic conditions.
“My understanding is, generally, poor economic conditions is not a basis for waiving the penalty cost or other charges,” County Counsel Leon Page said at Tuesday’s meeting.
The leading associations representing local governments across the state – including cities, school districts and large counties – have asked Gov. Gavin Newsom to keep the April 10 deadline in place.
“California’s local agencies are working diligently to maintain essential services and infrastructure during this unprecedented public health emergency related to the Coronavirus and the disease it causes, COVID-19,” the groups wrote in their letter Saturday to Newsom.
“Our organizations, representing all levels of local government in the state, are urging you to retain the April 10 deadline for property tax payments and allow local officials to forgive penalties for property owners who are unable to pay by that date due to the pandemic, as authorized by law,” the letter added.
“Local officials are already authorized to waive penalties, costs, and other charges resulting from tax delinquency due to reasonable cause and circumstances related to this crisis.”
Newsom’s office didn’t respond to a request for comment.
It remained to be seen Tuesday whether the state or federal government will help cover losses county governments experience if the payment deadlines are delayed for certain property tax payers.
There also were questions among state officials Tuesday about whether payment deadlines enshrined in California’s Prop 13 can be changed, due to state constitutional rules that say voter-approved laws can only be changed by the voters.
It also was unclear whether state officials would act on the April 10 deadline before it arrives. The state Legislature is currently in not in session, though committees apparently have still been in discussions.
Nick Gerda covers county government for Voice of OC. You can contact him at firstname.lastname@example.org.