BELLE FOURCHE –– Since Butte County began selling tax certificates in 2018, the county has recouped $599,774.29 worth of overdue property taxes, over half of which resulted from certificate sales.
Butte County State’s Attorney Cassie Wendt spoke to the commission during its Tuesday meeting, highlighting the county’s successes.
“I wanted to provide you guys with a little bit of some numbers,” she said. “I wanted you to see what the county has done since 2018.”
Because the procedure is rooted in state law, Wendt and her office have been integrally involved with fashioning the system in accordance with the county treasurer’s office staff and for guidance and clarification, as needed. In that time, the system has made a significant dent in the more than half a million dollars’ worth of overdue property taxes that had accrued by 2018.
Property taxes help fund county, city, and school budgets, and when property owners fail to pay their property taxes, it is the county’s responsibility to recoup the lost revenue.
As their name implies, tax certificates are liens that attach directly to the underlying real estate. The liens remain on the property until the owner pays the delinquent tax amount or an investor purchases the tax lien.
Counties in South Dakota have the option to either hold public auctions of the lien certificates, or, as Butte County had historically chosen to do, the county automatically becomes the certificate holder.
Due to staffing concerns, Butte County operated in this manner for a number of years prior to 2018. At that time, because the county was in possession of tax certificates for which the taxes, assessments, penalties, and interest total more than $500,000, the county commission, in coordination with the county treasurer’s office and the state’s attorney’s office, worked to pursue the adoption of public auctions to help generate the lost tax income.
In April 2017, the commission adopted a resolution that authorizes the county to publish delinquent property taxes owed to the county and sell the certificates and tax deeds based on those delinquencies via public auctions.
Adoption of the resolution authorized the county treasurer to publish the names, addresses, and amounts of taxes, penalties, and interest owed to the county.
Purchasing a tax certificate does not make a buyer the owner of the property. According to South Dakota Codified Law, if a tax certificate is purchased and not redeemed by the property owner within three years, the owner or holder of the tax certificate may proceed with another process to procure a tax deed on the real property. Property owners can redeem a tax certificate by paying the back taxes owed to the county. When a property owner settles up with the county, the county treasurer’s office reimburses the tax certificate purchaser, and the tax certificate will be considered redeemed or canceled.
So, what happens to the funds recovered from the sale of tax certificates?
A tax certificate is purchased for amount of tax due on the parcel, plus penalty and interest. The tax and interest are apportioned to the tax authorities in the same manner as if the taxes were paid by the property owner when they were due, and the penalty covers the costs of tax certificate preparation fees and publishing the delinquent tax notices in the newspaper.
Tax certificate sales are held on the third Monday of December annually.
According to Wendt, when the county held its first tax certificate sale in 2018, 145 were available, 78 sold, totaling $93,643.48 in taxes.
During the 2019 sale, 131 certificates were available, 59 sold, recovering $84,441.02.
In 2020, 97 certificates were available, 64 sold, totaling $75,117.24.
Last year, Wendt said, 103 certificates were available, 62 sold, totaling $58,200.
Over the course of four years, 263 tax certificates were sold, bolstering the county coffers by $311,372.84.
“In 2018 when we started this process, we had 153 outstanding certificates and the total was $687,614.16,” Wendt said. “There are 38 outstanding certificates available now, and the total is just about $88,000. So, since 2018, we’ve either had purchased or paid $599,774.29 worth of tax money that we had (due to the county).”
Overall, although the new tax certificate sales method is a detailed and time-consuming process, Wendt said it has been a great benefit to the county.
“… I think that those numbers are pretty great,” she said. “We’ve just perfected (the process), and it’s just been very positive.”
This year’s tax sale will be held on Dec. 19.
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