Current through Register Vol. 50, No. 6, December 1, 2023
RELATES TO:
KRS
134.125,
134.126,
134.128,
134.129,
134.452,
134.490(5)(h)
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
134.490(5)(h) authorizes the
Department of Revenue to promulgate Administrative Regulations to establish a
process for an installment method of payment for the redemption of certificates
of delinquency by a delinquent taxpayer. This administrative regulation
establishes the process by which third party purchasers shall grant installment
payments.
Section 1. Definitions.
(1) "Base amount" means the amount paid by a
third-party purchaser for a certificate of delinquency.
(2) "Certificate of delinquency" is defined
by
KRS
134.010(1).
(3) "Default" means:
(a) The failure to pay on or within fifteen
(15) days of a payment due date under a payment plan document; or
(b) Commencement of any legal action by a
person other than the third-party purchaser affecting the title or requiring
the sale of the subject property.
(4) "Department" means the Department is
defined by
KRS
134.010(5).
(5) "Optional certificate" means a
certificate of delinquency that is not a qualifying certificate.
(6) "Payment plan" means a monthly
installment plan described in the payment plan document.
(7) "Payment plan document" means the
agreement between the property owner and the third-party purchaser detailing
the terms of a payment plan.
(8)
"Person" means any individual, corporation, business trust, estate, trust,
partnership, limited liability entity, association, organization, joint
venture, government, or any subdivision, agency or instrumentality thereof, or
any other legal or commercial entity.
(9) "Processing fee" means a fee that may be
imposed by a third-party purchaser for administering a payment plan, as
provided in
KRS
134.490(5)(c).
(10) "Property owner" means "taxpayer" as
defined in
KRS
134.010(14), or any other
owners of real property on which an outstanding certificate of delinquency is
held by a third-party purchaser.
(11) "Qualifying certificate" means a
certificate of delinquency purchased after June 1, 2012 by a third-party
purchaser required to register with the department under
KRS
134.129.
(12) "Subject property" means the property
against which the lien related to a certificate of delinquency is
attached.
(13) "Third-party
purchaser" is defined by
KRS
134.010(16).
Section 2. Notice of Payment Plan
Availability.
(1) For purposes of this
administrative regulation, the term "third-party purchaser" shall also include
any assignee of a certificate of delinquency.
(2) Any third-party purchaser who owns a
qualifying certificate shall provide notice of the availability of a payment
plan to the property owner as required by
KRS
134.490(3)(d) 5, unless the
conditions established by Section 7 of this administrative regulation apply.
The notice shall include, at a minimum, the following information:
(a) A statement that a payment plan is
available upon written request from the property owner;
(b) The mailing address and the physical
address where a request may be delivered. An electronic address may also be
provided at the option of the third-party purchaser to accept requests in an
electronic format;
(c) The date the
certificate of delinquency was purchased by the third-party purchaser as
provided in
KRS
134.128, or paid and assigned as provided in
KRS
134.126(8); and
(d) A statement that the option to request a
payment plan shall expire unless a written request for a payment plan is
received by the third-party purchaser within twelve (12) months of the date the
certificate of delinquency was purchased by the third-party
purchaser.
Section
3. Submission and Review of Payment Plan Requests.
(1) Any property owner with property subject
to a qualifying certificate may submit a written request for a payment plan to
the third-party purchaser holding the qualifying certificate within twelve (12)
months of the date the certificate of delinquency was purchased by the
third-party purchaser as provided in
KRS
134.128; or paid and assigned as provided in
KRS
134.126(8). The request
shall be made in accordance with the process established by the third-party
purchaser.
(2) Upon receipt of a
payment plan request, the third-party purchaser shall review the request, and
if the request is timely and none of the conditions listed under Section 7 of
this administrative regulation apply, the third-party purchaser shall prepare
and deliver payment plan documents to the property owner in accordance with the
provisions of this administrative regulation.
(3) Beginning with receipt of a request for a
payment plan, and during the term of any payment plan, the third-party
purchaser shall not undertake any enforcement remedies available under the law
for the collection of the amount due on a certificate of delinquency. However,
this provision shall not preclude a third-party purchaser from engaging in
legal proceedings to protect its interest in property subject to its lien and
to charge reasonable legal and administrative fees in accordance with
KRS
134.452(3). If the request
for a payment plan is rejected because it is not timely or one of the
conditions listed in Section 7 of this administrative regulation applies, or if
the property owner defaults, the third-party purchaser may pursue any legal
remedies available to the third-party purchaser under the law for collection of
the amount due.
(4) A third-party
purchaser may accept a request for a payment plan that is not timely filed. A
payment plan entered into under this subsection shall be governed by the
provisions of this administrative regulation.
Section 4. Payment Plan Requirements and
Terms.
(1) The payment plan shall provide for
equal monthly installments, except the amount due in the final month may be
adjusted to reconcile the total amount paid with the total amount due. The
payment plan shall be offered for a minimum of twelve (12) months, unless the
property owner requests a shorter term.
(2) The terms and conditions of the payment
plan shall be established by a payment plan document, which shall be signed by
the property owner and the third-party purchaser. The third-party purchaser
shall provide a copy of the executed document to the property owner. The
payment plan document shall be effective upon receipt by the third-party
purchaser.
(3) The payment plan
document shall include the following:
(a) A
description of the subject property and the tax bill covered by the certificate
of delinquency;
(b) The base amount
due when the payment plan document is executed;
(c) The total amount of pre-litigation
attorney fees and administrative fees incurred and accrued as provided in
KRS
134.452 and due when the payment plan
document is executed;
(d) The
amount of interest accrued when the payment plan document is executed,
calculated as provided in
KRS
134.452 and
134.125;
(e) The term of the payment plan and number
of monthly payments;
(f) The amount
of interest that will accrue over the term of the payment plan, assuming
payments are made according to the payment plan schedule;
(g) The amount of the monthly processing fee
imposed;
(h) The monthly payment
amount due, as provided in Section 5 of this administrative
regulation;
(i) The date the
monthly payment amount is due;
(j)
A statement that the taxpayer shall be in default for the failure to pay within
fifteen (15) days of a payment due date, as provided in Section 1(3)(a) of this
administrative regulation, which would allow the third party purchaser, at his
discretion, to discontinue accepting payments in accordance with the plan and
pursue any other legal remedy available to collect the debt;
(k) Acceptable methods of payment;
(l) The mailing address and delivery address
where payments are to be made, if the payments are to be mailed;
(m) Any other terms and conditions mutually
agreed upon by the property owner and third-party purchaser; and
(n) A statement that the third party
purchaser shall notify the taxpayer within seven (7) business days by certified
mail if the certificate of delinquency related to the payment plan is assigned.
The notification shall include the name, address, and telephone number of the
assignee.
(4) The
third-party purchaser may limit the method of payment accepted to those methods
reasonably determined to ensure payment, except that a third-party purchaser
shall accept certified checks, cashier's checks, and cash in payment. A
third-party purchaser may, at the discretion of the third-party purchaser, also
accept ACH transfers, wire transfers, credit card, personal check, or other
means of payment.
(5) The
third-party purchaser shall not require more than one (1) payment per
month.
(6) An assignee of a
certificate of delinquency shall abide by the terms of a payment plan related
to a certificate of delinquency.
Section 5. Calculation of the Monthly Amount
Due and Crediting of Payments.
(1) Interest
shall be calculated during the term of the payment plan on the outstanding
balance of the base amount as required by
KRS
134.125.
(2) To determine the monthly payment due, the
third-party purchaser shall include the following to establish the total amount
due, and shall then calculate a monthly payment, with any adjustment necessary
for payments to equal the total amount due made in the last month of the
payment plan:
(a) The base amount
due;
(b) Interest:
1. Accrued prior to the effective date of the
payment plan; and
2. Calculated on
the declining balance of the base amount over the term of the payment plan as
provided in subsection (1) of this section;
(c) Pre-litigation attorney fees and
administrative fees imposed under
KRS
134.452 accrued when the payment plan is
agreed to; and
(d) The monthly
processing fee amount multiplied by the number of months the payment plan will
be in effect.
(3)
Payments shall be credited by the third-party purchaser on the day the payment
is received.
(4) Payment amounts
received shall be credited as follows:
(a)
First, to the monthly processing fee, which shall become due on the first day
of each calendar month;
(b) Second,
to the interest due;
(c) Third, to
outstanding pre-litigation attorney fees and administrative fees imposed under
KRS
134.452 and included as part of the payment
plan document; and
(d) Fourth, to
reduce the base amount due.
(5) If multiple certificates of delinquency
are included under one payment plan document, the third-party purchaser shall
apply payments based on the earliest date of attachment of the lien to the
subject property.
Section
6. Default.
(1) The third-party
purchaser may charge a processing fee for the month in which the default
occurs, but shall not charge a processing fee for any subsequent
month.
(2) In determining the
outstanding amount due after a default, all payments received from the property
owner and already credited as provided in Section 5 of this administrative
regulation shall remain as credited under Section 5 of this administrative
regulation. Any additional payments received after a default shall be applied
as follows:
(a) First, to the payment of
unpaid processing fees of the period prior to default, including the processing
fee due in the month the default occurred;
(b) Second, to outstanding interest
due;
(c) Third, to outstanding fees
charged as set forth in
KRS
134.452; and
(d) Fourth, to reduce the base amount
due.
Section 7.
Conditions Under Which A Payment Plan Is Not Required. A third-party purchaser
shall not be required to offer a payment plan to a property owner under the
following circumstances:
(1) The property
owner has previously defaulted on a payment plan with that third-party
purchaser; or
(2) An agreed
judgment, agreed order, or other court order is in place that addresses the
payment of the underlying tax claim or claims covered by a certificate of
delinquency.
Section 8.
Optional Payment Plans.
(1) A third-party
purchaser who is not required to register with the department under
KRS
134.129, or who holds optional certificates
of delinquency may offer payment plans to property owners under the same terms,
conditions, and requirements established by this administrative
regulation.
(2) Any payment plan
agreement between a third-party purchaser and a property owner in existence on
the effective date of this administrative regulation shall remain in effect
according to the terms of the existing agreement. A third-party purchaser shall
not impose the processing fee authorized by
KRS
134.490(5)(c) as part of an
installment payment plan agreement relating to a certificate or certificates of
delinquency purchased on or before June 1, 2012.
39 Ky.R. 916;
1461; 1653; eff. 3-8-2013; Crt eff. 6-7-2019.
STATUTORY AUTHORITY:
KRS
134.490(5)(h)