June 25, 2014 at 1:00 am

Editorial: Crack down on tax scofflaws

A Wayne County lawsuit to reclaim land sold at auctions is necessary to stop property tax scams

Wayne County officials have filed a lawsuit in an effort to make owners of property sold at auctions pay taxes. About $80 million is owed on the parcels, which represent about 78 percent of the 29,000 pieces auctioned. (John T. Greilick / The Detroit News)

Wayne County rightly wants to turn vacant and tax delinquent property into revenue-generating land. It also aims to halt the practices of unscrupulous speculators as well as homeowners who shed their tax debts by buying back their own foreclosed properties at public auctions.

To force more land owners to pay taxes on their parcels, the county has filed a lawsuit to reclaim about 22,700 tax-foreclosed properties that were purchased at auction.

Collectively, about $80 million is owed on the parcels, which represent about 78 percent of the 29,000 pieces auctioned by the county treasurer since 2011.

As The Detroit News has reported, the county has auctioned properties for as little as $500, encouraging investors to sit on them or rent the properties without paying taxes until they are foreclosed on again.

The Wayne County treasurer added language in 2011 that requires buyers of properties sold at auction to stay current on taxes, even though taxpayers usually have three years to pay taxes or lose properties. This rule must be enforced.

Speculators have taken advantage of lax oversight, and the county canít afford to let these buyers avoid taxes. It faces its own budget challenges.

County officials say their goal with the lawsuit isnít to regain the property and sell it at another tax auction. Rather, as Chief Deputy Treasurer David Szymanski says, the legal action places ďsignificantly more pressure on people to pay their taxes.Ē

Szymanski says the treasurerís office will send out notices to tax delinquent owners to attend show cause hearings. The sessions will run over two days, allowing people plenty of opportunity to make their case.

The owners will be given two options. One is to make four 25-percent payments for four months in a row starting in July to settle the debt by October. Or, they will be allowed to make 10-percent payments for 10 straight months.

Parcels with unpaid taxes will go to a land bank. Owners will still have six months to pay the taxes before the land bank begins its process of disposing of property.

Szymanski says that part of the process is assessing the properties to determine what can be sold as is, what is needed to make the land ready for sale and which parcels should be demolished.

Some community activists expressed concern about homeowners who purchased property from bulk buyers without being told back taxes were owed. Thatís more of a problem, but home buyers need to do their homework to see what tax liens are on the property.

When property with delinquent taxes is sold for next to nothing, itís supposed to be a win-win situation for the new owner and the county. The owner ó or investor ó gets a home at a bargain price and the county gets rid of a tax liability and turns it into an asset.

But when new owners abuse the system and donít pay taxes, that defeats the point.

There is enough time for most owners to come up with the cash. If they canít, then the property should go back to the county ó and ideally to other owners who will pay taxes.

Wayne County officials should aggressively go after the scofflaws to collect the delinquent taxes and end the tax scamming for good.