May 20, 2012

Beaufort County’s annual delinquent tax sale offers a window into our local economy. Unfortunately, the view isn’t all that great this year. On Oct. 4, county treasurer Joy Logan expects to auction off about 2,000 properties for failure to pay taxes, about double the number sold in last year’s sale.

As of this week, Logan said, about 4,900 properties still had unpaid taxes. Last year, the county began September with about 3,000 delinquent properties, and about 1,200 went to auction. This year, the count started at about 5,200 properties.

We also have a record number of properties — about 400 — whose owners didn’t pay their tax bills during the past year after their property was sold in the 2009 tax sale. They risk losing their property to the successful bidder. About 100 properties usually are not redeemed, Logan said.

No one will be watching the sale more closely than local officials whose budgets stand to gain from the sale to recoup unpaid taxes. Officials face the prospect, for the first time in decades, of a diminishing tax base in Beaufort County, long a growth market, particularly in the southern part of the county.

Collection rates also are a worry. Part of the debate over the tax rate for the Beaufort County school district was the likely collection rate on property taxes. Foreclosures continue to put a damper on the market. Properties listed for sale in the county’s October foreclosure auction total 121, according to Beaufort County’s website; in September, 173 properties were sold. RealtyTrac reports 418 foreclosures in July and 161 in August.

We should note that last year’s tax sale and the possibility that money was missing prompted an investigation into Treasurer’s Office operations that resulted in embezzlement charges against a former employee.

The embezzlement scheme was uncovered by accountants from the Atlanta office of KPMG, who were hired by 14th Circuit solicitor Duffie Stone and county administrator Gary Kubic to perform a forensic audit. The audit was requested by Sheriff P.J. Tanner, who said his office’s investigation into missing tax sale proceeds could not move ahead because of shoddy record-keeping in the Treasurer’s Office.

That audit found some disturbing practices associated with the annual tax sale and the process of redeeming properties during the year. Auditors found no independent review of cashiers’ work in collecting and recording payments to redeem property sold in the annual tax sale; records for the annual sale kept in notebooks and maintained by hand; and an average six-day lag between the time property is redeemed and the money is deposited in the bank.

Logan is on notice that she and her employees must do better, especially given the increasing sale volume and the increasing need for local governments to get every nickel they are owed.

About the author 

Charles Sells

Charles Sells is the founder and CEO of The PIP Group, a turnkey service provider that focuses on investments in distressed real estate assets including tax liens, tax deeds, traditional foreclosures, fix-and-flips and long-term cash flow acquisitions. He has been involved in tax lien investing for over 20 years, during which time The PIP Group has grown to become one of the largest agencies of its kind with nearly 1,000 individual and institutional investors worldwide.

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