Tax Definitions

Ad Valorem: “according to value”; The property tax is an ad valorem tax because it is measured by value, in CT State Statute “fair market” value.

Alias Tax Warrant:  An instrument of collection in which the Tax Collector authorizes a state Marshal to collect taxes as specified in the warrant.  CT General Statute 12-162 gives a State Marshal or Constable the same authority as the Tax Collector concerning the collection of taxes.  The State Marshal charges 15% of the warrant amount plus all costs and fees in the collection of the taxes. All taxes, interest, fees and costs will be paid by the delinquent tax payer. (CT General Statute 12-140)

Assessment/Assessed Value: the amount of value placed by the assessor on real or personal property. In Connecticut, assessed values are 70 percent of the fair market value determined by the assessor, unless the property is classified as farm, forest, or open space land. (CT General Statute 12-62a)

Certificate of Correction / Certificate of Change: an administrative procedure in which the assessor may correct clerical errors or omissions and submit them to the tax collector. The assessor may also, at any time prior to the payment of the tax, or within one year after the tax was paid, issue a certificate of correction removing tangible personal property from a list on which it was entered in error, or adding tangible personal property to a list from which it was omitted. Certificates of change are most frequently done to allow for credits on motor vehicle bills. (CT General Statute 12-57)

Certificate of Occupancy Pro-Ration Procedure: any new real estate construction completed after the assessment date is liable for taxes from the date of the use of the newly constructed property, or the date of the issuance of the Certificate of Occupancy, whichever is earlier. The building official notifies the Assessor, in writing, within ten days of the issuance of the certificate of occupancy. The assessor determines a pro-rated assessment, and notifies the Tax Collector, who issues a pro-rated tax bill. (CT General Statute 12-53a)

Credit: an amount deducted from a tax bill for various reasons. Credits are issued, for example, when taxpayers receive elderly or disabled tax relief; when taxpayers have sold and not replaced motor vehicles and are entitled to a credit on their bill; or when there are exemptions for other reasons. Credits are issued by the Assessor’s Office.

Delinquent: a debt on which payment is in arrears. A tax bill is delinquent when it has not been paid within the statutory grace period, which is one month from the due date. (CT General Statute 12-146)

Delinquent Statement: Delinquent statements for past due real estate and personal property taxes are mailed in August and February.  Delinquent statements for past due motor vehicle taxes are mailed in August – September and February - March. Delinquent statements for past due supplemental motor vehicle taxes are mailed in February – March.  The delinquent statement is mailed to the last known address the Tax Collector has.  If the mail is returned to the Tax Collector’s office by the Post Office as “invalid address” no additional delinquent statements will be sent.

Demand: Taxpayers who are delinquent on their tax bills are sent a Tax Collector’s Demand.  This legal instrument informs the tax payer of the legal action that may be taken by the Tax Collector.  The tax collector is required to make demand on the taxpayer in person, or to send a written demand at the taxpayer’s last known place of abode or billing. The term “demand” is prescribed by state statute and is not meant to imply rudeness toward the taxpayer. (CT General Statute 12-155)

 

Due date: Dates on which tax installments are due: July 1 and January 1. Taxes must be paid within one month from the due dates (by August 1 and February 1). (CT General Statute 12-142)

Escrow: For tax purposes, when there is a mortgage on a property and the taxpayer’s mortgage agent (lender) maintains a separate account in their custody for the purpose of accumulating from the monthly mortgage payment funds that will be used twice a year to pay property taxes as they become due. The mortgage agent will act on behalf of the property owner and pay the tax bill from the taxpayer’s funds that are being held in the escrow account.

Exemption: Property which is free, in whole or part, from property taxation. Various categories or citizens are exempt from taxation, in whole or part; i.e., veterans, elderly and disabled persons; blind persons; farmers; etc. Certain properties are exempt from taxation based upon their ownership: for example, properties owned by the State. Exemptions are determined by the Assessor’s office. (CT General Statute 12-170)

Garnishment: A procedure where the tax collector seizes property for back taxes, usually a taxpayer’s wages, or a bank account.

Grace period: The time period between the tax installment due date (July 1 or January 1) and the last day to pay without interest (August 1 or February 1). If payment is made after the grace period, interest is charged. (CT General Statute 12-146)

Grand list: A listing of all taxable property located within the Town as of October 1st .

Grand list year: The term used to label the taxes for a given fiscal year. The grand list is as of October 1; the assessor determines what that is by February 1.  In Prospect, after both the Region 16 Budget and the Town of Prospect Budget are approved, the tax rate is set, and in July and the following January, tax bills become due for that grand list year.

Grand levy: The amount of revenue required to operate the Town for the fiscal year.

Inchoate Lien: An unrecorded lien which exists from assessment date until it is replaced by the recorded lien, called a Certificate of Continuing Lien that is filed annually on June 1st for any property owing delinquent real estate tax. (CT General Statute 12-172)

Interest: A penalty charged on delinquent taxes. The interest rate is 18% per year, or 1.5% per month from the due date. Neither the Tax Collector nor the Mayor have the authority to waive or reduce the interest on delinquent taxes. Interest is charged on all late payments without exception. (CT General Statute 12-146)

Jeopardy Collection: If the Tax Collector determines that the collection of certain taxes that are not yet due may be “jeopardized by delay” the Collector is authorized to act to enforce collection of the tax before it is due. (CT General Statute 12-163)

Lien:  A claim or charge upon real property or personal property for the satisfaction of a tax debt arising by operation of law.  Taxpayers whose current fiscal year real estate tax bill is delinquent will receive a “Notice of Intent To Lien” in April.  The Certificate of Continuing Lien, which secures the Town’s interest in collecting payment of tax plus interest and fees is filed in the Town Clerk’s office on June 1st and recorded on the land records. (CT General Statute 12-175). A fee of $24 is charged to release a tax lien.

List Number: A number that identifies the tax bill in the Rate Book.  These numbers do not remain the same from year to year.

Map Block Lot: The identification number for a parcel of real estate, also known as parcel number. This is a permanent number and does not change.

Mill: A unit of monetary measure equal to 1/1000 of a dollar. Tax rates are expressed in mills and are referred to as mill rates.

Mill Rate: A number determined by dividing the grand levy (the amount of revenue required to operate the Town for the fiscal year) by the grand list (the total assessed value of all taxable property). The mill rate is then applied to each taxpayer’s assessment to determine how much tax is due.

Motor vehicle tax: In the state of Connecticut, motor vehicles such as passenger cars, trucks, vans, trailers, and so on are subject to local property taxation. The billing period for motor vehicle taxes runs from the grand list date of October 1st through the following Sept. 30th. The town where the vehicle was registered with DMV as of October 1st is the town to which the person will owe motor vehicle taxes the following July.

Personal property tax: In a business, all movable assets are termed personal property (including furniture and fixtures but excluding inventory) and are taxed annually.  Business owners are required to file a Personal Property Declaration annually with the Assessor. Personal property bills are not prorated or credited if a business is dissolved after October 1st.

Pro-Rated: A term used to describe the mechanism where a property is taxed only for a portion of a year.

Put-On: The electronic process of adding unpaid motor vehicle accounts to Connecticut Department of Motor Vehicles delinquency list. This is done semi-annually in August and February. The delinquent taxpayer will not be allowed to register any vehicle or renew any registration until all motor vehicle taxes in their name are paid.

Rate Bill:  A document signed by the Mayor describing the mill rate, the grand list date, and the due dates of the taxes levied for that grand list and authorizing the Tax Collector to collect such taxes.  (CT General Statute 12-130)

Rate Book: The annual listing of taxes due from each taxpayer.

Real estate tax: A tax levied on real property, including land and buildings thereon.

Refund: A return of monies erroneously collected or overpaid. Refunds are processed strictly in accordance with state law. Application must be made within three years from the due date of the tax, and must include proof of payment and a signed affidavit (including an original signature) from the taxpayer. (CT General Statute 12-129) Overpayments of less than $5.00 are not refunded. (Ordinance # 62-11-04-98)

Release: An electronic process allowing a taxpayer who owed past due motor vehicle taxes to now register vehicles. The release is processed directly to the Department of Motor Vehicle database when all delinquent taxes due in that taxpayer’s name have been paid.  If the taxpayer pays at the Tax Collector’s office with cash the process is done within 30 minutes.  If the taxpayer pays with a check, debit or credit card, or online, the process takes 7-10 business days from the date the payment is received and processed by the tax office.

Sewer use fee: A user fee determined by the Prospect Water Pollution Control Authority annually for property owners who utilize Waterbury Sewer Lines.  Sewer use fees are collected by the Tax Collector’s office. The WPCA sets the sewer use rates annually in September and fees become due October 1st and are payable on or before November 1st.

Supplemental motor vehicle tax: A prorated tax for vehicles that were registered (first time registration) after the grand list date of October 1st. The motor vehicle tax year starts on October 1st, but if a vehicle is registered after that, for example November 1st, the taxpayer will be billed from November through September instead of October through September. Supplemental motor vehicle bills are due January 1st and are payable on or before February 1st. After that initial supplemental bill, you will get a regular motor vehicle bill annually in July.

Suspense: A term for taxes which the Tax Collector states all methods of collection have been exhausted. Taxes may be deemed uncollectible and placed in suspense for various reasons. These are usually motor vehicle taxes when a taxpayer has moved out of state and is not able to be located; motor vehicle taxes of deceased taxpayers, taxes that are uncollectible due to a federal bankruptcy discharge, businesses that have dissolved, or mobile homes that were deemed abandoned by the Court. Items transferred to suspense are removed from consideration as assets of the Town, but are not abated and remain collectible for 15 years from the due date. The suspense list is prepared annually in May, and presented to the Town Council for approval (CT General Statute 12-165).

Take-Off: The electronic process of removing a previously delinquent motor vehicle taxpayer’s name from the Connecticut Department of Motor Vehicle’s delinquency list. This process is done weekly on Wednesday for any payments made by check, debit or credit card, or online during the previous Saturday through Friday.

Tax: Each property tax or installment as increased by interest, penalties, fees and charges. (CT General Statute 12-141)

Taxable property: Property that is subject to taxation. This includes real estate, motor vehicle, and business personal property.

Tax relief: A process in which the ad valorem (according to value) tax is adjusted or modified to allow an individual to pay less. Tax relief is granted under state and city programs for individuals who meet certain criteria such as low to moderate income elderly, disabled taxpayers and volunteer firefighters.  All tax relief programs are handled by the Assessor’s office.

Tax service: The term given to agencies that act as middlemen between the Town and the banks or mortgage agents who hold escrow accounts for Prospect taxpayers. Tax services typically gather payments from various banks and mortgage agents and consolidate the payments into a package which is delivered to the Tax Collector. This transaction may occur weeks after the funds have actually been taken from the taxpayer’s escrow account. The taxpayer’s payment history will often reflect that an installment payment was made by a particular tax service as part of an automated transaction involving numerous properties. Tax services will also frequently search tax records on behalf of lenders to determine payment status or delinquency.

Tax Sale: A process in which the Tax Collector or a Marshal, when authorized by an Alias Tax Warrant, seizes tax delinquent real estate and sells it at a public auction to recover the taxes due. The tax sale process involves a series of notifications to the taxpayer and to anybody who has an encumbrance or lien on the property, as well as public postings in the newspaper and other statutory requirements. (CT General Statute 12-157)

Tax Warrant: A legal instrument issued annually by the state to the tax collector which empowers the collector to demand and collect payment of taxes as set in the rate book. (CT General Statute 12-130)

UCC 1 Lien:  A UCC lien is a legal notice the Tax Collector files with the Secretary of State to secure the Town’s interest against the assets used in a business.  It gives notice that the Town has an interest, or lien, against the asset being used by you to secure unpaid personal property (business) taxes.  Personal Property (business) tax bills that become delinquent will have a UCC 1 Lien filed with the CT Secretary of State in March.

Uniform Fiscal Year: July 1st through June 30th. Taxes are based on the Grand List of the preceding October 1st. (CT General Statute 7-382)

WPCA (Water Pollution Control Authority): A citizen body, appointed by the Republican and Democratic Town Committees with the consent of the Mayor and the Town Council, that is responsible for policy concerning the sanitary sewer system.