Collectors’ Corner

Writing Off Taxes – LGA 781 – What You Need to Know

Ioriginally wrote an article in the November 2010 GFOA Newsletter about when and how Local Government Act S781 (previously S315.3) applies. I updated that article in the December 2014 GFOA Newsletter. With the changes to the deferment and home owner grant programs, it seems timely to update that article again. The intent of this legislation is to write off uncollectible taxes, not to write off a duly imposed tax, which includes the late payment penalty. Section 781 states: “The minister may confer on a local government further powers to manage and dispose of assets, including taxation revenue, that the minister considers necessary or advisable.” Interestingly, while applying to any municipal asset, this section has almost solely been used with regards to taxation revenue.

When does S781 apply? • For an uncollectible debt such as to write off uncollected taxes on mobile homes. • Due to an error made by the municipality such as failure to include a qualified property in the permissive exemption bylaw. • Due to an error made by BC

Assessment such as an assessment roll error. • An ‘Act of God’, such as the Calgary flood in 2013, if Council is willing to adopt a written policy regarding the situation. The point is that this section of the legislation should be applied fairly to all taxpayers and properties in the same situation.

When does S781 NOT apply? In cases of penalties applied to unpaid taxes: • To an individual business due to the general prohibition against providing assistance to businesses. • Sickness, death and “other crummy stuff” so that the municipality does not have the burden of arbitrating when the penalty should apply. • Mail strike. • Bank errors. Clearly, S781 is not intended to arbitrarily write off a tax penalty if there was any opportunity for another party to pay the property taxes or to check whether the taxes had been received by the municipality.

What is the process to use S781? • Document the circumstances that created the need for the request to write off the taxes. • Prepare a report to Council recommending that Council request the authority to write off the taxes pursuant to the LGA S781. • Council passes a resolution to that effect. • A letter is sent to the Minister of Municipal Affairs requesting the write off. The request should include the folio number, the street address and the circumstances per above. Usually, the staff report to

Council on the issue is sufficient.

However, do not include the owner(s) name for privacy reasons. • Once the Minister’s Order is received, the tax account is adjusted including recovery for other taxing jurisdictions. The

Order may be used to request an adjustment to the municipality’s

School Tax account from the

Ministry of Finance.

Reference: Write-Off of Local Government Financial Assets

DOUG STEIN has worked in municipal finance for over 30 years. In 2011 he retired from his position as Manager of Revenue Services for the District of Saanich. Doug leads the Collectors’ Forum, is a GFOABC Life Member, and a CPA, CMA.