Finance and Administrative Committee
	TO:	Mayor and Members of Council
	FROM:	Andy Taylor, Commissioner, Corporate Services
	PREPARED BY:	Paul Wealleans, Director, Taxation
	DATE OF MEETING:	2003-Sep-22
	SUBJECT:	Tax Write Offs in Accordance with Section 354 of the Municipal Act, 2001

RECOMMENDATIONS:

THAT taxes totalling $655,830.86 (excluding penalty and interest) as set out in this report be written off pursuant to the provisions of Section 354 of the Municipal Act, 2001;

AND THAT the applicable penalty and/or interest charges be adjusted accordingly;

AND THAT the Treasurer be directed to remove the taxes from the Collector’s Roll.

PURPOSE:

Provisions under Section 354 of the Municipal Act, 2001 allow for the write-off of taxes deemed uncollectible. This report recommends the write-off of $655,830.86 of taxes (excluding penalty and interest) of which the Town of Markham share is $119,580.35.

BACKGROUND:

Under Section 354 of the Municipal Act, the Treasurer has the authority to recommend to Council that uncollectible taxes be written off after an unsuccessful tax sale whether or not the property vests with the municipality, or are no longer payable as the result of a provision tax relief or a decision of any court. Taxes levied on property of the Crown can also be written off.

The attached list of taxes (Appendix A) reviewed by the staff of the Tax Office is a “Summary of Uncollectible Taxes”. The list includes uncollectible taxes that have been assessed incorrectly, properties vested to the Town of Markham, or Payment in Lieu of taxes on Crown lands (resulting from Current Value Assessment adjustments or capping adjustments).

All appropriate collection action has been carried out and the Treasurer has ascertained the taxes to be uncollectible. It is recommended that Council approve the cancellation of the uncollectible taxes and remove them from the Tax Collector’s Roll.

OPTIONS/DISCUSSIONS:

Taxes being recommended for write off are from accounts that have either gone through the Town’s collection process or are being recommended for write off due to assessment errors, capping adjustments or reclassification of Crown properties. The tax collection process includes some or all of the following: Overdue Statements, Final Demand Letters, investigations, telephone calls, meetings, Bailiff Warrants, Collection Agency action, and tax sale.

The amounts of taxes to be written off total $655,830.86 (excluding penalty). Of this total the Town’s share is $119,580.35 as well as $3,369.79 relating to the Markham BIA. The balance of $532,880.72 will be charged to the Region of York and School Boards accordingly.

The following chart summarizes the categories of write offs:

Categories of Tax Write Offs

Category	Total Taxes	Town of Markham’s Share
Town Property (Tax Sale, Transferred to Town)	$54,973	$13,193
PILs (Federal Crown Farmland Adjustment)	$547,723	$87,883
PILs (CVA/CappingAdjustments)	$11,799	$9,392
MPAC Assessment/Billing Error	$37,966	$9,112
BIA Billing Error	$3,370	$0
Total	$655,831	$119,580

The three properties vested to the Town noted in this report were registered for tax sale in 1999. A tax sale by public tender was held on December 12, 2002 for two properties located on Lynhurst Drive. There were no tenders received on the lands. The Treasurer has since registered a notice of vesting with the Town of Markham. The titles of the subject lands were transferred to the Corporation of the Town of Markham on December 23, 2002.

A tax sale by public auction was held on December 18, 2002 for vacant land located at Robinson Street Rear. No bid was made on the land, and the title of the subject land was transferred to the Corporation of the Town of Markham on December 30, 2002. This is the property now included as part of the Tannery Pond park project in Ward 4.

The unpaid taxes for these tax sales properties total $38,612.81 (Town share is $8,463.45) must now be written off as uncollectible.

Write offs for payment in lieu of taxes are adjustments resulting from (1) capping and clawback provisions; and, (2) incorrect farmland classification. At the time of billing, commercial payment in lieu properties were billed at full CVA. The Province, through subsequent legislation, clarified that capping provisions do apply to Crown properties and as a result, these capping adjustments that relate to payments in lieu must be written off. Secondly, there are payments in lieu that must be written off due to incorrect farmland classification. The federal government disputed the classification as returned on the assessment roll by the Municipal Property Assessment Corporation (MPAC). MPAC classed the farmland as residential and the lands were taxed at that rate. The federal government has made payments at the farmland rate (which is 25% of the residential rate) and the balance must be written off. The farmland issue is the largest category of taxes to be written off between 1998 and 2002.

A total of $37,966 (Town share is $9,112) must be written off because of assessment and billing error in which incorrect assessment values, property class information or severance figures were included on original billings.

There is also $3,369.79 (Town share is $0) for a Markham Business Improvement Area (BIA) levy to be written off as it was incorrectly levied against a property outside the BIA boundary.

FINANCIAL CONSIDERATIONS:

The amount of taxes that require removal from the Tax Collector’s roll total $655,830.86 (excluding penalty and interest of $82,438.76). Of this total, the Town’s share is $119,580.35 and $3,369.79 that relates to a Markham BIA property. The balance of $532,880.72 will be recovered from the Region of York and School Boards accordingly. The write offs included in this report as well as other tax adjustments due to assessment appeals, frozen assessment listing appeals, etc will cause the annual budget of $183,500 to be overspent by $34,216. This overage will be absorbed by year end through a review of all 2003 write offs to determine which accounts can be offset against the existing Tax Allowances for Write offs Accrual.

BUSINESS UNITS CONSULTED/AFFECTED:

None.

ATTACHMENTS:

Appendix A “Summary of Uncollectible Taxes”

Paul Wealleans, Director, Taxation

Andy Taylor, Commissioner, Corporate Services

_______________________________

Barb Cribbett, Treasurer

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