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New Orleans property owners who are late in paying their real
estate taxes will no longer be charged penalties and collection
fees on top of their tax bill following a ruling by the state
Supreme Court. (A.
Remy Fransen, Jr. and Allain F. Hardin v. City of New Orleans et
al.)
Penalties Unconstitutional
For the past ten
years, New Orleans used private attorneys to collect delinquent
property taxes. Prior to 2002, taxpayers were charged as much as
33% in penalties on overdue taxes - 30% went to lawyers. The
current law firm under contract received 9.5% of the tax revenue
collected.
In a unanimous
verdict, the Louisiana Supreme Court ruled the practice is
unconstitutional. Justices said the only legal method that
cities may use to collect back property taxes is a tax sale of
the property.
Will Taxpayers Get a Refund?
It’s unclear
whether the $40 million in penalties collected over the years
will ever be returned to taxpayers. Prosecutors say they will
ask the city to return the money or give taxpayers a credit on
their bill.
However, a New
Orleans city attorney released a statement saying monetary
damages are unlikely. If damages are awarded, the city is
expected to seek payment from the law firms that benefited.
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