How to Manage PRE Denials

Overview

When a Denial is issued against a parcel there are several things to take into consideration, many things effect how the denial is billed and calculated, even who gets the Denial Bill (a Denial could be for a previous owner of the parcel involved). We will try to cover those situations in the information that follows in this document.

Collection of PRE Denials is done by the authority in possession of the Tax Roll, this means that if a denied tax bill is in the collection cycle (still in the possession of the local unit) it is the responsibility of the local unit to collect the denied taxes and interest. If the denied tax period has been settled with the county (post-settlement) it is the responsibility of the county to collect the denied taxes and interest. It is possible for a property owner to receive two denial notices at the same time, because the county may issue a denial for the tax periods in its possession and the local unit may issue one for the current tax roll in the local unit’s possession.

 

Entering a new PRE Denial.

Maintenance of your denials is done on the Manage Denial Bills (MDB) workspace, this is the last item listed in ‘Primary Tasks’. The list shown in the workspace will show all the current Denials in the system.

To add a new Denial, click the New Denial button at the top of the workspace, this will launch the New Denial Bill tool to the General Information window.

When the Parcel Number is entered information from the parcel is displayed.

The Denial Date determines the Denial Year (which determines the tax period/cycle for settlement purposes) and the End of Grace period (which determines when interest on the Denial resumes).

Denial Year is based on the calendar date. Because it is possible to enter a denial late in the collection cycle, it may require that the Denial be collected for an additional year at the local unit level (a Denial added in January of 2015 against S14/W14 Tax Bills would not go delinquent and be turned over to the county until March of 2016).

Denied By is one of three authorities can issue a Denial (State, County or Local Assessor), this setting determines the breakdown of the interest collected.

The Reason(s) for Denial should be provided on the documentation for the Denial, at least one option (or ‘Other Reason’) needs to be applied to the Denial.

The Owner Name assigned to the Denial defaults from the current owner of the parcel (as shown in Manage Property Records), this may be changed if required by entering part or all of the appropriate name for the Denial. It is possible to enter a denial to be billed against a prior owner of the parcel (as the result of a bona fide sale), these are normally passed on to the State of Michigan for collections.

Click the Details button to continue to the next phase of the process, the Tax Period Detail window.

On the top part of the window you will select the specific tax periods that will be a part of the Denial. Be aware that the rules for the denial state that the entity in possession of the tax roll is responsible for the collection of the denied taxes and that the tax periods denied are limited to the current year and three prior years. This could mean that the County bills the denial for the three prior tax years and the Township bills for the current tax year.

Tax Periods identified as being for the current owner will automatically be checked by the program, select or deselect as required by the denial documentation and the Tax Roll possession rules.

The Assessor has the ability to waive Interest and Penalty on the denial in the case of a clerical error or delay in billing, specific documentation will be provided for this situation. The ‘WI’ and ‘WP’ columns in the grid allow for the waiver, to waive Interest and/or Penalty you must check the box(s) for each applicable tax period.

A list of the specific tax levies that will be recalculated for the denial will be listed on the bottom portion of the screen.

When all applicable tax periods have been selected, click the Summary button to proceed to the Bill Summary window. If a tax period has been selected that the program detects as a prior owner has been selected a warning message will appear for verification (because of variations in historical data it is possible that the warning message will be displayed in error).

The Bill Summary will show you a list of the tax periods denied along with information related to the payoff calculation (Original Interest Date, Number of Months of Interest, Grace Period Interest Allowance and the total interest at the time of the denial). The bottom portion of the screen will show a total for the Denied Levies, Admin Fee and Interest.

Click the Finish button to complete the process and add the denial for collection.

 

Update to an existing PRE Denial.

To edit an existing Denial use the ‘Edit Denial’ button at the top of the Manage Denial Bills workspace, the edit window will display for the selected denial in the list.

Edit procedures for an existing Denial use the same windows and follow the same rules as the ‘New Denial’ process described above. If there have been changes to the denial and payments exist the program will void the original payments and repost them under a new Receipt Number using the recalculated values for the denial.

 

Posting payments against a PRE Denial.

Once a Denial is added into the system payments can be posted using the Tax Bills and Collections workspace, Denials are treated just as any normal tax bill.

Receipt reports and totals are handled in the same way as normal tax bills with the exception of the distribution of interest collected on payments.

Distribution of interest is handled using the ‘Denial Interest Summary – Form 4142’ report found in Reports | Denials | Collections node in the report selection. This report shows the total interest and the 70%/20%/10% breakdown of the interest distribution (see ‘Special Procedures for PRE Denials’ for information related to the distribution of the interest collected on a denial payment).

 

How payoffs are calculated for PRE Denials.

Denial interest and penalty is calculated from the interest and penalty dates configured for the tax period being denied, because each denial may touch multiple tax periods the interest is calculated individually for each of the denied periods.

That means that each tax period denied will have a different number of months used for calculating interest, this is shown in the ‘Intr Mos’ column on the summary screen when editing the denial and in the same column on the Denial Bill Detail view.

Interest is calculate for each month or part thereof since the original interest date (Intr Date on the Summary Screen and Denial Bill Detail view) for the denied tax bill.

The 60 day grace period accounts for one month of no interest (this is accounted for in the ‘Grace’ column). When the denial is entered into the system, interest is frozen for the duration of the 60 Grace Period, once the Grace Period ends interest resumes (and in NOT retroactive to the Denial Date.

 

Special procedures for PRE Denials.

Denials for a Previous Owner: If there has been a bona fide sale of the property and the denial is for a prior owner, the denial is turned over to the State of Michigan for collection as soon as the denial is created. Denials to a prior owner are NOT turned over delinquent to the County Treasurer.

Delinquency: If the denial is for the current owner of the property, just as with a normal tax bill, the denial is turned over delinquent to the County Treasurer on March 1^st of the year following the denial.

Denial Interest Distribution: Interest collected on a denial payment is broken down using a 70%/20%/10% spread, the entity receiving which percentage is based on the authority issuing the denial (see the table below). Interest is distributed on a Denial by Denial basis as each denial in your system could have a different Denial Authority. The ‘Denial Interest Summary – Form 4142’ does all the breakdown calculations for you.

Settlement Procedures: Denial Tax Periods (Dxx) are treated in the same way as ‘normal’ tax periods are for settlement though a few of the required reports for balancing with the county will be different. Reports used for settlement specifically for Denials are located in Report | Denials | Collections.

Denial Authority	Interest Distribution Percent
	70%	20%	10%
State	State	Township	County
County	County	Township	State
Township	Township	County	State

 

What happens to the denied Tax Bill and how does a Denial effect other reports?

The originally denied Tax Bill is flagged as having been denied, this will show in the header when viewing the original tax bill showing both that the tax bill had been denied and what year the denial was for.

If an edit of the denied tax bill is required you will NOT be able to make a change to the PRE percentage or type, the denial is now in control of those values. For most reports the PRE information will print as it is on the original tax bill and will not reflect the denial information (for example, reprinting a tax bill will show the original PRE information on the tax bill, NOT the updated/denied PRE rate).

The DS-4410 Report is meant to show totals reflecting the current status of tax bills, this report WILL show adjusted PRE amounts that were part of the denial.