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OFFICE OF TAX AND REVENUE
NOTICE OF EMERGENCY AND PROPOSED RULEMAKINGThe Deputy Chief Financial Officer of the District of Columbia Office of Tax and Revenue (OTR) of the Office of the Chief Financial Officer, pursuant to the authority set forth in D.C. Official Code § 47-1335 (2005 Repl.), Section 201(a) of the 2005 District of Columbia Omnibus Authorization Act, approved October 16, 2006 (120 Stat. 2019; P.L. 109-356, D.C. Official Code § 1-204.24d (2009 Supp.)), and Office of the Chief Financial Officer Financial Management and Control Order No. 00-5, effective June 7, 2000, hereby gives notice of the adoption of the following emergency rules by adding a new Section 319,“Special Tax Deed Sale” of Chapter 3, REAL PROPERTY TAXES, of Title 9, District of Columbia Municipal Regulations (DCMR). The emergency rules establish an alternative procedure to sell real properties bid back by the District of Columbia during a real property tax sale. The alternative procedure would allow the Chief Financial Officer of the District to utilize a sealed bid process to more quickly sell, as well as to enhance District revenues from, properties bid back to the District by encouraging purchasers to submit bids on the greatest amount of taxes owed by those delinquent properties bid back to the District; thereby, seeking to achieve real property tax compliance from the maximum number of properties owing the most in delinquent real property taxes.
Action was taken on October 26, 2010, by the Deputy Chief Financial Officer of OTR to adopt the following rules on an emergency basis, effective on that date. Because of the economic recession’s significant, detrimental effect on the value of real property, approximately twenty-four million dollars ($24,000,000) in real property taxes owed by real property owners had to be bid back to the District at the conclusion of the 2010 real property tax sale. This constituted a significantly greater amount than in prior years, and when combined with ongoing reductions of other District government revenues, including an estimated additional budget deficit of one hundred seventy-five million dollars ($175 million) for now current Fiscal Year 2011, this deprived the District of expected tax sale revenues for the provision of city services. Additionally, some of these properties are unoccupied and/or nuisance properties that pose a hazard to the community. Thus, the adoption of these emergency rules is necessary for the immediate preservation of public peace, health, safety and welfare, including police, fire and schools. These emergency rules will remain in effect for up to one hundred twenty (120) days from the date of adoption, unless superseded by publication of a Notice of Final Rulemaking in the D.C. Register, whichever occurs first.
OTR also gives notice of its intent to take final rulemaking action to adopt these proposed rules in not less than thirty (30) days from the date of publication of this notice in the D. C. Register.
A new Section 319, “Special Deed Tax Sale” of Chapter 3 of Title 9 DCMR is added to read as follows:
319 Special Deed Tax Sale
319.1 At the discretion of the Chief Financial Officer, any or all real properties bid back from a real property tax sale pursuant to § 47-1346 of the D.C. Official Code may be subject to sale pursuant to § 47-1353(a)(1) of the D.C. Official Code. This sale shall not provide for any reduction of taxes owed. The Office of Tax and Revenue (OTR) in its discretion may exclude one or more bid back real properties from the portfolio of properties offered for sale.
319.2 OTR may initially offer some or all of such bid back real properties as a single portfolio under a sealed bid process, and a list of such real properties by Square, Suffix and Lot, or Parcel and Lot, including the corresponding tax owed for which each was bid back at a real property tax sale, including accruals thereon to the date of award, shall be published on OTR’s Web site.
319.3 All purchasers shall submit sealed bids within ten (10) business days from when the list is posted to OTR’s Web site. The successful purchaser shall have bid to buy the greatest amount of taxes from the portfolio for which the properties were bid back from a real property tax sale, including accruals thereon to the date of award. The bid shall include a list of the real properties by Square, Suffix and Lot, or Parcel and Lot, including the corresponding tax owed for which each was bid back at a real property tax sale, including accruals thereon to the date of award.
319.4 Prior to or at the time of submission of his or her sealed bid, a bidder shall have registered with OTR on the form that OTR has devised, filed Form FR-500 (Combined Business Tax Registration Application), submitted a copy of Treas. Form W-9 (Request for Taxpayer Identification Number and Certification), and provided a deposit by certified check or cashier’s check payable to the D.C. Treasurer that is five percent (5%) of the bid amount, not to exceed one hundred thousand dollars ($100,000).
319.5 OTR shall evaluate the sealed bids within five (5) business days from the close of the sealed bid period. Notice of an award shall be provided to the successful tax sale purchaser that his or her sealed bid is accepted for those properties included in the sealed bid. Notice is deemed to be properly served when mailed, by first class mail, to the purchaser’s address indicated on the registration form.
319.6 The successful tax sale purchaser shall pay, by certified check or cashier’s check payable to the D.C. Treasurer, the balance of his or her bid within five (5) business days from when he or she is notified by OTR. If such payment is not timely received, the award shall be void. If the prior purchaser’s bid shall become void, then the next highest bidder shall be awarded his or her bid. In such an event, he or she shall pay, by certified check or cashier’s check payable to the D.C. Treasurer, the balance of his or her bid within five (5) business days from when he or she is notified by OTR. The foregoing process shall continue until a purchaser pays the balance of his or her purchase.
319.7 In the event that any purchaser’s bid shall be awarded and then become void due
to non-timely payment, that purchaser shall forfeit the amount of his or her
deposit that represents the damages suffered by the District due to such non-
performance. Damages shall be measured by the amount the defaulting
purchaser’s bid exceeds the amount of the fully paid bid of the successful
purchaser.
319.8 Certificates of sale shall be delivered to the successful purchaser for those real properties purchased within the portfolio for the corresponding amount of taxes with accruals.
319.9 Bid back real properties not sold to the successful tax sale purchaser may be
purchased on a one-by-one, first-come first-served basis by submitting offers to
the Chief of the Assessment Service Division within OTR. A list of all properties
not sold in an awarded bid shall be posted to OTR’s Web site within ten (10)
business days after an award is successfully finalized under 9 DCMR § 319.7
hereof.
All persons desiring to comment on the subject matter of this emergency and proposed rulemaking should file comments, in writing, with Robert McKeon, Deputy Chief Counsel, Office of Tax and Revenue, 1101 4th Street, SW, Suite W750, Washington, DC 20024, no later than thirty (30) days after publication of this notice in the D.C. Register. Copies of this rule and related information may be obtained by writing to the person at the address stated herein.
