Dude, Where’s My Tax Revenue?

For school districts with a July tax levy, local tax-collecting units recently sent summer tax bills to district taxpayers. Those municipalities will collect school taxes on those districts’ behalf. Every year, however, some of our clients receive collected tax revenue late, causing unexpected cash flow problems. School officials should be aware that tax-collecting units have a statutory duty to timely transfer school tax revenues.

Township and city treasurers generally are responsible for tax collections. While a school district may contract with a township or city to set a different collection schedule, Section 43 of the General Property Tax Act establishes a default collection schedule. Township and city treasurers must remit all school tax collections in their possession on the 1st and 15th day of each month. Further, township and city treasurers must account for and remit 90% of school tax collections in their possession by the last day of February and transfer all school taxes on hand by April 1.

Because township and city officials may view the statutory collection schedule as inconvenient or inefficient, they may deviate from it without the district’s knowledge or consent. Absent a contractual arrangement with the school district that establishes a different collection schedule, such deviation is not legal.

School officials should be aware that Section 1613 of the Revised School Code requires a contract with a tax-collecting unit before that unit may collect summer taxes on behalf of a school district. Because the contract likely contains its own collection schedule, school officials should review it. The contract may provide a more favorable collection schedule for the district than provided by state law.

Tax-collecting officials can be subject to civil and criminal penalties for failing to timely remit collected school taxes. An official who willfully neglects or refuses to perform his or her duties under the General Property Tax Act is guilty of a misdemeanor and potentially liable for damages.

If your district is not receiving tax revenue on a timely basis, we recommend contacting the collecting unit’s assessor or treasurer to inquire about the delay and, if necessary, bring the statutory or contractual requirements to the appropriate official’s attention. If the delay persists, we suggest contacting a Thrun Law Firm finance attorney.