SB 0709 Creates a senior property tax deferral program
Sponsor:Goode Co-Sponsor(s)
LR Number:2637S.01I Fiscal Note:2637-01
Committee:Ways and Means
Last Action:01/08/04 - Second Read and Referred S Ways & Means Committee Journal page:S77
Effective Date:August 28, 2004
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Current Bill Summary

SB 709 - This act creates a senior citizen property tax deferral program. In brief, the system will allow senior citizens to defer payment of their property taxes until death, while securing the deferral with a lien on the real property. A detailed outline follows:

SECTION 135.037 (Definitions): Includes various definitions for use in the act.

"Equity interest" is defined and includes both outstanding secured debts such as a mortgage and accumulated deferred taxes.

"Homestead" is defined to include farm houses and surrounding land up to five acres; the term applies to multi-unit dwellings and permits a the percentage of the building comprising the domicile be considered a homestead; no homestead property may include more than five acres.

The maximum income limit for deferring 100% of property taxes is set at $32,000.

"Household income" includes all household income for the property (includes children or other relatives income if they live on the property).

SECTION 135.039 (Election of deferral):

A taxpayer may elect to defer property taxes under the act between January 1 and October 15 of any year. The election is made by filing a form with the County Clerk who will forward the form to the Department of Revenue (DOR).

Income level must be below the maximum limit of $32K.

A guardian or conservator may act for an individual seeking the deferral; a trustee may act as well.

A grievance for a claim denial follows the same procedure as any regular protest with the department of revenue.

SECTION 135.041 (Property requirements): In order to qualify for the program the property must meet the following requirements:

Must be individual's homestead;

Must be owned in fee simple or be in the process of being purchased in fee simple;

No federal law, contract, or deed of trust for the property can contain any prohibition to the deferral or property taxes;

Proof of insurance equal to or exceeding the market value must be shown and maintained throughout the deferral.

SECTION 135.043 (Form of deferral claim): The Department of Revenue shall provide a form where the applicant will:

Describe the homestead;

Recite facts establishing eligibility for the program including income;

Attach documents required by the DOR for demonstrating eligibility;

Sign a affidavit attesting that the statements in the claim are true.

SECTION 135.045 (DOR to notify the County Assessor):

DOR shall notify each County Assessor where a property is situated that qualifies for the deferral.

The Assessor shall note the deferral in his or her tax book.

The Assessor shall forward the tax statement to the DOR.

Interest accrues on the amount advanced to the county at a rate of 6% per annum.

SECTION 135.047 (Lien on deferred property):

DOR will record a list of tax deferred property in each county.

DOR will not pay any filing fee in connection with the recording.

SECTION 135.049 (County gets reimbursed): DOR will pay to any county where property is deferred the amount of the deferred taxes minus 2%.

SECTION 135.051 (Notice of eligibility): DOR shall notify each eligible taxpayer before December 15 of the year such taxes are due. The notice will:

Indicate if the taxes have or have not been deferred;

Provide the total balance of deferred taxes and interest;

Inform the taxpayer that a voluntary prepayment may be made at any time.

SECTION 135.053 (Details of the tax lien):

The tax lien will include estimated deferred taxes for five years plus interest.

The DOR will file a new estimated lien every five years and update the accrued interest estimate.

The lien will attach on January 1 of the filing year.

The priority of the lien shall be equal to that of other tax liens; mortgages and other security interests recorded prior shall maintain priority.

If the amount of taxes and interest exceeds the estimated lien amount, then the DOR will have a lien for the excess amount as of January 1 of the year the excess occurred. This amount of excess shall be indicated on the notice of lien.

Foreclosure of this lien may be made pursuant to the law relating to foreclosure in civil suits or pursuant to any other collection methods within the director's power.

If the taxpayer makes voluntary payments they may request that the DOR record a partial satisfaction of the lien.

SECTION 135.059 (Conditions causing payment to come due): Deferred taxes become payable when:

The last surviving tax deferral claimant dies;

The property is claimed or sold;

The property is no longer the homestead of the claimant(s), except in the case of absence due to health reasons;

The property is moved out of the state.

SECTION 135.061 (Payment comes due): Whenever any of the events from the prior section occur:

The deferral of taxes for the current year continues;

The amount of deferred taxes and interest shall be due and payable on the date of closing in the case of a sale or on the date of probate in the case of death; in the case of property being removed from the state, the due date shall be five days before the property is removed.

If the amount due is not payed and no extension is granted, then the property shall be subject to foreclosure.

SECTION 135.063 (Non-qualifying surviving spouse continuing deferral):

When a qualifying spouse dies who was participating in the deferral, the surviving spouse who was not eligible at the time of application for the deferral may continue the deferral by filing a claim if the spouse is or will be 60 years old within six month of death and the spouse continues to meet the standard deferral requirements.

A spouse who does not meet the age requirement stated above may continue the deferral of those taxes which have been previously deferred. When such spouse turns 62, such spouse may elect to defer the previous and the current years' taxes. Thereafter, the spouse's taxes will continue to be deferred under the program.

SECTION 135.065 (Income found to be over maximum limit):

If household income exceeds $32K then the taxpayer may qualify for the program, but the amount that may be deferred will be reduced by 50 cents for each dollar of income above $32K. If household income exceeds $64K, no deferral will be permitted.

DOR shall notify the owners of a homestead that meets the income requirements pursuant to the above provision.

If a taxpayer in the program does not file a return, the taxpayer will be given 30 days notice before refusing to defer taxes for the next tax year.

If upon audit a taxpayer's household income is found to be in excess of $32K, then the DOR shall determine the amount that should not have been deferred and pursue that amount as if it were an income tax deficiency.

If upon audit a taxpayer's household income is found to be less than the limitation in the first provision of this section, the DOR shall determine the amount that should have been deferred and treat it as an income tax refund.

SECTION 135.066 (Deferral of tax increases): Any taxpayer(s) who has a household income of up to $64K may defer the amount of property tax that has increased since the year following their 62nd birthday.

SECTION 135.067 (Payment of deferred taxes):

Payments are made to the DOR.

Payments may be made by the taxpayer or spouse, next of kin, heir at law or child of the taxpayer or by any person claiming legal or equitable interest in the property; no person other than the taxpayer may pay if the taxpayer objects within 30 days.

Any payment is applied against interest first.

If a taxpayer in the deferral program chooses to pay any or all of their current year tax bill, the payment will be applied to the principal of the deferred taxes first, rather than the interest as required for a regular prepayment.

When the lien and interest are paid in full, the DOR will record a satisfaction of deferred property tax lien in the county where the property is situated.

SECTION 135.073 (County to reimburse DOR upon foreclosure): If the property is foreclosed upon the County Treasurer shall pay the DOR from the combined tax collections account the amount of deferred taxes and interest which were not collected by the DOR; immediately thereafter, the County Treasurer shall notify the tax collector of the amount paid to the Director for the property which has been deeded to the county. The amount paid by the county to the DOR will not exceed the amount collected by the foreclosure, minus reasonable expenses incurred by the county from the foreclosure process.

SECTION 135.075 (Extension of deferral to heirs): When the taxpayer(s) who originally claimed the deferral dies the DOR may extend the deferral of previously deferred taxes up to five years where:

The property becomes the homestead of an individual or individuals by inheritance or devise;

The individual or individuals commence occupancy of the property as their principal residence by February 15th after the year of death; and

The individual or individuals file an application with the DOR by February 15th after the year of death.

The extension shall terminate if the property is sold or removed from the state, or if none of the heirs or devisees use the property as a principal residence.

The DOR may require a bond for this extension.

The deferred taxed on extension shall continue to accrue interest.

Upon the death a taxpayer who has deferred property taxes, the spouse heir or devises shall notify the DOR in writing within sixty days.

SECTION 135.077 (No intent to interfere with certain other securities):

Nothing in this act is intended to:

Prevent the collection, by foreclosure, of property taxes which become a lien against tax deferred property;

Defer payment of special assessments to benefitted property which assessments do not appear on the assessment and tax roll;

Affect any provision of any mortgage or other instrument relating to land requiring a person to pay property taxes.

SECTION 135.079 (Conflicting contract language after enactment): Once this act is enacted it shall be unlawful for any mortgage trust deed or land sale contract to contain a clause or statement which prohibits the owner from applying for the benefits of this deferral. Any such clause shall be void.

SECTION 135.083 (Senior Property Tax Deferral Revolving Account):

A revolving account shall be established for making payments to county tax collectors and the DOR.

The account funds shall be advanced annually to the DOR.

The account may contain a reserve for administrative expenses.

All sums received by the DOR as repayments of deferred property taxes shall be credited to the account, subject to appropriations.

If the amount in the account is insufficient, an appropriation may be made from the general revenue (GR) account; once revenue is sufficient in the account the DOR shall repay the GR account; repaid money is not part of TSR.

If there are insufficient funds in the GR account to provide funding to the revolving account, the Commissioner of Administration may issue revenue bonds.

REVENUE BONDS - DEFINITIONS: "commissioner", "revenue bonds", and "revolving account" are defined for simplicity.

REVENUE BONDS - ISSUING BONDS: The commissioner may issue bonds not in excess of the necessary funding required to maintain the revolving account. The net revenues and income of the revolving account shall be pledged to the payment of the bonds ad shall maintain an interest an sinking fund in an amount adequate to pay such bonds, a reserve fund, and a depreciation fund.

REVENUE BONDS - NOT STATE DEBT: The bonds issued under this act shall not be a debt of this state.


Bonds shall not bear more than 15% interest and shall not mature over more than 40 years.

Serial bonds may be issued with or without the right to call them for payment before maturity or a covenant of a premium for such call.

Term bonds shall contain a reservation of the right to call them for payment prior to maturity with or without payment of a premium.

The bonds will be sold for the best price attainable not less than 98% of par value; any such bonds may be sold to the United States of America or to any agency or instrumentality thereof, at a price not less than par and accrued interest, without public sale and without the giving of notice.

The bonds shall be MO tax exempt.

REVENUE BONDS - REFUNDING OF BONDS: The revenue bonds may be refunded when:

Such bonds have come due and there are not sufficient funds in the interest and sinking fund to pay such bonds and interest;

Such bonds are by their terms callable for payment and redemption in advance of their date of maturity and are duly called for payment and redemption; and

Such bonds are voluntarily surrendered by the holder for exchange for refunding bonds.

The commissioner may issue refunding bonds in the amount sufficient to payoff and redeem the bonds to be refunded, under the same terms for the revenue bonds.

REVENUE BONDS - FORM OF BONDS: The commissioner shall determine the form details and incidents of the bonds, within the requirements of this act. The holders of such bonds may compel the commission by civil action at law or equity to perform the duties required by this act concerning the revenue bonds.