Augusta, ME - Today, Treasurer Henry Beck announced that the interest rate charged on delinquent property taxes will be reduced to the lowest level on record in consideration of economic challenges associated with COVID19. For taxable year 2021, the maximum interest rate that a municipality may charge for delinquent property taxes is no more than 6%. Treasurer Beck is declining an additional 3% penalty to the range, as is routine and allowed by Maine law.
Municipalities may vote to determine the rate of interest that shall apply to taxes that become delinquent during a taxable year until those taxes are paid in full. Given this is a reduction of more than two points from 2020's rate of 8%, municipalities may add up to two percentage points to the low end of the range, for a maximum of 6%. 4-6% is the lowest rate according to records dating back to 1991.
Treasurer Henry Beck commented:
"We make this reduction on the interest rate for delinquent property taxes in consideration of the economic challenges faced by Mainers during the COVID19 pandemic. Property owners should make every effort to pay property tax bills to fund vital local services but at this time of economic stress it is not wise to add unnecessary penalties on late property tax payments. Mainers are worried about keeping their homes and paying other bills. Last year, some Maine municipalities opted not to charge the allowed maximum and this option remains."
Statutory background:
The maximum rate of interest that can be charged is governed by Title 36 M.R.S. Section 505(4):
"The maximum rate of interest must be established by the Treasurer of State and may not exceed the prime rate as published in the Wall Street Journal on the first business day of the calendar year, rounded up to the next whole percent plus 3 percentage points. The Treasurer of State shall post that rate of interest on the Treasurer of State's publicly accessible website on or before January 20th of each year. The interest must be added to and become part of the taxes."
According to Title 36 M.R.S. Section 505(4-A), municipalities may add an additional two points to the 4% rate:
"For any tax year for which the maximum interest rate established by the Treasurer of State under subsection 4 is 2 percentage points or more lower than the maximum rate established by the Treasurer of State for the previous tax year, the municipality may adopt an interest rate that is up to 2 percentage points over the rate established by the Treasurer of State for the tax year under subsection 4."
About OST: The Office of the State Treasurer provides state agencies with efficient banking and financial services, which include revenue collection, payment issuance, reconciliation, and trust management. The Office also manages state investments and debt payments and issuance, ensuring that bonds authorized by voters are efficiently sold in the marketplace to provide funding for capital projects statewide. Over $200 million in unclaimed funds for Maine residents are managed by the Office of the Treasurer. FMI, www.maine.gov/treasurer