VIRGINIA BEACH — Taxpayers who are late on their real estate and personal property tax bills pay stiff penalties and interest that translate to about $6 million a year in revenue for the city.
But some city leaders say it’s time to consider giving residents some leeway.
“Taxpayers have hardships,” City Treasurer Leigh Henderson told the City Council at a meeting Tuesday. “I’m hoping we can give them a little bit of grace literally and figuratively.”
The City Treasurer’s Office is tasked with the billing and collection of taxes for the city. Tax rates are set by the City Council, and the assessed values are determined by the real estate assessor and the commissioner of the revenue. The city’s real estate tax rate remained the same this year, at 99 cents per $100 of value.
Residents are facing higher real estate tax bills this year with the rise in assessments, which grew by more than 9% for most property owners, and the amount snowballs for those who miss the due date.
Currently, penalty and interest starts to accrue on the day after the payment is due. The penalty is 10% of the tax due on the due date, and the interest is 9.6% for the first year.
If a person’s real estate tax bill is $2,000, they will pay a $200 penalty the day after it’s due if they’re late.
“It’s steep,” said Henderson.
People have complained that the penalty for paying late is too burdensome, she said.
So she wants to give them a break with a grace period of up to five or 10 days, but it will mean forgoing a chunk of revenue that has been programmed into the city’s annual operating budget.
Henderson said Virginia Beach collects an average of $926,834 in penalty and interest for real estate and personal property tax payments that are up to 10 days late. The average collected for late payments up to five days is $495,591.
The city budgets $3 million per year for real estate and $3 million for personal property late fees, and those figures are expected to rise, according to Kevin Chatellier, Virginia Beach’s budget director.
“There has been an uptick in recent years,” Chatellier said at the meeting.
Other Hampton Roads cities also assess penalty and interest the day after a tax due date. Arlington and Alexandria have a tiered penalty rate that increases over time. Henderson said a grace period would be the easiest to manage.
Mayor Bobby Dyer said he supports it as a matter of “fairness and empathy.” Dyer asked to have it considered as part of the annual budget process this spring.
Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com
