WINSLOW — The town will begin taking business owners to court to recover personal property taxes that have been unpaid for at least five years as it considers new business licensing requirements that would make it easier to collect on delinquent taxpayers.

The move is unique among the area’s municipalities, many of whom either let unpaid business personal property taxes go without ever being paid or, as one town clerk put it, “nag people to death” because taking businesses to court is costly.

According to town tax records, as of October, Winslow was owed roughly $45,400 in back personal property taxes and interest from businesses dating back to 2009. Personal property tax is the local levy on business assets such as furniture, equipment or machinery.

In Winslow, the vast majority of business owners pay their property taxes. For example, in 2015 the town billed $582,094 in property taxes and only $13,440 — about 2 percent — was left outstanding, said Town Manager Michael Heavener.

But those outstanding taxes can be difficult to collect, and they add up the longer the municipality takes to act on delinquent accounts.

When a property owner goes into arrears on real estate taxes, an automatic process starts wherein the town can place a lien on the home or land and ultimately seize it as a tax-acquired property after an 18-month foreclosure process.

But there isn’t a similar process in place for personal property taxes. Instead, the recourse for towns and cities is to take the tax delinquent to small claims court or place a lien on the assets through the Maine secretary of state that makes the municipality a creditor, which means it would have a claim if the business goes bankrupt or is sold.

Given the challenges of collecting, Winslow is taking a dual track to address the issue. Acting on the recommendation of the town attorney, Heavener said he will start taking each delinquent to small claims court and, after going through the entire process, will attach any judgment in the town’s favor to other real estate owned by the entity late with its taxes, so the town will be repaid before the sale of any other property can go through.

In addition, Heavener is considering an annual license for businesses in town. In order to get the license, businesses would have to be up to date with their taxes.

Businesses only register with the town when they open, so it doesn’t have a good way to track which are in operation and which have gone out of business, Heavener said. That makes collecting outstanding taxes even more difficult, since the town has to track the former owner down.

“It’s very time consuming to do the research on whether the business is still here,” he said.

“That’s because we don’t have an adequate system in place so when a business does close or leave, that gets communicated to us at the town office,” Heavener said.

Collecting personal property taxes isn’t a problem that’s unique to Winslow. Towns and cities all over central Maine have tens of thousands of uncollected property taxes sitting on their accounts and, according to tax collectors, usually don’t take legal steps to recoup the costs.

Waterville is owed $24,620 in back taxes between 2011 and 2015, according to tax collector Linda Cote.

In most cases, she is able to get people to pay without resorting to filing a small claims suit, she said.

“To be honest, I’ve never actually done it” because people eventually pay, Cote said. “I haven’t had to because they work with me to get it straightened out before we get to the next step.”

The number of people who don’t pay their taxes is small compared to the amount billed. According to Cote, in 2015 the city billed $1.75 million in personal property taxes, of which only $12,452 is unpaid, roughly half of the total amount of all property taxes owed Waterville.

“We want to be business friendly, but if you are doing business in Waterville, it is a fair tax that everybody pays,” she said.

Other municipalities struggle to recover taxes. According to tax information from Augusta, the city is owed $63,840 in taxes, including interest, between 2011 and 2016. Tax collector Barbara Wardwell said the city hasn’t gone to court to recover the money it is owed.

Gardiner is owed $67,036, but that number includes the current tax year and half is not due until next March, according to tax collector Kathleen Cutler. If all those taxes are collected, the city would still be owed about $23,150.

In Madison, selectmen recently wrote off $2,700 in overdue taxes from three businesses, said Town Manager Tim Curtis. Overall, overdue taxes aren’t a serious concern for the town, he said. There are about 10 accounts with past due taxes of $100 or less each, he added.

In Madison the biggest property tax bills are for the Madison Paper mill and Backyard Farms greenhouses, Curtis said. Selectmen haven’t considered implementing an annual business license to ensure people pay up, he said.

“We’ve never seen it as a big enough issue to move in that direction,” Curtis said.

Fairfield tax collector Susan Inman said the town is owed $6,736 in back taxes over the last five years, but hasn’t taken a case to small claims court because the process can be lengthy and expensive, and there is no guarantee the taxes will be paid even if the court sides with the town.

“I prefer the nagging them to death” to get back taxes, Inman said. In some cases it works, and the town and business owner can work out a payment plan. In other cases a business has gone bankrupt, and the town has had to write off the taxes, she said.

Skowhegan has taken one business to court for unpaid taxes in the last year, but Town Manager Christine Almand said she doesn’t think the money was ever repaid. In 2015 alone, Skowhegan was owed $8,053 in back taxes from 33 accounts, according to town records.

In March 2014, the town sued James Derbyshire, who owns the Garden Island of Skowhegan laundromat, for $4,810 in unpaid taxes from 2008 and 2009. The court made an award in the case to the town in July 2014, but Almand said she isn’t sure what its status is now.

Almand, who was appointed town manager in May 2014, said she didn’t expect that getting back taxes would include taking people to small claims court. With so many other issues to concentrate on, she can see how issues like collecting personal property taxes could slide to the bottom of the list of things to do, she said.

“When you take the job, you don’t always know that it means you’re going to go to small claims court,” she said.

Derbyshire, in an interview Thursday, said he thinks the town inaccurately assessed the laundromat equipment and doesn’t intend to repay the money.

Peter McGuire — 861-9239

[email protected]

Twitter: @PeteL_McGuire


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