KRS 134.504: Department to collect or contract with county attorney for collection of

certificates of delinquency -- Procedures.

(1) (a) The department shall be responsible for the collection of certificates of

delinquency and personal property certificates of delinquency.

(b) The provisions of this section relating to certificates of delinquency shall also

apply to personal property certificates of delinquency unless otherwise

specifically noted.

(c) The department shall offer the collection dutie s related to certificates of

delinquency and personal property certificates of delinquency to the county

attorney in each county, unless the department determines that a county

attorney has previously failed to perform collection duties in a reasonable and

acceptable manner.

(2) Any county attorney desiring to perform the collection duties shall enter into a

contract with the department on an annual basis.

(3) The terms of the contract shall:

(a) Specify the duties to be undertaken by the county attorney, w hich shall

include, at a minimum, the duties set forth in subsection (4) of this section;

(b) Provide that, if the county attorney fails to perform the duties required by the

contract during the contract period, the department may assume all collection

responsibilities; and

(c) Allow the county attorney, at the option of the county attorney, to enforce

collection of a certificate of delinquency by the procedure established in KRS

91.481 to 91.527 and authorized by KRS 68.095.

(4) The following duties shall be performed by the department or the county attorney,

as the case may be, with regard to each certificate of delinquency:

(a) Within thirty (30) days after the establishment of a certificate of delinquency,

the county attorney or the department shall mail a notice by regular mail to the

owner of record on the assessment date at the address on the records of the

property valuation administrator, or to the in -care-of address if an in -care-of

address is provided as required by subse ction (5) of this section. The notice

shall:

1. Include the name, address, and telephone number of a contact person in

the county attorney's office or the department, as the case may be;

2. Advise that:

a. The certificate of delinquency is a lien of record against the

property on which the taxes are due;

b. The amounts due are a personal obligation of the taxpayer on the

assessment date; and

c. The certificate bears interest at the rate of twelve percent (12%)

and, if not paid, will be subject to collection by the county attorney

or the department as provided by law;

3. Include the total amount due as of the date of the notice;

4. Include in bold print in at least twelve (12) point font, a statement

advising the taxpayer that anytime after ninety (90) days f rom the

creation of the certificate of delinquency, the certificate of delinquency

may be paid by a third-party purchaser and, that if so paid, the certificate

of delinquency will be subject to collection by the third -party purchaser

as provided by law. Th e notice shall also advise that a third -party

purchaser may impose substantial additional administrative costs and

fees associated with collection in addition to the amount due on the

certificate of delinquency, and that collection actions may include

foreclosure. This provision shall not be included in notices sent for

personal property certificates of delinquency; and

5. Advise that the taxpayer may qualify for a payment plan with the county

attorney or the department, if the taxpayer meets the requiremen ts

established by the county attorney or the department, and if terms are

agreed to prior to the date of the sale;

(b) The county attorney or the department shall file in the office of the county

clerk a list of the names and addresses to which the thirty (30) day notice was

mailed along with a certificate attesting that the notices were mailed in

accordance with the requirements of this section;

(c) 1. All thirty (30) day notices returned as undeliverable shall be submitted

by the county attorney or depart ment to the property valuation

administrator, and a list of the returned notices shall be filed with the

county clerk, who shall record the list in the order book of the county.

2. The property valuation administrator shall attempt to correct inadequate

or erroneous addresses and, if property has been transferred, shall

determine the new owner, current mailing address, and in -care-of

address, if any, as provided in KRS 382.135.

3. The property valuation administrator shall return the notices with the

corrected information to the county attorney or the department within

twenty (20) days of receipt.

4. Upon receipt of the new information from the property valuation

administrator, the county attorney or the department shall resend the

notice required by paragra ph (a) of this subsection using the updated

information;

(d) 1. At least twenty (20) days after the mailing of the thirty (30) day notice

required by paragraph (a) of this subsection, but within sixty (60) days

of the establishment of a certificate of deli nquency, the county attorney

or department shall send a second notice, by regular mail, to owners of

record whose tax bills remain delinquent, or to the in -care-of addresses

or corrected address, if information regarding a new property owner has

been recei ved by the county attorney or the department under the

provisions of paragraph (c) of this subsection. The notice shall include,

at a minimum, the following information:

a. The name, address, and telephone number of a contact person in

the county attorney's office or the department, as the case may be;

b. A statement that a sale of tax claims shall be held by the county

clerk on the date established by the department for the sale. The

text of the statement shall include the actual sale date, as well as a

statement noting that the certificate of delinquency may be paid by

a third -party purchaser at the sale, and if the certificate of

delinquency is paid by a third -party purchaser, it shall be subject

to collection by the third -party purchaser as provided by l aw, that

significant additional collection fees shall be imposed by the third -

party purchaser, and that collection actions may include

foreclosure. This statement shall not be included in notices sent to

owners of property subject to a personal property ce rtificate of

delinquency; and

c. A statement that the taxpayer may qualify for a payment plan with

the county attorney or the department, if the taxpayer meets the

requirements established by the county attorney or the department,

and if terms are agreed to prior to the date of the sale.

2. The county attorney or the department shall file in the office of the

county clerk a list of the names and addresses to which the sixty (60)

day notice was mailed, along with a certificate attesting that the notices

were mailed in accordance with the requirements of this section.

3. If the notice required by paragraph (c) of this subsection is returned as

undeliverable, and the property valuation administrator is not able to

provide a corrected or updated address, the cou nty attorney or the

department shall address the sixty (60) day notice to "Occupant" and

shall mail the notice to the address of the property to which the

certificate of delinquency applies;

(e) The county attorney or the department shall deliver to the pr operty valuation

administrator, at the same time the notice required by paragraph (d) of this

subsection is sent, a list of the owners whose tax bills remain delinquent. The

property valuation administrator shall review this list in accordance with KRS

132.220 to establish that the properties on the list can be identified and

physically located; and

(f) 1. Anytime after the expiration of the one (1) year tolling period

established by KRS 134.546, the county attorney or department may

institute an action to collect the amount due on a certificate of

delinquency owned by the taxing jurisdictions and in the possession of

the county clerk.

2. At least forty-five (45) days before instituting a legal action, the county

attorney or department shall send, by regula r mail, a notice of intent to

initiate legal action to enforce the lien.

3. The notice shall be sent to the owner of record of the property or to the

in-care-of address or corrected address if either has been provided

pursuant to this section.

(5) If property subject to a certificate of delinquency has been transferred in any year

after the assessment date, the property valuation administrator shall determine the

in-care-of address supplied in the deed pursuant to KRS 382.135 and shall provide

that information to the county attorney or the department.

(6) (a) Failure of the county attorney or the department to mail the notices required in

subsection (4) of this section shall not affect the validity of the claim of the

state, county, school district, and taxing district. However, the county attorney

or the department shall not receive any compensation, commission, or

payment related to any certificate of delinquency for which the notices

required by the provisions of subsection (4) of this section are not sent.

(b) For each notice mailed, one dollar ($1) shall be added to the amount of the

certificate of delinquency, to offset the cost of mailing, and, upon collection,

the county attorney or the department shall be paid the amounts as

reimbursement for mailing costs.

(7) (a) As compensation for the collection duties performed pursuant to a contract

with the department, a county attorney shall be paid twenty percent (20%) of

the amount due each taxing unit during the contract period, whether the

amount is paid voluntarily, through sale, or under court order, and whether the

amount is paid to the county clerk or the county attorney. The fee for the

county attorney shall be added to the amount of the certificate of delinquency

and shall be paid by the person paying the certificate of delinquency.

(b) If payment in full is voluntarily made by the taxpayer to the county attorney

or county clerk within five (5) days of the filing of the tax claim with the

county clerk, the county attorney fee shall be waived.

(c) 1. If a county attorney files a court action or files a cross -claim, the county

attorney shall be paid the greater of:

a. Reasonable attorney's fees and costs that arise from the

prosecution of collection remedies or the protection of a certificate

of delinquency during litigation; or

b. An additional fee of thirteen percent (13%) of the amount of the

certificate of delinquency and shall be reimbursed for costs

incident to the court action. The additional fee and costs incident

to the litigation shall be added to the certificate of delinquency and

shall be paid by the person paying the certificate of delinquency.

2. For purposes of subparagraph 1.a. of this paragraph:

a. Actual attorney's fees up to two thousand dollars ($2,000) may be

reasonable if the fees are based upon documented work performed

at a rate commensurate with hourly rates customarily charged by

private attorneys in that jurisdiction for similar services. A flat fee

rate, without hours documented for work performed, may be

reasonable if the flat fee rate is determined to be discounted from

the usual and customary rates for comparable work; and

b. Any attorney's fee arising from the litigation in excess of two

thousand dollars ($2,000) shall be reasonable if the court finds that

the county attorney incurred actual attorney's fees in excess of two

thousand dollars ($2,000) and the additional fees were warranted

based upon the complexity of the issues presented in the litigation.

(d) If more than one (1) county attorney renders necessary services to collect on a

certificate of delinquency, the county attorney serving the last notice or

rendering the last substantial service preceding collection shall be entitled to

the fee.

(8) (a) The county attorney shall establish a system to accept installment payments

from delinquent taxpayers. The county attorney may, during the contract

period, enter into an agreement with a delinquent taxpayer to accept

installment payments on the certificates of delinquency. The agreement shall

not waive the county attorne y's right to initiate court action or other

authorized collection activities if the taxpayer does not make payments in

accordance with the agreement.

(b) The county attorney may, upon written request of the taxpayer for good cause

and with agreement of the affected taxing jurisdiction or fee recipient, waive

or reduce fees and penalties that are part of a certificate of delinquency during

settlement or negotiation with a taxpayer in accordance with guidance

provided by the department.

(9) Any action by the county attorney authorized by this chapter shall be filed on

relation of the commissioner. A copy of any judgment obtained by the county

attorney shall be sent to the department.

(10) (a) The county attorney shall notify the county clerk and the department of the

filing of an action at the time the action is filed, and of payment agreements at

the time the agreements are entered into. The county clerk shall note on the

certificate of delinquency the filing of the lawsuit or the existence of the

payment agre ement, and these certificates of delinquency shall not be

available for purchase or payment by a third-party purchaser.

(b) The county attorney shall provide to the county clerk at least ten (10) days but

not more than twenty (20) days prior to the annual sale date for the county

established pursuant to KRS 134.128, a protected list of current year

certificates of delinquency that are:

1. Under a payment plan with the county attorney on which payments are

current;

2. Involved in litigation initiated by the county attorney or in which the

county attorney responds or files an answer;

3. Involved in bankruptcy litigation in which the county attorney has filed

a claim; or

4. Included on a list of protected properties submitted to the county

attorney by a vacant property review commission or an alternative

government entity as provided in KRS 99.727.

The list shall include sufficient detail for the county clerk to accurately

identify the property.

(c) The county attorney shall notify the county clerk of the failure of any payment

agreement and, upon notification to the clerk, the certificate of delinquency

shall be available for purchase.

(11) The department may make its delinquent tax collection databases and other

technical resources, including but not limited t o tax refund offsetting, available to

the county attorney upon request from the county attorney. The county attorney

seeking assistance shall enter into any agreements required by the department to

protect taxpayer confidentiality, to ensure database integ rity, or to address the

concerns of the department.

(12) (a) If a county attorney chooses not to contract for collection duties, or if a county

attorney fails to perform the duties required by the contract, the department

shall assume responsibility for all uncollected certificates of delinquency and

personal property certificates of delinquency, including, at the option of the

department, those with pending court action or for which the county attorney

has entered into an installment payment agreement.

(b) If the department assumes or retains responsibility for the collection of

certificates of delinquency and personal property certificates of delinquency,

the twenty percent (20%) fee that would have been paid to the county attorney

under subsection (7) of this section, and any other fees or costs established by

this section for the county attorney shall be paid to the department for deposit

in the delinquent tax fund provided for under KRS 134.552.