MEMPHIS, TN (abc24.com) - Memphis Mayor A C Wharton wants the city to get out of the property tax collection business. Under Wharton's proposal, the Shelby County Tax Collector would also collect your city taxes.
Wharton says it will save the city money. Nine jobs would be eliminated. The city won't have to buy new software. But there is a bigger motivation; it has to do with a class action lawsuit that could cost the city millions of dollars.
"There are lawsuits pending in federal court, one of which has been certified as class action status," Wharton said.
The lawsuit is against the collection agency the city currently pays to collect delinquent taxes. If you are behind on your Memphis taxes, you have to pay up to an 18 percent fine plus ten percent in lawyers' fees, and an additional 20 percent goes to the collection agency. That's a 48 percent penalty. A homeowner would have to pay $148 to settle a $100 delinquent tax bill.
"The collection agency says they are collecting on our behalf," said Wharton. "I don't want to be anywhere near a fee in which I have not had to my justification had someone show me that it's legal."
Wharton's plan to let the county tax collector also collect taxes for the city would cut the fines and fees almost in half. However council members have concerns about the change.
"Are we trying to give the county government our entire operation?" asked Councilman Joe Brown.
Wharton replied, "It's simply a matter of efficiency and not soaking delinquent tax payers with an extra 20 percent; this is what this all boils down to."
The city council will take the matter up again in two weeks.