§ 2C — Assignment or transfer of tax receivables; conditions of sale; limitations

Massachusetts § 2C

• Jurisdiction: Massachusetts
• Part I: ADMINISTRATION OF THE GOVERNMENT
• Title IX: TAXATION
• Ch. 60: COLLECTION OF LOCAL TAXES

Text

Section 2C. (a) For the purposes of this section, the following words shall have the following meaning:"Appropriate financial official'', the treasurer or collector of a municipality."Available funds deficit'', the amount by which the funds certified by the director of accounts as available on July first next preceding the date of appropriation pursuant to section twenty-three of chapter fifty-nine, reduced by the amount of all intervening appropriations from available funds and increased by such amounts as the director may authorize, is less than zero."Commissioner'', the commissioner of the department of revenue."Current tax receivables'', tax receivables sold on or before the first annual anniversary of the date that the entire amount an individual taxpayer receivable or related tax could have been paid without interest or penalty."Entity'', any individual or business subject to the provisions of chapter sixty-two or chapter sixty-three."Individual taxpayer receivable'', tax receivables that are owed to a municipality for single or multiple tax years by or on behalf of a taxpayer that constitute all or part of the tax receivables sold by an appropriate financial official to a purchaser pursuant to the provisions of this section."Municipality'', any city or town within the commonwealth."Parcel'', any piece of real or personal property subject to real property taxes or excise taxes."Purchaser'', a person or entity that purchases tax receivables pursuant to the provisions of this section; provided, however, that any such entity must be registered with the state secretary and must be a party in good standing."Related Tax'', the tax that gives rise to a tax receivable sold pursuant to the provisions of this section."Service agent'', a person or entity employed by or acting on behalf of a purchaser, whether or not for a fee or other compensatory arrangement, for the purpose of collecting tax receivables purchased by said purchaser from a municipality in the manner provided herein."Statutory notice third party'', a third party entitled to receive notices with respect to an individual taxpayer receivable pursuant to section thirty-eight or section thirty-nine or any other general or special law."Subsequent individual taxpayer receivable'', an individual taxpayer receivable arising in connection with a parcel with respect to which an individual taxpayer receivable is presently outstanding."Tax receivable'', the right to receive payment of taxes assessed and due on real and personal property, in one or more fiscal years and sold by assignment or transfer, either individually or in bulk, by an appropriate financial official to a purchaser pursuant to the provisions of this section."Taxpayer'', a person or entity owning property, real or personal, against whom a municipality has assessed real property taxes."Taxes'', taxes assessed by a municipality against real and personal property under chapters fifty-nine and sixty or any other charge added to and committed as part of the tax and secured by a tax lien.(b) The appropriate financial official of a municipality may arrange for and assign or transfer to a purchaser the municipality's right to receive payments owed by a taxpayer on tax receivables after the date upon which the amounts so owed may be paid without interest or penalty; provided, however, that the municipality shall not arrange for and assign or transfer to a purchaser the right to receive payments if the treasurer or tax collector of the municipality receives notice before the transfer that the taxpayer is a veteran as defined in section 7 of chapter 4. If any taxes owed to a municipality include taxes assessed by a district located wholly or in part within the limits of such municipality, then such district may assign or transfer the right to receive payment of such taxes pursuant to this section in accordance with guidelines or regulations that the commissioner may issue. The assignment or transfer of individual taxpayer receivables by a municipality may be made either individually or in bulk. Prior to the assignment or transfer of individual taxpayer receivables, the appropriate financial official shall publish, in accordance with section 1, a list of all receivables that will be offered for assignment or transfer hereunder at least 60 days prior to the offer of such parcel for assignment or transfer and a municipality may not offer for assignment or transfer any parcel upon which a taxpayer has entered into and is in compliance with the terms of a payment agreement with the appropriate financial official. If the taxpayer fails to comply with such agreement, the appropriate financial official may assign or transfer such parcel in accordance with the provisions established hereunder. The appropriate financial official may assign or transfer any receivables either individually or in groups without regard to class, except for: (1) parcels with respect to which the taxpayer has entered into a payment agreement in accordance with the provisions of this section; (2) parcels which are part of the estate of a bankrupt; (3) parcels which the appropriate financial official has determined are or may be subject to a lien under the provisions of chapter 21E; and (4) such other categories of parcels as the commissioner may by guideline define or as the municipality, with the approval of the commissioner, may authorize by vote of its selectmen, town council, or city council and mayor. Two or more collectors, or 2 or more treasurers, may jointly assign their respective municipalities' receivables in accordance with guidelines issued by the commissioner.(c) Tax receivables so assigned or transferred by an appropriate financial official shall be sold subject to the following conditions:(1) The sale of tax receivables shall be by public sale to the most responsible and responsive offeror taking into consideration the following evaluation criteria: (i) the price proposed by the offeror; (ii) the offeror's qualifications and experience; (iii) the offeror's plan for communicating with the taxpayers; (iv) whether the offeror has a regular place of business in the commonwealth; (v) whether the offeror is in good standing with the department of revenue; and (vi) other criteria determined by the commissioner and the municipality. The sale shall provide for the option to purchase subsequent tax receivables subject to subsection (h) and any regulations that may be promulgated by the commissioner pursuant thereto.(2) The sale price shall be equal to not less than (i) the amount assessed and due from the face value of the tax receivables sold hereunder and (ii) any unpaid accrued interest, statutory fees, penalties and charges owed to the municipality as of the date of sale of the tax receivables. Tax receivables may, with the approval of the town meeting, town council or city council and mayor, be sold either at a discount of not more than 50 per cent of the interest on the receivable or at a premium, under such terms as the commissioner may determine by regulations that shall be promulgated pursuant to this section. Such sale price or discounted sale price may reflect any interest accrued on any individual taxpayer receivable or related tax to the date of the sale of the right to receive payment of such tax. Any unpaid statutory fees and charges as of the date of the sale with respect to such individual taxpayer receivable or related tax shall continue to be payable to the municipality and shall be paid to it by the purchaser from the first amounts collected by the purchaser on such tax receivable unless otherwise received by such municipality.(3) The purchaser shall pay the sale price to the appropriate financial official by certified or bank cashier's check, or by such other transfer of funds authorized by the appropriate financial official under the terms of the sale.(4) Any amounts paid, except amounts described in paragraph two if under a discount sale, subsequent to the satisfaction of the sale price for tax receivables in respect of an individual taxpayer receivable, by or on behalf of a taxpayer, shall be the sole property of the purchaser thereof, and if received by the municipality shall be paid promptly in accordance with the terms of the sale, to such purchaser. The municipality shall agree to receive payment of such amounts owing to the purchaser as are tendered to it by or on behalf of any taxpayer and to provide such payments to the purchaser in accordance with the terms of the sale and to issue municipal lien certificates with respect to the unpaid amounts of tax receivables.(5) Any premium payment received by a municipality shall be deposited in the General Fund of such municipality and applied in such manner and for such purposes as provided by law for amounts in the General Fund.(6) Any amounts paid by a purchaser to a municipality, exclusive of excess amounts received as described in paragraph (5), for any tax receivables that are not current tax receivables shall be segregated on the books of such municipality to the extent any such amount is in excess of any available funds deficit and shall be appropriated by the city council or town meeting or town council, as applicable, of such municipality only for purposes for which such municipality is authorized to borrow for a period of five years or more unless otherwise approved by the commissioner.(7) The municipality shall provide the purchaser when tax receivables are sold with the name and address of each statutory notice third party to whom notice is due with respect to any taxpayer, individual taxpayer receivable or related tax.(8) Whenever after the sale of any tax receivable the municipality shall receive a notice from a statutory notice third party in respect of the individual taxpayer receivable or related tax, the municipality shall make available to the purchaser a copy of such notice.[ Paragraph (9) of subsection (c) effective until November 1, 2024. For text effective November 1, 2024, see below.](9) A purchaser owning any tax receivable shall give notice to a taxpayer and to the appropriate municipality of the name, address, telephone number and preferred method of communication with said purchaser and any service agent acting on behalf of said purchaser within 12 business days of purchasing said tax receivable. Upon written request by the taxpayer in such form as may be determined by the municipality, the municipality shall furnish a copy of such information to the taxpayer within 12 business days of receiving such request. Whenever the purchaser or the service agent of such tax receivables shall change, the new purchaser or service agent shall provide the notice required herein within 12 business days of the effective date of such change.[ Paragraph (9) of subsection (c) as amended by 2024, 140, Sec. 81 effective November 1, 2024. See 2024, 140, Sec. 250. For text effective until November 1, 2024, see above.](9) A purchaser owning any tax receivable shall give notice to a taxpayer, and to the appropriate municipality, within 12 business days of purchasing that tax receivable. The notice shall include the name, address, telephone number and preferred method of communication with the purchaser and any service agent acting on behalf of the purchaser. If the purchaser or the service agent of such tax receivables shall change, the new purchaser or service agent shall provide the notice required herein within 12 business days of the effective date of such change. Where the land is Class one, residential property, as defined in section 2A of chapter 59, such notice shall: (i) be mailed and addressed to the taxpayer at their last known residence and usual place of abode or place of business; (ii) be posted upon the Class one, residential property; (iii) be posted in a convenient and public place; and (iv) include a uniform notice prepared by the commissioner of revenue, in language understandable by a least sophisticated consumer, together with a notice in the 7 most commonly spoken languages in the commonwealth that the notice affects important legal rights and should be translated immediately. The notice shall state:(i) that a complaint to foreclose the tax title may be filed on or after a specific date;(ii) that the tax title has been sold to a purchaser of tax receivables;(iii) why the property was taken and that the owner may redeem the property up until the property is foreclosed by a judgment issued on a proceeding before the land court;(iv) the components of the amount as of the date of the notice, subject to accumulating taxes, fees and charges, required to redeem the property and the procedure for redemption;(v) that if a complaint to foreclose the tax title is filed and the owner does not respond by filing an answer, the court may enter an order defaulting the owner;(vi) that if a complaint to foreclose the tax title is filed, the owner may respond by filing an answer that requests that the court set the terms by which the owner may redeem the property;(vii) that if the property is not redeemed, the purchaser is entitled to receive a judgment from the land court that transfers title to the property to the town or purchaser and permanently eliminates any title rights the owner has in the property; and(viii) that following a foreclosure of the property, the former owner shall be entitled to any excess equity in the property, upon written request to the municipality or purchaser of tax receivables, pursuant to section 64A.(10) Except as provided for in the terms of the sale in accordance with regulations promulgated by the commissioner, no purchaser or service agent thereof may enter into an agreement with a taxpayer or with any party with interest in a parcel, that has the effect of requiring said taxpayer or interested party to pay more than said taxpayer or interested party could be required to pay to the municipality on account of the tax receivable owed to the municipality in accordance with the provisions of this chapter or chapter fifty-nine of the General Laws.(d) The sale of tax receivables shall be without recourse to the municipality selling the same except as otherwise provided in this subsection.(1) The agreement between a municipality and a purchaser for the sale of tax receivables may provide for the repurchase of such tax receivables that do not conform to the terms and conditions of such agreement for the amount paid by the purchaser plus actual costs incurred by the purchaser from the date of sale.(2) The agreement between a municipality and a purchaser for the sale of tax receivables may provide for the repurchase at the election of the municipality of tax receivables inadvertently included in the sale that were excludable under the definition of the class to be assigned that was approved by the commissioner under subsection (b). Such repurchases at the option of the municipality shall take place not later than 6 months immediately following the assignment.(3) If any individual taxpayer receivable (i) shall be abated or (ii) is less than the amount for which the tax receivable in respect thereof was purchased by the purchaser at the time of sale, then, in each case, the purchaser shall be reimbursed by the amount of such abatement or other reduction in the amount of the tax receivable. If such tax receivable was purchased for a discount as provided in paragraph (2) of subsection (c), the repurchase price or reimbursement shall be reduced by the same percentage by which the purchase price of the tax receivable was discounted. In lieu of any such repurchase or reimbursement, the municipality may provide a replacement tax receivable of the same fiscal year as the tax receivable to be replaced that, together with any cash provided by the municipality or the purchaser, shall equal such purchase price or reimbursement amount; provided, however, that a replacement tax receivable shall be of similar market value as the tax receivable that is being replaced. The replacement tax receivable shall be provided only after compliance with subsection (b).(4) The reimbursement amount, pursuant to paragraph (3), shall include, in the case of abatement, interest accrued on such amount from the date of purchase by the purchaser to the date of repurchase or reimbursement by the municipality, calculated in accordance with the rate provided in section 69 of chapter 59.(5) The obligation of the municipality to repurchase any tax receivable pursuant to paragraphs (1) and (2), or to reimburse the purchaser pursuant to paragraph (3), including any replacement tax receivable in lieu of such repurchase or reimbursement, shall be set forth in an agreement between the municipality and the purchaser thereof, and (i) such obligation shall not exceed 10 per cent of the aggregate purchase price received by the municipality from the purchaser, inclusive of any interest and statutory fees paid by such purchaser to the municipality; but in the case of any reimbursement pursuant to said paragraph (3), such reimbursement amount shall not be charged to such percentage limitation; and (ii) the maximum period of time during which a municipality shall remain obligated to repurchase any tax receivable shall not exceed the lesser of: (a) 3 years from the date a tax receivable was purchased from the municipality, and (b) the period ending on the date 6 months prior to the date on which the lien securing the individual tax liability would terminate pursuant to section 37.(6) The limitations set forth in this subsection shall not apply in any case involving fraud or misrepresentation.(e) The sale of tax receivables pursuant to this section shall not affect (i) the legal authority of the municipality with respect to any taxpayer or individual taxpayer receivable or related tax, including the granting of abatements pursuant to law, (ii) the security for the payment of the individual taxpayer receivable and any related tax, (iii) the accrual of interest or the rate thereof in respect of the delinquency of such individual taxpayer receivable and any related tax or (iv) the rights and remedies of each taxpayer in respect of such individual taxpayer receivable and any related tax. The rights and remedies of the purchaser of the right to receive payment of any individual taxpayer receivable shall be subrogated to all the rights and remedies of the municipality to receive and enforce payment of such individual taxpayer receivable and any related tax and interest accrued and to accrue thereon, including, without limitation, the right to take tax title in its own name in the same manner that the municipality is authorized to take tax titles. The said right to take tax title shall vest in the purchaser with the same force and effect as if such tax title had vested in the municipality, including the accrual of interest at the rate provided in section sixty-two for land taken or purchased by a town and not assigned; provided, however, that:(1) For purpose of calculating a municipality's available funds, an individual tax receivable or related tax shall be treated as paid to the extent provided in guidelines or regulations issued by the commissioner upon the sale, assignment or transfer of such in accordance with the provisions of this section; provided, however, that for the purposes of issuance of municipal lien certificates, abatement and abatement appeal rights, the rights of the municipality with regard to the individual tax receivable or related tax are preserved in full.(2) Notwithstanding the third paragraph of section sixty-two, subsequent to a duly authorized and executed sale or auction, a treasurer shall have no authority to adjust the amount of a tax title held by a purchaser on account of erroneous municipality utility bills or interest charges.(3) The right of a municipality established under section twenty-nine shall remain with the municipality under the terms of any sale or auction pursuant to the provisions of this section and the purchaser shall not have the benefit of the assistance to collect taxes as authorized for a municipality by section thirty-three.(4) A purchaser shall not have the right to take immediate possession of the land and collect the rent and income from such land as otherwise permitted under section fifty-three, except as necessary to meet a requirement of subsection (b), (c) or (e), as applicable, of the definition of "Owner'', or "Operator'' in section two of chapter twenty-one E.(5) For the purposes of subsection (d) of the definition of "Owner'', or "Operator'' in section two of chapter twenty-one E, the taking of tax title by a purchaser shall be deemed a taking pursuant to section fifty-three, and the purchaser shall be deemed a city or town; provided, however, that the foregoing shall not prohibit the purchaser from the benefits of subsection (b) or subsection (c) of such definition, as otherwise applicable, to the extent that the purchaser meets the requirements thereof.(6) No notice shall be required to be given to any statutory notice third party from the purchaser in connection with the taking of tax title by the purchaser unless and until the purchaser or its service agent receives actual notice of such statutory notice third party.(f) A purchaser may use a service agent to act on its behalf, whether or not for compensation. The purchaser, or its service agent, shall maintain a record of all tax receivables so serviced, which shall contain the name and address of the taxpayer and the initial amount owing pursuant to each tax receivable, the amounts paid by or on behalf of the taxpayer liable for the individual tax receivable, the amount of any abatement thereof and of any amounts permitted by law to be added thereto, and the final disposition thereof. Such records shall be open to inspection by the appropriate financial official with respect to his municipality during normal business hours. Within seven business days of receipt by a purchaser of a request by an appropriate financial official, a purchaser or any service agent acting on its behalf shall provide a municipality with any and all records relating to any and all receivables sold, assigned or transferred to a purchaser by a municipality in the form provided for in the agreement between the municipality and the purchaser; provided, however, if such request by an appropriate financial official indicates that it is made on behalf of a taxpayer, such purchaser shall furnish the requested information within three business days by means of electronic transmission and follow such transmission, where appropriate, with information in the form provided for in the agreement between the municipality and the purchaser. Whenever a purchaser or the service agent shall perform any of the services for which a fee or charge is permitted by law and by the assignment or transfer agreement between the appropriate financial official and the purchaser to be added to the amount of the individual tax liability, the amount of the tax receivable may be increased by the amount of such fee or charge. All fees charged by a purchaser shall be established pursuant to a fee schedule approved by the commissioner and a copy of such fee schedule shall be provided to the appropriate financial official who shall maintain the same in the municipal office of the appropriate financial official. A copy of such shall be furnished to the taxpayer by the appropriate financial official upon request by the taxpayer. A municipality may charge the taxpayer for the actual cost of the copy.(g) The sale agreement between a municipality and a purchaser shall include, but shall not be limited to, the following provisions:(1) The sale of tax receivables shall be recorded on a written instrument of transfer upon receipt of the purchase price by the appropriate financial official: (i) reciting that it is an assignment and transfer to the purchaser of the right to receive payment of the taxes identified therein pursuant to this section (ii) identifying all such individual tax liabilities associated with such sale and specifying the name, address and phone number of such purchaser, (iii) specifying the amount of the purchase price and (iv) signed and dated by the appropriate financial official.(2) Upon receipt of the purchase price by the appropriate financial official pursuant to paragraph (3) of subsection (c), said instrument of transfer shall establish that all rights, title and interest of the municipality in an individual taxpayer receivable and the right of the municipality to receive payment of the individual taxpayer receivable, including interest accruing thereon after the date of sale to the purchaser, and any statutory fees and charges arising after said date of sale, shall thereupon be transferred and assigned to such purchaser; provided, however, that the municipality may collect amounts owing to such purchaser according to the provisions of paragraph (4) of subsection (c).(3) Tax receivables may be assigned and transferred successively under the same terms and conditions and in the same manner as originally assigned and transferred, provided, however, that the instrument (i) shall be signed by the assignor or transferror and (ii) need not recite the purchase price.(4) Each assignor or transferror shall provide the municipality with an original record of each instrument of transfer and the municipality shall maintain such instrument of transfer with its official records.(5) All tax receivables sold in bulk in a single transaction may be identified in a single instrument of transfer, and it shall not be necessary for each such tax receivable to be identified in a separate instrument of transfer; provided, however, that the instrument of transfer shall identify by name the individual taxpayers contained therein.(6) Where an instrument of transfer has been lost or destroyed, the purchaser of said instrument may file a notarized affidavit with the appropriate financial official of the municipality from which the tax receivable was purchased attesting under the pains and penalty of perjury to the loss or destruction of said instrument. Upon presentation of the notarized affidavit, the appropriate financial official shall on payment of a fee of ten dollars issue to the holder thereof an exact duplicate of the instrument.(7) A fee schedule of all fees to be charged by the purchaser or service agent, provided however, that no fee other than the fees established in accordance with the fee schedule approved by the commissioner shall be attributed to any taxpayer receivable or charged to any taxpayer and provided further, that all such fees shall be reasonable in relation to the actual cost of the transaction.(h) The purchaser of an individual tax receivable on any parcel of real estate shall have the right to purchase any subsequent delinquent individual tax receivable on the same parcel in accordance with the terms of sale of the original agreement, except that there shall be no discount or premium; the price of such subsequent receivable shall be the amount assessed together with any accrued interest, charges and fees. There shall be no requirement of notice or publication with respect to the transfer of such subsequent receivables, notwithstanding the provisions of subsection (b).(i) The amount owed by a taxpayer for an individual taxpayer receivable may be redeemed by said taxpayer upon payment to the purchaser then holding the right to receive said receivable in an amount equal to the sum of the following: (1) the amount of delinquent taxes, penalties, interest, charges and fees that stand charged against the parcel as shown on the instrument of transfer evidencing the tax receivable; and (2) interest at the rate provided by law accruing on said receivable from the date said tax receivable was purchased until the date said tax receivable is redeemed.(j) The commissioner shall make and from time to time revise such rules, regulations and guidelines as he determines necessary and appropriate to implement the provisions of this section.