Some taxpayers got a shock when they paid their quarterly tax bills recently. They found they were being assessed a 10 percent penalty for being late.
From their perspective, they weren’t doing anything different than what they had done for years. They were fully aware the last quarterly payment was due April 15 but elected to wait until closer to the end of the month before stopping down to the tax collector’s office with a check.
What they discovered is that the traditional grace period, which usually extended to the end of the month, was no longer being applied. The April 15 deadline was being adhered to hard and fast.
While it can be argued the city should have notified taxpayers of the change, which would have gone a long way, there was no written policy enabling people to make payments until the end of the month without incurring a penalty. Apart from a one-time interest penalty waiver for residential taxpayers who have paid their taxes on time for the last five years, there’s no grace period.
As it turns out, the grace period evolved as a “practice” as a result of the city’s inability to immediately process the influx of quarterly payments. As payments received by mail were taking two and three weeks – and sometimes even longer – to process, it seemed unfair to hit these payers with a penalty.
To address the backlog, the city went to a lockbox system of payments last year. Tax and utility payments are now sent to a Massachusetts address, where they are deposited within a day to the city’s account. Eliminating the lag improves the city’s cash flow and those making payments are able to balance their checkbooks that much faster. The process has made for a more efficient system and enabled the city to enforce the deadline.
As tax collector David Olsen pointed out in a story appearing in today’s Beacon, he is simply enforcing the law.
There’s no question elimination of the “grace period,” which ran the risk of being arbitrarily applied, could have been handled differently. A notice and explanation would have helped.
But this is preferable to the manner in which tax payments were being processed prior to the lockbox. The lockbox has made for efficiencies, albeit painful for those planning on a grace period, and isn’t that what we expect from our government?