Assume Tina Tarheel sells her house at 123 Main St. to Billy BlueDevil in July 2024.  Two months later, Carolina County prepares to mail its 2024 property tax bills. Who should get the bill? Tina? Billy? Both?

The Machinery Act does not offer an explicit answer to this question. But I think the clear best practice is to send the bill to Billy.

Why? Because Billy is the party that will be personally responsible for the 2024 tax bill if it is not paid in a timely fashion. Under GS 105-365.1(b)(1), personal responsibility for real property taxes falls on the owner as of the date of delinquency and all subsequent owners.

Let’s unpack that provision, starting with “date of delinquency.”

Property taxes generally become delinquent on January 6 of the fiscal year in which they are levied.  G.S. 105-360(a).  However, 2024 property taxes will become delinquent on January 7, 2025, because of the “weekend and holiday” rule created by G.S. 105-395.1. The last day to pay 2024 taxes without penalty is January 5, 2025, which is a Sunday.  As a result, the last day to pay without penalty moves to Monday, January 6. The delinquency date moves to Tuesday, January 7.

Next—what does it mean to be “personally responsible” for property taxes? It means that your personal property—tangible stuff like a car or a boat and intangible stuff like wages or a bank account—is at risk of being targeted with enforced collections under GS 105-367 (levy and sale of tangible property) and GS 105-368 (attachment and garnishment of intangible property).

Finally—what’s the deal with “subsequent owners”?  That provision creates successor liability for delinquent taxes on real property.  Anybody who takes ownership of 123 Main St. on or after January 7, 2025 will become personally liable for the delinquent 2024 taxes.  If on January 8 Billy sells the property to Susan, who later sells it to Bob, then Billy and Susan and Bob would all become personally responsible for the 2024 taxes.

The Carolina County tax office could target any personal property owned by any of those former and current owners.  The Machinery Act does not specify how the county should choose which owners to target first; my advice is to go after the easiest money first. If the county knows where an owner banks, start there with a bank account attachment. Then move onto wage garnishments, if the county knows where the owners work.  The county cannot get paid more than it is owed, but it can initiate multiple enforced collections simultaneously until it satisfies the entire tax debt.

Two more collection notes.  First, regardless of who is personally responsible for delinquent property taxes, the real property itself is always subject to foreclosure for delinquent property taxes. Second, remember that all of these remedies are subject to the 10-year statute of limitation created by GS 105-378(a).

Putting it all together for our example, if Billy is the owner of 123 Main Street as of January 7, 2025, then he will be personally responsible for the 2024 taxes if they remain unpaid. Billy’s bank accounts, wages, and cars could be targeted by the Carolina County tax collector to satisfy those taxes.

What about Tina?  She’s off the hook for 2024 taxes, because she transferred the property to Billy prior to January 7, 2025.  She has no personal responsibility for the 2024 taxes, despite the fact she owned as of the listing date (January 1, 2024) and the start of the tax year (July 1, 2024).

The fact that Billy and not Tina is personally responsible for the 2024 taxes leads me to conclude that Billy should get the 2024 tax bill. If the county sends the tax bill to Tina, she could tear it up while laughing maniacally with no consequences because the county cannot hold her responsible for those taxes.  If Billy never gets a tax bill, he may not realize that he’s responsible for the 2024 taxes.  It will be an unpleasant surprise when he receives a delinquency notice in January 2025.

I know that not all counties follow this approach, in part because several provisions in the Machinery Act focus on ownership on the listing date, January 1, as the key data point for listing and taxing real property.  For examples, see GS 105-285(a)(“ownership of real property shall be determined annually as of January 1”) and GS 105-302 (real property to be listed “in the name of the owner of record as of the day as of which property is to be listed”).  But none of those provisions requires tax bills to be mailed to the January 1 owner.

The practice of sending bills to January 1 owner might also relate to the old personal liability rules for taxes on real property.  Prior to 2008, it was the January 1 owner who was responsible for taxes on real property.  There was no successor liability.  (This remains the rule for taxes on personal property. See GS 105-365.1(b)(2).)  The new rules mandating personal liability for the owner as of the delinquency date and all subsequent owners were created by Session Law 2008-35, s. 4.

Given the 2008 changes to personal liability for real property taxes and the Machinery Act’s lack of guidance about tax bills, here is my advice: local governments should update their ownership records immediately before creating their new tax bills and then mail those bills to the current owners.

To be clear, I do not think that sending new bills to the January 1 owners violates the Machinery Act.  Even if new owners do not get the tax bills for the current year, they will become personally responsible for those taxes if they become delinquent the following January.  GS 105-348 charges all property owners with notice of their taxes, even if they never receive a actual notice in the form of a tax bill.  In other words, you can’t avoid a tax obligation by complaining that you never got the bill.

But if new owners don’t get the new tax bills, they are going to be in for a shock when they get late notices in January informing them of the interest charges and enforced collection efforts triggered by the delinquent taxes.  One irate new owner emailed me last week, complaining that he “tried to reason with [the tax office], but the person in charge of the admittedly flawed process admits that they send out hundreds and hundreds of tax bills every year to the wrong people, and then penalize the new owners with late fees…nice racket!”

Tax offices can avoid these arguments by making sure that they update their ownership records before they send out their new bills each summer.