Beware of tax lien payments

Some Salt Lake County property owners who had overdue property taxes recently learned that another entity had paid the bill.

It was far from an act of benevolence. Rather, it was a carefully orchestrated move on the part of a months-old investment firm aimed at eventually owning their property. After paying $358,000 in back taxes on 11 commercial parcels in Salt Lake County, the firm has abandoned its attempt to take over the real property. The investment group has since given up on its attempt to assume the commercial parcels.

The good news is, state and county attorneys say they do not believe Utah law permits individuals or companies to act as the county's debt collector and charge a statutory annual interest rate on the unpaid property taxes. If there's any loophole that might be exploited in this fashion, the Utah Legislature needs to close it.

Nationwide, this practice has become somewhat of a cottage industry. There are a number of television infomercials that sell instructional programs that teach investors how to buy up tax liens. Potential investors are told they can earn interest payments from the unpaid taxes and there may be opportunities to take ownership of properties. In essence, potential investors are schooled to take advantage of people who cannot (or will not) pay their property taxes.

Some people fail to pay their property taxes because they have fallen on hard times. That's one thing. Others fail to pay so to give themselves a low-interest loan. The money that would have gone to pay taxes is used for other purposes, and they eventually pay the tax bill with a relatively small penalty.

Everyone has an obligation to pay these taxes because taxing entities such as public schools, county and municipal government and special-service districts are the losers. So are other people who do their share by paying their taxes.

This is not to suggest that anyone's property should be seized. The tax sale process is a deliberative procedure that helps to ensure people who are in arrears can make good on their tax debt or face the eventual loss of their property.

Last week, investigators at the Utah Attorney General's Office and the Salt Lake County District Attorney's Office launched preliminary inquires into the matter. Those probes and a thorough review of the appropriate statutes should proceed to ensure private property cannot be assumed by investors for purely selfish interests.