What happens if someone doesn't pay her property taxes?

[Ellie]

A friend who lives in California inherited some land in Virginia when her father died. She has never paid one cent in property taxes, even though she has been contacted by the tax-requiring organization. She says she doesn't want the land and has never even been there, and doesn't see why she should have to pay taxes. What can be the possible consequences? I told her she should just sell it, but there's no talking to her. So I'm going to talk with her daughter, who seems to have more common sense.

[LaughingCat]

It is state dependent -- In some states, someone else can pay the taxes and after a certain amount of time will own the property.  Other states will auction the property off after a certain amount of time.

[Arcadia]

https://law.lis.virginia.gov/vacode/title58.1/chapter39/section58.1-3975/
Ҥ 58.1-3975. Nonjudicial sale of tax delinquent real properties of minimal size and value.

A. Notwithstanding any other provision of this title, the treasurer or other officer responsible for collecting taxes may sell, at public auction, any parcel of real property that is assessed at $10,000 or less, provided that the taxes on such parcel are delinquent on December 31 following the third anniversary of the date on which such taxes have become due.

B. The treasurer or other officer responsible for collecting taxes may in addition sell, at public auction, any parcel of real property that is assessed at more than $10,000 but no more than $25,000, provided that the taxes on such parcel are delinquent on December 31 following the third anniversary of the date on which such taxes have become due, it is not subject to a recorded mortgage or deed of trust lien, and such parcel:

…”

[LucyStoner]

Depends on the state and the value of the property.  It generally takes a while but eventually, the state can sell the property at auction to get the tax money.  

If she doesn't want the land, why can't she just sell it?  

[Ellie]

I did some sleuthing myself, but I didn't look far enough, as most of the results had to do with houses on property, and AFAIK, it's only property.

I would love to have this property myself, because I know the general vicinity, but the truth is that I'm never going to move to Virginia, so there's that. 🙂

I was mostly kind of worried that my friend might be arrested or something dreadful, but it doesn't look like that's the case. It would be a shame for her to lose this property, and I can't believe she has let it go for over 20 years. o_0 Of course, maybe the property has been sold at public auction by now and she just hasn't paid attention.

Anyway, thanks, y'all.

[LucyStoner]

Just now, Ellie said:

I did some sleuthing myself, but I didn't look far enough, as most of the results had to do with houses on property, and AFAIK, it's only property.

I would love to have this property myself, because I know the general vicinity, but the truth is that I'm never going to move to Virginia, so there's that. 🙂

I was mostly kind of worried that my friend might be arrested or something dreadful, but it doesn't look like that's the case. It would be a shame for her to lose this property, and I can't believe she has let it go for over 20 years. o_0 Of course, maybe the property has been sold at public auction by now and she just hasn't paid attention.

Anyway, thanks, y'all.

If they haven't sold it yet, it's probably not sellable.  Or they long ago sold it.  

There was a land owner here who owned MANY houses in one area that had all decayed to the point squatters didn't want to live there, after years and years of him renting them out by the room.  The man couldn't be prevailed on to fix the properties, pay his taxes or sell his properties (which are all located in prime locations, where a small lot can easily fetch $500k or more now.)  It took forever but eventually the city essentially seized the houses one by one to pay off the man's taxes and legal judgements.  I never understood why he didn't just sell them.  

[Tanaqui]

The worst that happens if you don't pay your property tax is that the property is seized and sold at auction. Nobody goes to prison over this. That would *cost* money. The point of taxes is for the government to *gain* money, not for the government to spend it. You can say one thing for the tax-collecting arm of government - these are people who know the difference between bringing money in and spending it fruitlessly.

[Melissa in Australia]

here after a number of years the property is auctioned off. We have bought some land at an arrears sale

[Laura Corin]

Hmmmm.... just thinking about the taxes that we will pay to the US after the sale of our rental flat in London. Not living in a location is no barrier to being liable for taxes there. 

Yes, Husband could give up his US citizenship, but that in itself would trigger an audit, which would be extra trouble.  At least the money may help to support some Americans' healthcare needs through the ACA.

[I talk to the trees]

So, out of curiosity, what part of VA is the land located in? (If you don’t mind answering.) There are some areas right now where a plot of land just large enough to build a house on would be snapped up the minute it goes on the market. Your friend could possibly sell, pay off any back taxes, and walk away with a tidy profit.  

[plansrme]

6 hours ago, Tanaqui said:

The worst that happens if you don't pay your property tax is that the property is seized and sold at auction. Nobody goes to prison over this. That would *cost* money. The point of taxes is for the government to *gain* money, not for the government to spend it. You can say one thing for the tax-collecting arm of government - these are people who know the difference between bringing money in and spending it fruitlessly.

Not always true. Federal tax fraud is a crime very much punishable by imprisonment. Property taxes are not federal taxes, however, so in this case, it is true that she is not going to prison.

[Ellie]

1 hour ago, I talk to the trees said:

So, out of curiosity, what part of VA is the land located in? (If you don’t mind answering.) There are some areas right now where a plot of land just large enough to build a house on would be snapped up the minute it goes on the market. Your friend could possibly sell, pay off any back taxes, and walk away with a tidy profit.  

I believe it's in Chesapeake.

[QueenCat]

42 minutes ago, Ellie said:

I believe it's in Chesapeake.

It would sell quickly in that area. When selling, back taxes, late fees, etc. would be paid out. And then she'd be free of it.

[Faith-manor]

In Michigan, forfeiture proceedings begins after two consecutive years of nonpayment, and normally the property is auctioned in year three, four at the latest. I am surprised Virginia has let this go on for so long.

OP, my guess is she will soon be losing the property.

[I talk to the trees]

41 minutes ago, QueenCat said:

It would sell quickly in that area. When selling, back taxes, late fees, etc. would be paid out. And then she'd be free of it.

Oh, goodness, yes! That is, *if* the parcel hasn’t already been sold. I can’t imagine the bean-counters letting it go this long! 

[Ellie]

I think I'll chat with her daughter and see if she knows anything (e.g., whether the property has been sold or anything).

[cbollin]

1 hour ago, Ellie said:

I think I'll chat with her daughter and see if she knows anything (e.g., whether the property has been sold or anything).

In addition to asking directly, you may be able to sleuth some more online.  Some municipalities have property records and tax payments online since it's public record, depending on the place, might be able to cross reference by address or owner name.  Happy researching

[katilac]

5 hours ago, plansrme said:

Not always true. Federal tax fraud is a crime very much punishable by imprisonment. Property taxes are not federal taxes, however, so in this case, it is true that she is not going to prison.

Well, yes, but when she said "No one goes to prison over this" she is referring to not paying property taxes. Federal vs local is not the reason you won't to to jail for not paying property taxes. Not paying your property taxes isn't considered fraud; it's a civil matter with a pre-determined civil solution. 

It's true that, on paper, federal tax fraud is "very much punishable by imprisonment," but it hardly ever happens. The number of people sent to prison for tax fraud and evasion is vanishingly small.  I mean, don't do it, lol, it's a very bad idea, you can still wind up a felon even if you don't go to prison, and the monetary penalties will destroy the finances of the average person. The non-average, aka rich, people who engage in tax fraud and evasion hire top-notch lawyers and generally wind up with a settlement agreement that still leaves them ahead, and no criminal penalties. 

Also, if the IRS comes round with questions, they already know or strongly suspect the answers. Consult a lawyer if you can, answer everything truthfully, plead stupidity or forgetfulness, and throw yourself at their mercy. Be pleasant, be polite, and definitely do not lie. 

[Tanaqui]

7 hours ago, plansrme said:

Not always true. Federal tax fraud is a crime very much punishable by imprisonment. Property taxes are not federal taxes, however, so in this case, it is true that she is not going to prison.

Fraud is punishable that way, yes. In my experience, somebody* somehow** forgetting to file their state and federal income taxes for nearly a decade may be punishable the same way, but they try the soft method of "freezing your accounts" first in order to make you pay up. It's cheaper, and bean counters love to count those beans. Just because they *can* do the other method doesn't mean they *will* if they can get what they want in another, cheaper way.

* Wasn't me! It was another family member who is no longer allowed to file their own taxes....

** I may have said that everybody in my family is on the broader autistic spectrum before, so when I say "somehow" I mean "serious executive function issues".

Edited May 29, 2022 by Tanaqui