A New York bill would authorize local governments to enact a moratorium on tax foreclosures and tax lien sales to aid struggling taxpayers during the pandemic.
S. 8107, introduced January 25 by Sen. Cordell Cleare (D), would allow any village, town, city, school district, or county to pass a local law or resolution to place a moratorium on all tax foreclosures and tax lien sales for up to five years after the COVID-19 covered period.
Under the bill, the COVID-19 covered period is from March 7, 2020, until the provisions that have closed or restricted public and private businesses and have postponed or canceled gatherings of individuals are no longer in effect. The definition refers to all executive orders that have implemented these restrictions and permits the covered period to be extended by future executive orders.
According to the bill’s sponsor memorandum, the bill would provide local governments with the flexibility to place the moratorium because many taxpayers have experienced financial troubles resulting from job losses and business closures during the pandemic.
“Some taxpayers cannot afford to pay their taxes, and this would provide local governments the option to allow them to stay in their homes,” according to the memo.
The bill has been referred to the Senate Local Government Committee and would take effect immediately if enacted.
“The bill makes sense from a policy perspective, as many people, including seniors and homeowners of color, have arrears due to COVID,” Cleare told Tax Notes. She also noted that the lien sale process in New York City has been flawed and was delayed repeatedly in 2020 and 2021.
The statewide moratorium on tax lien sales and foreclosures that was extended in September 2021 by Gov. Kathy Hochul (D) expired January 15. New York City also held its tax lien sale on property taxes and charges December 17, 2021, despite calls from Attorney General Letitia James (D) to delay it.