Interest Calculation on Past Due Property Tax in Massachusetts
Hi everyone,
I have a question about interest calculation on a past due property tax bill in Massachusetts. I received a bill from the town collector that was due on 11/01/2017. Unfortunately, I forgot about it and paid it late. The billing cycle is quarterly. On or around 12/30/2017 the collector sent me a new bill that included past due amount, the amount due for the next quarter (due 2/1/2018), and 14% interest calculated from the past due amount. I paid the entire bill on 12/30/2017. The problem is that the interest on that bill was calculated for 92 days (11/1/17-2/1/18) and included the entire month of January. The question is should the collector have charged me the interest of 59 days (11/2-12/30) instead of 92 days? I think the relevant statute is MGL Chapter 59 Sec. 57 (https://malegislature.gov/Laws/Gener...er59/Section57). I see that the interest starts on the due date, but I can't find when should the interest stop to accumulate. Why am I paying interest for many days (12/30-2/1) on which there was no past-due balance?
I called tax collector, and the office told me that they bill the interest through the next billing cycle, which is 2/1/2018. When I asked why they are charging interest for days after the payment was maid, they said that they are not violating any laws and that is the way the system is set up. I used MCC online payment system if that matters. The confirmation email from MCC states "After the transaction has proven successful, the Collector will view the bill paid as of 12/30/2017. It will not be the date the transaction cleared."
Thanks.
Re: Interest Calculation on Past Due Property Tax in Massachusetts
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Why am I paying interest for many days (12/30-2/1) on which there was no past-due balance?
You've already been told why "cause that's the way we do it."
Good luck trying to fight the tax bureaucracy.
Re: Interest Calculation on Past Due Property Tax in Massachusetts
Adjusterjack, thanks for the answer.
Does the law say anything about when the interest accrual should stop?
Is it a common practice (perhaps in many towns in MA) to charge penalty interest upfront as a "non-prorated" lump sum accrued through the date of the next bill??? I've never seen an interest computed this way. An interest is always computed from the due date until the amount past-due is paid in full, not until some future date, which in this case happens to be the next quarterly due date. Essentially, if my payment was only 1 day late I would still have to pay the same interest for 92 days.
Is it feasible to sue town's tax collector in small claims court? Will the court hear the case?
Re: Interest Calculation on Past Due Property Tax in Massachusetts
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Quoting
ilya980
Does the law say anything about when the interest accrual should stop?
I checked the statute you posted. Can't tell anything from it.
Quote:
Quoting
ilya980
Is it a common practice (perhaps in many towns in MA) to charge penalty interest upfront as a "non-prorated" lump sum accrued through the date of the next bill??? I've never seen an interest computed this way. An interest is always computed from the due date until the amount past-due is paid in full, not until some future date, which in this case happens to be the next quarterly due date. Essentially, if my payment was only 1 day late I would still have to pay the same interest for 92 days.
I agree. I'm just not sure you can do anything about it.
Quote:
Quoting
ilya980
Is it feasible to sue town's tax collector in small claims court? Will the court hear the case?
Before you can sue a government agency there is a special procedure you have to go through.
See:
https://malegislature.gov/Laws/Gener...eIV/Chapter258
Re: Interest Calculation on Past Due Property Tax in Massachusetts
Adjusterjack,
Thank you for useful response. I contacted the Town councel as suggested by the chapter you pointed out. He said he will review the claim. Let's see what happens.
Re: Interest Calculation on Past Due Property Tax in Massachusetts
Just wanted to give an update on this older thread. Someone might find this useful one day. Contacting town councel has helped, and the interest on the taxes was adjusted as I explained above. Adjusterjack, thanks again for the useful link to the law that explains the way to handle this.