How Has Covid Affected Property Taxes In California?

More than a million Californians are recently unemployed. Others have seen their hours slashed, or the revenue of their businesses evaporate.

While the economy has been hammered by the coronavirus pandemic, bills are still coming due. The property tax, which finances government services that are in high demand during a pandemic and can run up substantial fines if left unpaid, is a big one for homeowners, landlords and companies.

Through a mortgage escrow account, many people pay their property taxes, with the servicer collecting a bit each month and then paying the county in a lump sum. For those individuals, counties say the property tax should have already been collected and there is no cause for concern about a coming payment deadline. According to an organization of California tax collectors, that accounts for about 20 % to 40 percent of land parcels, depending on the region.

But less prepared may be those who pay their property tax directly to the county.

Counties say for those who need it, they are rolling out support. But it's unclear how individuals can qualify, contributing to the possibility that taxpayers' aid can depend on where they live, not how the virus has affected them.

The average annual property tax bill for a single-family home is about $5,600 in Los Angeles County, a level kept lower because Proposition 13 holds taxable values for long-term owners well below market values. An individual who recently purchased a $650,000 home in Los Angeles will pay about $7,600 in annual property taxes.

“This is a pretty significant bill that is coming due smack dab in the middle of this crisis,” said Nisha Kashyap, staff attorney for the pro-bono law firm Public Counsel.

What is the deadline to pay property taxes?

Land taxes are collected in two instalments in California. This Friday, the second is due. Typically, if property taxes come in after that date, counties impose a 10 percent fee; then an additional 1.5 percent late fee is charged every month if they are not paid by June 30.

Many county offices throughout the state are no longer open to the public, but taxpayers can pay electronically, over the phone or by mail.

Do I have to pay?

Yes — at least eventually. Counties do not disregard the amount you owe or reduce it.

Many have, however, said that if people can't pay because of COVID-19, the disease caused by the new coronavirus, they will cancel penalties for late payments. However, it is not universally defined what connection a hardship should have to the disease.

Do I qualify for a cancellation of the late fee?

It depends on where you live. Even then it’s unclear.

The California State Assn. of Counties and the California Assn. of County Treasurers and Tax Collectors have said that counties "will use all existing authorities to cancel penalties and other charges on a case-by-case basis for homeowners, small businesses, and other property owners who are unable to pay their property taxes because of conditions caused by COVID-19."

But in California, there are 58 counties, and tax collectors interpret their power differently.

In Los Angeles County, by going to the county 's website starting Saturday, the day after taxes are due, taxpayers who can not pay on time for "reasons related to COVID-19" can submit a request to cancel their late fee.

There isn’t a set list of situations that would qualify for a cancellation. But Los Angeles County Treasurer-Tax Collector Keith Knox said he plans to broadly interpret “reasons related to COVID-19.” He said that people who were hospitalized because of COVID-19 might be included. It may also be someone who lost their job because their company was closed by a government order. Or maybe, since the schools were closed, parents had to take care of their children at home and couldn't function.

“This isn’t the time to squeeze people ... this is a time for us to be understanding and appreciative of circumstances,” Knox said. “There could be a lot of factors tied to employment besides losing your job because the restaurant closed.”

Other counties are planning to take a stricter position.

The tax collector in Yuba County, Dan M. Mierzwa, said he does not believe he has the power to give penalty cancellations to anyone whose business was shut down because it was not considered necessary. But he said that if the company was taken over by the government to be used as a shelter, “may be different”.

“I respect that counsels may have different opinions,” he said.

In Orange County, what qualifies has shifted. Tax Collector Shari L. Freidenrich said in an email that she had received legal guidance that “income loss was not allowed by law, but received revised legal guidance this weekend.” That new guidance says that people with “significant demonstrated economic hardship due to COVID-19" are eligible for a late-fee cancellation.

“We will be closely reviewing each request on a case-by-case basis that we receive from homeowners, small businesses and other property owners who have demonstrated economic hardship due to COVID-19,” she said. She didn’t immediately answer an email asking for what would be a “significant demonstrated economic hardship.”

Karen Lange, a lobbyist for the tax collectors association, said the organization is circulating an application model to all 58 tax collectors in an attempt to standardize the application process., but noted that “there is nothing that would compel a ... tax collector to use it.”