“Section 906 Orders” and Unpaid Property Taxes

Training for: Legal Notes

Question: Can a taxpayer with multiple years of unpaid property taxes be compelled to pay off the older taxes before paying newer taxes on that property?

Answer: Yes. A “Section 906 Order” (named after 36 M.R.S. § 906) authorizes the municipal officers, upon the tax collector or treasurer’s request, to require that tax payments be applied against outstanding or delinquent taxes in chronological order beginning with the oldest unpaid bill on a specific property. Once adopted, a Section 906 Order prevails regardless of the taxpayer’s directions or intention. But there are three important limitations.

First, a payment can be applied only to older taxes due on the specific real or personal property for which the taxpayer’s payment was tendered.  This means that a payment made on real estate taxes cannot be applied to personal property taxes owed by the same taxpayer. Nor may a payment made on one parcel of real property be applied to another.

Second, a payment cannot be applied to taxes for which an abatement request or appeal is pending unless the taxpayer consents in writing.

Third, the order generally may not be enforced against a taxpayer who has filed for bankruptcy; instead, tax payments involving a bankruptcy case usually must be applied as directed by the bankruptcy court.

A Section 906 Order applies to both personal property taxes and real estate taxes (subject to the limitations above). It applies to taxes subject to a property tax lien and to taxes for which the lien process was defective or not initiated for some reason. As a result, it can be a useful collection tool in cases where a taxpayer seeks discharge of a lien for recent taxes but otherwise might not wish to pay older outstanding taxes.

Unlike some other statutory options for the municipal officers (e.g., treasurer’s disbursement policies), a Section 906 Order does not need to be renewed annually; it is valid and binding indefinitely unless the order itself provides otherwise. Nevertheless, it is recommended that the order be renewed periodically when individuals holding the positions of collector or treasurer change or the membership of the municipal officers turns over.

A model “Section 906 Order” can be found here and in the appendix to MMA Legal Services Tax Collectors & Treasurers Manual. (S.F.P.)

Question: Can a taxpayer with multiple years of unpaid property taxes be compelled to pay off the older taxes before paying newer taxes on that property?

Answer: Yes. A “Section 906 Order” (named after 36 M.R.S. § 906) authorizes the municipal officers, upon the tax collector or treasurer’s request, to require that tax payments be applied against outstanding or delinquent taxes in chronological order beginning with the oldest unpaid bill on a specific property. Once adopted, a Section 906 Order prevails regardless of the taxpayer’s directions or intention. But there are three important limitations.

First, a payment can be applied only to older taxes due on the specific real or personal property for which the taxpayer’s payment was tendered.  This means that a payment made on real estate taxes cannot be applied to personal property taxes owed by the same taxpayer. Nor may a payment made on one parcel of real property be applied to another.

Second, a payment cannot be applied to taxes for which an abatement request or appeal is pending unless the taxpayer consents in writing.

Third, the order generally may not be enforced against a taxpayer who has filed for bankruptcy; instead, tax payments involving a bankruptcy case usually must be applied as directed by the bankruptcy court.

A Section 906 Order applies to both personal property taxes and real estate taxes (subject to the limitations above). It applies to taxes subject to a property tax lien and to taxes for which the lien process was defective or not initiated for some reason. As a result, it can be a useful collection tool in cases where a taxpayer seeks discharge of a lien for recent taxes but otherwise might not wish to pay older outstanding taxes.

Unlike some other statutory options for the municipal officers (e.g., treasurer’s disbursement policies), a Section 906 Order does not need to be renewed annually; it is valid and binding indefinitely unless the order itself provides otherwise. Nevertheless, it is recommended that the order be renewed periodically when individuals holding the positions of collector or treasurer change or the membership of the municipal officers turns over.

A model “Section 906 Order” can be found here and in the appendix to MMA Legal Services Tax Collectors & Treasurers Manual. (S.F.P.)