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Home My WebLink AboutTR-14-96 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT #2 . T REPORT COUNCIL Meeting: File# `l�Ii:D�° Date: February 26, 1996 Res. # Report#: T4-46 File#: 13y-Law# Subject: PRE-AUTHORIZED PAYMENT SYSTEM FOR TAXES Recommendations: It is respectfully recommended to Council the following: 1. THAT Report TR-14-96 be received; 2. THAT the attached By-Law (Schedule "A") authorizing the establishment of a monthly pre-authorized payment system for payment of realty taxes and a payroll deduction for tax payments for employees be approved; 3. THAT all staff be notified of Council's decision; and 4. THAT all taxpayers be notified of Council's decision in conjunction with the June 1996 tax billing with the pre-authorized payment system effective December 1, 1996 for the 1997 tax year. BACKGROUND AND COMMENT: 1. A pre-authorized payment system is a very useful tool for collection of receivables. It is ideally suited to environments that collect revenues on an instalment basis. This has resulted in fairly extensive implementation in the Municipal environment. The attached Schedule "B" indicates a small sample of Municipalities who have pre-authorized payment systems in place. The Schedule also shows the parameters that have been established by each Municipality. 2. Under a pre-authorized payment system, funds are collected electronically from the taxpayer's financial institution and deposited directly into the Municipality's bank account. This system reduces the cost of processing and depositing payments received over the counter or by mail. It also reduces delays in receipt of payments and NSF or uncollectible amounts are identified immediately. As well, it reduces the handling and storage problems associated with post-dated cheques. PAPER RED'.1E 814515 PRMIEDO RECYCLED PAPER TR-14-96 Page 2 3. The Municipal Act prohibits collection of greater that fifty percent (50%) of the prior years tax levy before the current year mill rate is approved. The Municipality of Clarington generally passes the Mill Rate By-Law in the month of May. As a result, in order to adhere to the Municipal Act, it is recommended that the PAP (pre-authorized payment) system commence on December first each year for the following taxation year. This means that six (6) months or fifty percent (50%) would be collected by the time the current mill rate is approved. 4. It is also recommended that the instalments be over a twelve (12) month time period in order to minimise the amount for the taxpayer. The instalment amount would be established for December 1st based on the prior year's tax levy divided by twelve (12) instalments. The instalment would then be adjusted in June for the remainder of the year based on the new mill rate established in May. 5. Providing that the taxpayer adhered to the instalment schedule, no penalties and interest would be charged nor would a fee be charged to enroll in this system. However, should a taxpayer default on an instalment payment more than once, they will be removed from the plan and penalties and interest would be charged on all outstanding amounts. A service charge will also be levied for instalments that cannot be processed due to insufficient funds or change of banking information without prior notice. 6. Benefits of a PAP system to the taxpayer include elimination of the need to write, stamp and mail cheques, keep track of due dates and risk of lost cheques or mail delays. Taxpayers will be able to budget for property taxes easier with a regular schedule of payments. Since the payments will be electronically requested and processed from our computer system payments will be posted accurately and timely. By choosing the PAP option, taxpayers will be helping to keep the administrative cost of processing tax payments from increasing as the Municipality continues to grow. This will be reflected in future tax years. 7. It is anticipated that enrollment forms will be sent out with the Final Tax Notice in June and a fall deadline will be set for initial sign-up to the program. After the initial set-up, taxpayers will be able to join the plan at any time but the instalment amount would be higher for the first year in order to ensure that all current year taxes are collected by the November 1st instalment. 8. There is a small bank fee associated with this program of $60 per month and $0.10 per item. As a result it would be beneficial to the Municipality if Municipal employees were permitted to pay their taxes via payroll deduction at no cost to the Municipality. As with the PAP system, penalty and interest would not be charged providing that the employee adhered to the payment schedule. It the employee defaulted, penalty and interest would be charged on the amount outstanding at that time. Due to the ease in establishing this process, it is recommended that the payroll deduction option be made available to employees immediately. TR-14-96 paw CONCLUSION: In order to improve tax collections as well as provide a better service to taxpayers, it is recommended that the establishment of a pre-authorized payment system for taxes and an employee payroll deduction option for tax payments be approved. Respectfully submitted, Reviewed by, ? r — IYV �MaAeLjt'Marano, H.BSc.,A.M.C.T., W.H. Stockwell, Treasurer. Chief Administrative Officer. MAM/NT/hjl Attachments SCHEDULE"A" THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON BY-LAW NUMBER 96- Being a by-law to authorize the establishment of an Optional Pre-Authorized Payment System for Taxes and an Employee Payroll Deduction for Tax Payments WHEREAS pursuant to Section 399 of the Municipal Act, R.S.O. 1990, Chapter M-45, the Municipality is empowered to provide for the payment of realty taxes by instalments and is further empowered to invoke penalties and discounts; AND WHEREAS the Municipality is further empowered to direct that such monies be paid by the person charged with payment into banks as authorized by the said section of the Municipal Act; NOW THEREFORE the Council of the Corporation of the Municipality of Clarington enacts as follows: 1. THAT a pre-authorized payment system for taxes be approved with the following conditions: (1) In this By-Law,PRE-AUTHORIZED PAYMENT SYSTEM means the pre- authorized monthly withdrawal of the realty taxes from the taxpayer's financial institution through electronic funds transfer. (2) Residential, industrial and commercial realty taxpayers of the Corporation of the Municipality of Clarington may enrol in an optional Pre-Authorized Payment Plan to provide for the payment of realty taxes, and other charges collected in a like manner as taxes, in monthly payments in any year. The payments will be made by pre-authorized withdrawal from the taxpayer's financial institution. (3) The Pre-Authorized Payment Plan commences on December 1, 1996. (4) Payments made under the Plan for 1997 will be divided into twelve (12) payments. The first payment will be withdrawn on December 1, 1996 and on the first day of each subsequent month until November 1, 1997. This will automatically continue for subsequent tax years unless otherwise notified by the taxpayer. (5) If the taxpayer makes all payments as required by the Plan, no penalty or interest will be levied. (6) Continued enrolment in the Pre-Authorized Payment Plan may be revoked by the Treasurer,if more than one (1) monthly payment fails to be honoured. If a taxpayer defaults on more than one (1) payment,the Treasurer may cancel the privilege of any defaulting taxpayer to participate in the Pre-Authorized Payment Plan for one (1) year. Tax accounts disqualified from the program,shall revert to the regular instalment billing system and be subject to penalty and interest in accordance with Municipal By-Laws. 2. THAT effective the 1996 taxation year,employees be permitted to make realty tax payments via payroll deduction,based on the number of pay periods over a calendar year and subject to the above applicable clauses. By-Law read a first and second time this 26th day of February 1996. By-Law read a third time and finally passed this 26th day of February 1996. Mayor Clerk SCHEDULE B ........... ............ .. . ........ .......................................................................... ......................................... .... ........ ........ ... ...X..q. ........ .... ........... . ............ .. ..... . fi n ent .... ............ a i A i ........... .. ................. .... ::::>:: XX .................. ... ..... Hamilton 12 Dec I Nov 1 1st day of month Stoney Creek 10 Feb 1 Nov 1 1st day of month Peterborough 12 Jan 31 Dec 31 end of the month Sudbury 11 Dec I Oct 1 1st day of month Kitchener 12 Jan 1 Dec I 1st day of month Burlington 11 Nov 30 Sept 30 31st of the month Mississauga 11 Jan I Nov 1 1st day of month Innisfil 11 Jan 1 Nov I last banking day SCHEDULE "A" THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON BY-LAW NUMBER 96- Being a by-law to authorize the establishment of an Optional Pre-Authorized Payment System for Taxes and an Employee Payroll Deduction for Tax Payments WHEREAS pursuant to Section 399 of the Municipal Act, R.S.O. 1990, Chapter M-45, the Municipality is empowered to provide for the payment of realty taxes by instalments and is further empowered to invoke penalties and discounts; AND WHEREAS the Municipality is further empowered to direct that such monies be paid by the person charged with payment into banks as authorized by the said section of the Municipal Act; NOW THEREFORE the Council of the Corporation of the Municipality of Clarington enacts as follows: 1. THAT a pre-authorized payment system for taxes be approved with the following conditions: (1) In this By-Law, PRE-AUTHORIZED PAYMENT SYSTEM means the pre- authorized monthly withdrawal of the realty taxes from the taxpayer's financial institution through electronic funds transfer. (2) Residential, industrial and commercial realty taxpayers of the Corporation of the Municipality of Clarington may enrol in an optional Pre-Authorized Payment Plan to provide for the payment of realty taxes, and other charges collected in a like manner as taxes, in monthly payments in any year. The payments will be made by pre-authorized withdrawal from the taxpayer's financial institution. (3) The Pre-Authorized Payment Plan commences on December 1, 1996. (4) Payments made under the Plan for 1997 will be divided into twelve (12) payments. The first payment will be withdrawn on December 1, 1996 and on the first day of each subsequent month until November 1, 1997. This will automatically continue for subsequent tax years unless otherwise notified by the taxpayer. (5) If the taxpayer makes all payments as required by the Plan, no penalty or interest will be levied. (6) Continued enrolment in the Pre-Authorized Payment Plan may be revoked by the Treasurer, if more than one (1) monthly payment fails to be honoured. If a taxpayer defaults on more than one (1) payment, the Treasurer may cancel the privilege of any defaulting taxpayer to participate in the Pre-Authorized Payment Plan for one (1) year. Tax accounts disqualified from the program, shall revert to the regular instalment billing system and be subject to penalty and interest in accordance with Municipal By-Laws. 2. THAT effective the 1996 taxation year, employees be permitted to make realty tax payments via payroll deduction, based on the number of pay periods over a calendar year and subject to the above applicable clauses. By-Law read a first and second time this 26th day of February 1996. By-Law read a third time and finally passed this 26th day of February 1996. Mayor Clerk