Distribution of Delinquent Taxes After Decertification

Property taxes that are delinquent when a TIF district decertifies but subsequently paid should not be distributed by the county auditor as tax increment, except under one condition.

If the failure to pay such taxes prior to decertification caused the outstanding bonds or contractual obligations pledged to be paid by the district to be paid by sources other than tax increments or to go unpaid, then the county auditor shall pay the delinquent tax increments to the district.

The TIF authority must provide the county auditor with any information necessary to administer the payment, as requested by the county auditor. Proactive communication by the authority is well advised.

Absent these conditions, the county should distribute the delinquent tax receipts as general property taxes, not as tax increment.

Note that this restriction on distribution applies only to taxes that are delinquent, i.e., not paid as of the first business day in January following the date they are due. Tax increments that are merely past due, but not delinquent, may be distributed as usual.

Last referenced February 5, 2021 in the State Auditor's E-Update.