More than 8,000 residents of Flint, Michigan are in danger of losing their properties to foreclosure as the local government recently issued tax liens for unpaid water and sewer bills. The residents were prompted to settle their balances by May 19 to prevent the local government from placing tax liens on their homes. Families that received the notices have water bills that have not been settled for six months or more, according to the report. Families unable to settle their debts will undergo a lengthy judicial process that may end up in the foreclosure of their property. Flint Treasury Department official Al Mooney stressed that the city is in dire need of revenue, and settling the tax lien notices may generate nearly $6 million.
However, the news did not sit well with other state officials.
“Flint families should not have to pay for water that they still cannot drink, and they certainly should not lose their homes over this ongoing water crisis that was caused by the callous decisions of state government. It is unfortunate that Governor Snyder ended water credits for Flint families. I opposed this decision because Flint families deserve support from the state until there is confidence in the water system again,” said Rep. Dan Kildee (D-Mich.).
Groups, city council move to stop tax lien issuance
Following news about the tax lien on unpaid water bills, Flint’s City Council has voted to end the policy that would potentially displace more than 8,000 residents. According to the city council and its members, it would be ludicrous to penalize the residents for water that they cannot even use. The council noted that residents have already struggled with settling Flint’s expensive water rates, which were allegedly the highest in the country considering its quality. Some residents even deliberately refused to pay for water that cannot be used without a filter, the council members added.
Prior to the city council’s meeting, groups such as the American Civil Liberties Union and the NAACP Legal Defense and Educational Fund have called on the authorities to suspend the issuance of tax liens on properties. “The city has the power to put a moratorium on home foreclosures which is the only equitable solution resulting from this tragedy. The suffering of Flint residents should not be compounded by the loss of their homes. No one should be expected to pay for water that is not safe, and that has caused so much physical, psychological and financial damage. In a city where residents have been crying out for justice, even more injustice is being proposed,” said Kary Moss, the Executive Director of the ACLU of Michigan.
A better understanding of tax lien and foreclosure
A tax lien as a legal way for the federal government to claim a non-compliant taxpayer’s assets. Tax liens serve as a last resort to force the non-compliant individual or business into paying back the taxes. In order to address the tax lien, the indebted taxpayer must settle the balances, get the debt dismissed in bankruptcy court, or reach a compromise agreement with the tax authorities. Federal and state governments may impose tax liens for unpaid federal or state income taxes, while local governments may impose tax liens for unpaid local income or property taxes.
On the other hand, a tax lien foreclosure occurs when the government ceases a property and puts it up for sale as a result of the non-compliant taxpayer’s failure to settle required taxes, including property taxes and federal and state income taxes. According to the website, a statutory lien is first placed on the assets of the non-compliant taxpayer. The government that goes after the taxpayer will then move to repossess the property in order to recover the debt.
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