Altom, Richardson and Utah County Treasurer Mel Hudman said initial delinquency rates are low enough now (between 5 percent and 9 percent of all 2005 tax owed in those counties) that they are not forced to seek tax-anticipation loans because of delinquencies, and they actually make a little money from the penalties and interest.

But they all say that could quickly change if too many decide to play the game of not paying on time to obtain cheap "loans." Hudman says already it appears that more individuals than businesses may be playing that game because resulting interest may be as low or lower than rates they could obtain on other types of consumer loans.

For example, Utah law sets the interest on unpaid taxes at 6 percent plus the "Federal Funds Target Rate" as of Jan. 1. For unpaid 2005 taxes, that amounts to a total of 10.25 percent interest. For 2004 taxes, the rate was 8.25 percent. For 2003, it was 7 percent.

Those are all lower than the current national average credit card rate of 12.94 percent. They are, of course, far lower than the very high average rates of 521 percent for "payday" loans that people without good credit often obtain in Utah, or the similar 300 percent average they pay for car title loans.

The prime rate, the interest charged by banks to their most creditworthy customers, is now 7.25 percent. But if a business or individual still owed unpaid tax from 2003 in Utah, they would only be paying 7 percent interest on it — less than the current prime rate.

The three county treasurers say that if the Legislature imposes higher penalties and interest, that would likely discourage some people from playing the "cheap loan" game by deferring payment of taxes. They note that temptation now could be high because Utah's penalties and interest are lower than most states.

Richardson notes, for example, that among states in the West, "Arizona charges 16 percent interest and a 5 percent penalty if tax is not paid in 13 months after it is due. Washington charges 12 percent interest, and a 3 percent penalty if it is paid within 30 days and an 8 percent penalty if it is paid after that.

"Nevada is charging 10 percent interest, and penalties range from 4 percent if it is not paid in the first installment up to 22 percent if all installments are missed," he said. "California has a $15 redemption fee, but charges 18 percent interest."

Richardson said most delinquent property owners do not wait the full five years to elapse, courting the possibility of a tax sale. Most pay it fairly quickly. "Very few properties actually go to tax sale," he said, so counties usually obtain all money due within five years.

The exception can be for property involved in bankruptcies, such as the tax owed by Delta Air Lines.

"There is an automatic stay under federal bankruptcy law so that we cannot pursue collection on any taxes outstanding at the point that they filed bankruptcy," Richardson says. Owed taxes are given high priority in bankruptcy code for eventual payment, but they may not be collected until bankruptcy repayment plans are final, which may take more than five years in some cases.

Richardson notes, however, that those in bankruptcy are "still required to pay anything that comes due" in years after they filed for bankruptcy.

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E-mail: lee@desnews.com