Can a Mississippi county board waive the 10% penalty for failure to file a personal property tax rendition if the taxpayer paid the back taxes once they learned of the mistake?

Plain-English summary

Neshoba County's attorney described a situation where a convenience store owner bought a neighboring property with a car wash in December 2015. The owner kept filing renditions and paying taxes on the convenience store, but never filed a rendition or paid taxes on the car wash. The personal property rendition request and tax bill kept going to the previous owner of the car wash. From 2015 to 2020, no rendition and no taxes for the car wash. When the new owner and the assessor figured this out, the owner paid all the back taxes. The board asked whether they could also waive the 10% penalty.

The AG said the penalty is mandatory but may not have been triggered.

The framework: Section 27-35-23 requires personal-property owners to file renditions of taxable property by April 1 of each year (or earlier on the assessor's demand). Section 27-35-45 imposes a 10% penalty when "any person shall fail to list for assessment, as required by law, any personal property which is taxable . . . or shall intentionally fail to provide the tax assessor with any documentation that the tax assessor considers necessary to verify the list, the current year assessment shall be increased by ten percent (10%)."

The penalty's plain language is mandatory. AG opinions consistently hold that neither the board nor the assessor can forgive or reduce it (Wilkinson 1997, Thaggard 2008). The Mississippi Constitution's restrictions on tax forgiveness reinforce this.

But the penalty is conditioned on the taxpayer's failure. If the taxpayer did submit proper documentation, the penalty was never triggered. The 2008 Thaggard opinion said "the Tax Assessor would be authorized . . . after a challenge by the taxpayer, to review all facts and make a determination, consistent with fact, that the taxpayer did submit the proper documentation, and that the penalty is not warranted."

In the Neshoba scenario, the AG identified another path: assessor error. The 2017 Tutor opinion (in a different delinquent-tax context) held that "a property owner does not owe penalties and interest for unpaid taxes . . . when an error by the tax assessor resulted in the owner's delinquency of the tax payment." If the Neshoba assessor sent the rendition request to the wrong owner (the previous owner of the car wash), and that error caused the new owner's failure to file, the board could find that the assessor failed to fulfill statutory obligations and that the taxpayer does not owe the penalty.

This is a finding-based escape, not a waiver. The board still cannot forgive a properly triggered penalty. The board can only find that the penalty was not triggered because of assessor error.

What this means for you

For tax assessors, collectors, and county boards

Under the opinion, the 10% penalty in Section 27-35-45 is mandatory: "Neither the Board nor the tax assessor/collector may waive or forgive the penalty." The opinion identifies two ways the penalty may not be owed, neither of which is a waiver: the tax assessor may determine "that the taxpayer did submit the proper documentation," or the board may determine "that the tax assessor/collector did not fulfill his statutory mandates." In either case, the board "may determine that the taxpayer does not owe the penalty." Whether the assessor made an error (such as sending the notice to the prior owner) is, the opinion says, "a question of fact to be determined by the Board."

For business property owners

The opinion confirms that Section 27-35-23 places the duty to file a personal-property rendition on the owner, by April 1 each year or earlier on the assessor's demand. It holds that paying the back taxes after the fact does not let the board forgive the 10% penalty. The taxpayer's avenue, per the opinion, is a factual determination that proper documentation was actually submitted, or that the assessor's failure to meet statutory obligations caused the missed filing.

What the opinion does not decide

The opinion is explicit that the AG describes only the legal framework and that the factual determinations belong to the assessor and the board. It does not find that the Neshoba assessor in fact erred; it says only that if the board so finds, it may determine the penalty is not owed.

Common questions

Q: Can a Mississippi county board waive the 10% rendition penalty if the taxpayer later pays the back taxes?
A: No. The opinion holds the penalty "is mandatory" and that "neither the Board nor the tax assessor/collector may waive or forgive" it, even though the taxes were paid once the mistake was discovered.

Q: Is there any way the taxpayer avoids the penalty?
A: Yes, but only by a finding that the penalty was never triggered. The opinion says the assessor may determine "that the taxpayer did submit the proper documentation," or the board may determine "that the tax assessor/collector did not fulfill his statutory mandates," in which case the taxpayer "does not owe the penalty."

Q: Why is the penalty mandatory?
A: The opinion reads Section 27-35-45's text, "the current year assessment shall be increased by ten percent," as mandatory on its face, citing the Wilkinson opinion (1997), and notes that "consistent with the Mississippi Constitution" prior opinions held neither the assessor nor the board may forgive or reduce it (Thaggard, 2008).

Q: What if the assessor sent the rendition request to the wrong owner?
A: The opinion relies on the Tutor opinion (2017) that "a property owner does not owe penalties and interest for unpaid taxes . . . when an error by the tax assessor resulted in the owner's delinquency." Whether such an error occurred is a question of fact for the board (Martin, 2001).

Q: Does paying the back taxes matter?
A: Not for the penalty. The question presented was whether payment of the past-due taxes let the board waive the penalty, and the opinion answers that it does not; the penalty turns on the failure to list, not on whether the taxes were eventually paid.

Background and statutory framework

Section 27-35-23 sets the requirements for reporting taxable personal property. The opinion quotes its provision that each person must "make out and deliver to the tax assessor, upon demand, and if not demanded, not later than the first day of April in each year, a true list of his taxable property with the true value of each article."

Section 27-35-45 sets the penalty: "If any person shall fail to list for assessment, as required by law, any personal property which is taxable . . . or shall intentionally fail to provide the tax assessor with any documentation that the tax assessor considers necessary to verify the list, the current year assessment shall be increased by ten percent (10%)." The opinion reads this as mandatory on a plain reading, citing Wilkinson (1997), and notes that under Thaggard (2008) neither the assessor nor the board may forgive or reduce it.

The opinion then explains that the penalty is triggered by a taxpayer's failure to comply (Blackledge, 2004), but that there may be circumstances where it is not triggered: where the assessor determines proper documentation was submitted (Thaggard, 2008), or where the board finds the assessor failed to fulfill statutory obligations, such as sending the notice to the prior owner (Tutor, 2017; Martin, 2001). On the Neshoba facts, the assessor had sent the rendition request and tax bill to the car wash's previous owner from 2015 to 2020. The opinion stresses that whether the assessor erred is a factual question for the board, not one the AG can decide.

Citations and references

Statutes:

• Miss. Code Ann. § 27-35-23, requirements for reporting taxable personal property
• Miss. Code Ann. § 27-35-45, mandatory 10% penalty for failure to list taxable personal property

Prior AG opinions cited:

• MS AG Op., Blackledge (Feb. 20, 2004), failure to comply triggers Section 27-35-45 penalty
• MS AG Op., Martin (Dec. 7, 2001), board may make factual determinations on penalty applicability
• MS AG Op., Thaggard (Feb. 29, 2008), neither assessor nor board may forgive Section 27-35-45 penalty; but proper-documentation determination can negate trigger
• MS AG Op., Tutor (Jan. 20, 2017), property owner does not owe penalties when tax assessor's error caused delinquency
• MS AG Op., Wilkinson (June 20, 1997), penalty is mandatory based on plain reading of statute

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/12/W.White-November-30-2021-Authority-of-Board-of-Supervisors-to-Forgive-Penalties-for-Failure-to-File-Ad-Valorem-Tax-Rendition.pdf

Original opinion text

November 30, 2021

Wade White, Esq.
Attorney, Neshoba County Board of Supervisors
501 Main Street
Philadelphia, Mississippi 39350

Re: Authority of Board of Supervisors to Forgive Penalties for Failure to File Ad Valorem Tax Rendition

Dear Mr. White:

The Office of the Attorney General has received your request for an official opinion.

Background

According to your request, a convenience store owner purchased neighboring property with an existing car wash in December 2015. While the convenience store owner always filed a personal property rendition and paid personal property taxes on the convenience store, he never filed a personal property rendition or paid personal property taxes on the newly acquired car wash. The personal property rendition request and personal property tax bill continued to go to the car wash's previous owner. From 2015 to 2020, no rendition was filed, and no personal property taxes were paid on the car wash. When the car wash's new owner and the tax assessor/collector learned of this, the owner paid all past due ad valorem taxes on the car wash's personal property.

Question Presented

May the County Board of Supervisors (the "Board") and/or the tax assessor/collector waive the penalty for failure to file a rendition since the personal property taxes were paid once the mistake was learned?

Brief Response

The penalty provided in Section 27-35-45 is mandatory. Neither the Board nor the tax assessor/collector may waive or forgive the penalty. However, if the tax assessor/collector determines that the taxpayer did submit the proper documentation or the Board determines that the tax assessor/collector did not fulfill his statutory mandates, the Board may determine that the taxpayer does not owe the penalty.

Applicable Law and Discussion

Section 27-35-23 of the Mississippi Code sets forth the requirements for reporting taxable personal property, and states, in part, the following:

(1)(a) Except as may be otherwise provided for in subsection (2) of this section, the tax assessor shall call upon each person liable to taxation in his county for a list of his taxable personal property, either in person, or by leaving a copy of the prescribed tax list at his business or his usual place of residence, and it shall be the duty of each person to make out and deliver to the tax assessor, upon demand, and if not demanded, not later than the first day of April in each year, a true list of his taxable property with the true value of each article, specifying all such property of which he was possessed on the next preceding tax lien date in his own right or in the right of his wife or minor child, or as executor, administrator, guardian, trustee, agent, or otherwise, rendering separate lists of the property of each. The taxpayer shall fill in all blanks on the tax lists and show in the proper place all taxable personal property owned by him or by any person for whom he is required to give in taxable property.

Section 27-35-45 states the corresponding penalty for failure to submit a list of taxable personal property:

If any person shall fail to list for assessment, as required by law, any personal property which is taxable under the laws of the State of Mississippi, and which said person should list for assessment under the laws of the state, or shall intentionally fail to provide the tax assessor with any documentation that the tax assessor considers necessary to verify the list, the current year assessment shall be increased by ten percent (10%).

Based on a plain reading of this statute, the penalty provided therein is mandatory. MS AG Op., Wilkinson at 1 (June 20, 1997) (opining that "it appears from a plain reading of the statute that [the penalty] is in fact mandatory if the tax assessor makes the determination that the schedules or documents provided by the taxpayer are insufficient"). Consistent with the Mississippi Constitution, this office has opined that neither the tax assessor nor the board of supervisors may forgive or reduce the penalty imposed by Section 27-35-45. MS AG Op., Thaggard at 2 (Feb. 29, 2008).

However, while a taxpayer's failure to comply with the personal property rendition requirement of Section 27-35-23 triggers the penalty provided in Section 27-35-45, MS AG Op., Blackledge at 2 (Feb. 20, 2004), there may be circumstances where the penalty is not triggered. MS AG Op., Thaggard at 1 (Feb. 29, 2008) (finding that "[t]he Tax Assessor would be authorized . . . after a challenge by the taxpayer, to review all facts and make a determination, consistent with fact, that the taxpayer did submit the proper documentation, and that the penalty is not warranted.").

As the basis for the property owner's failure to submit a personal property rendition or pay any personal property taxes on the car wash for the years 2015 through 2020, you state that the tax assessor/collector sent the notice to the previous owner of the car wash. This office has opined previously, although in a different delinquent tax context, "that a property owner does not owe penalties and interest for unpaid taxes . . . when an error by the tax assessor resulted in the owner's delinquency of the tax payment." MS AG Op., Tutor at * 3 (Jan. 20, 2017). Whether the tax assessor/collector made an error is a question of fact to be determined by the Board. If the Board makes a finding that the tax assessor failed to fulfill his or her statutory obligations, the Board may find that the taxpayer does not owe the penalty. See MS AG Op., Martin at *1 (Dec. 7, 2001).

Because the statutory language of Section 27-35-45 is clear, and on its face the penalty is mandatory, neither the Board nor the tax assessor/collector may waive or forgive the penalty. However, if the tax assessor/collector determines that the taxpayer did submit the proper documentation or the Board determines that the tax assessor/collector did not fulfill his statutory obligations, the tax assessor/collector or Board may determine that the taxpayer does not owe the penalty.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Misty Monroe
Misty Monroe
Special Assistant Attorney General