Town of Milton, DE Chapter 194 Taxation

[HISTORY: Adopted by the Town Council of the Town of Milton as indicated in article histories. Amendments noted where applicable.]

GENERAL REFERENCES

Town Assessor — See Charter Section 24.

Assessment of taxes — See Charter Section 25.

Levy of annual taxes — See Charter Section 26.

Collection of revenues — See Charter Section 27.

Article I Determination of Tax Rates

[Adopted 6-2-1986 (Ch. 7, Art. 1, of the prior Code)]

§ 194-1 Determination of tax rates.

[Amended 9-9-2013 by Ord. No. 2013-04; 8-6-2018 by Ord. No. 2018-005]

A. Pursuant to Section 26 of the Town Charter, at the last regular meeting in the fiscal year immediately preceding the fiscal year in which this article was first enacted, the Town Council duly determined, assessed, fixed and/or levied taxes. In a subsequent year, the rates were duly modified by the Town Council, in compliance with the aforesaid section of the Town Charter. For applicable tax rates, please consult the currently effective Town of Milton Fee Schedule.

B. In addition to the annual assessment, the Town Manager may, at the Town Manager's option, direct the Town Assessor to prepare a quarterly supplemental list for the purpose of adding property and improvements thereon not included on the last assessment or increasing the assessed value of property and improvements thereon which was included on the last assessment. The supplemental list may be used to correct errors on the prior assessment rolls and to remove or modify any exemption from taxation applicable to property in the Town.

(1) Such supplemental list shall be prepared quarterly in each tax year. The first such supplemental list shall be certified on or before January 1 of each year; the second on or before April 1 of each year; the third on or before July 1 of each year; and the fourth on or before October 1 of each year.

(2) On the date of certification of a supplemental list, the property owners listed thereon shall be liable to pay taxes equal to the assessed value of the property multiplied by the tax rates for the then current tax year applicable to the property, reduced by 25% where the property is listed on the second supplemental assessment roll; by 50% where the property is listed on the third supplemental assessment roll; and by 75% where the property is listed on the fourth supplemental assessment roll; and the amount of such tax shall be and remain a lien on such property from the time of its certification.

(3) In the collection of said taxes, before the first day of the second month after certification, there shall be no penalty. On all taxes paid after the first day of the second month after certification, the penalties, interest, and collection charge of Section 27 of the Charter shall apply.

(4) Appeals shall be made to the Mayor and Town Council as provided in Section 25 of the Charter.

§ 194-2 Change of rates.

[Amended 8-6-2018 by Ord. No. 2018-005]

The rates may be determined, fixed, assessed, levied, altered or changed at any regular or special meeting of the Town Council as the Town Council, in its proper discretion, may determine pursuant to Section 26 of the Town Charter.

§ 194-3 Annual Town assessment.

[Amended 12-7-2009 by Ord. No. 2009-001; 4-21-2014 by Ord. No. 2014-03; 8-6-2018 by Ord. No. 2018-005]

A. The Town Assessor may adopt as the annual assessment and quarterly assessment for the Town the assessment for the real estate and improvements thereon, as compiled by the Board of Assessment of Sussex County, as authorized by Section 24(c) of the Town Charter. Alternatively, if approved by the Town Council, the Town Assessor may perform an independent, fair and impartial assessment of property subject to taxation situated within the corporate limits of the Town.

B. Regardless of whether the Town adopts the assessment by the Board of Assessment of Sussex County or performs an independent assessment, any improvement that is part of a geothermal loop heat exchange well system or wind energy system or solar energy system shall be excluded up to 100% of its value from the assessment and therefore exempt from property taxation under this article, pursuant to the limitations of this subsection. This subsection applies to any such system, regardless of how the system was acquired or is owned, including but not limited to leasing.

(1) As used in this subsection, "wind energy or solar energy system" means an energy system which converts wind energy or solar energy to usable thermal, mechanical, chemical or electrical energy to meet all or a significant part of a building's energy requirements but is an accessory use to the principal use of the building; the system is limited to the materials present solely for the purpose of collecting and converting wind energy or solar energy, including turbines, solar panels, lines, pumps, batteries, mounting brackets, framing and foundations.

(2) As used in this subsection, "geothermal loop heat exchange well system" means a sealed and pressurized loop of pipe containing a heat exchange solution, which is circulated below the earth's surface and utilizes the earth for the purpose of heat transfer, and other materials present solely for the purpose of heating or cooling.

§ 194-4 Compensation of Assessor.

[Amended 4-21-2014 by Ord. No. 2014-03]

The Town Assessor shall receive as compensation the contracted sum as authorized by Section 24(a) of the Town Charter.

§ 194-5 Just allowances for delinquent taxes.

As authorized by Section 27(e) and (f) of the Town Charter, the Town Council hereby delegates to the Town Solicitor the authority to compromise and make just allowances for delinquencies in the collection of any tax charge or fee. If suit has not been filed, such compromise and just allowances may be made only by a majority vote of Council.

§ 194-6 Interest and penalties on delinquent taxes; collection charges.

As authorized by Section 27(f) of the Town Charter, the Town Clerk is hereby directed by Council, upon expiration of 30 days next succeeding the mailing of an invoice, to add interest at the rate of 2% per month or a fraction thereof, and an additional sum of 2% as a penalty for each month or a fraction thereof. The Town Clerk is further directed to impose a collection charge of 24% of the amount of tax, charge or fee and any interest or penalty imposed therein, upon the necessity to effect collection of any delinquent tax, charge or fee.

§ 194-7 Institution of suit.

To implement Section 26 of the Town Charter, the Town Clerk may institute such suits only upon the prior direction of the majority of the members of the Council.[1]

[1] Editor's Note: Original Exhibit A, as amended, which immediately followed this section, was removed at the time of adoption of Code (see Ch. 1, General Provisions, Art. III). See now current listing of tax rates on file in the Town office.

Article II Realty Transfer Tax

[Adopted 8-20-1998 (Ch. 7, Art. 2, of the prior Code)]

§ 194-8 Definitions.

A. As used in this article, except where the context clearly indicates a different meaning:

DOCUMENT

Any deed, instrument or writing whereby any real estate within the incorporated areas of the Town of Milton, or any interest therein, shall be quitclaimed, granted, bargained, sold or otherwise conveyed to the grantee, but shall not include the following:

(1) Any will.

(2) Any lease other than those described in Subsection B below.

(3) Any mortgage.

(4) Any conveyance between corporation operating housing projects pursuant to Chapter 45 of Title 31 of the Delaware Code[1] and the shareholder thereof.

(5) Any conveyance between nonprofit industrial development agencies and industrial corporations purchasing from them.

(6) Any conveyance to nonprofit industrial development agencies.

(7) Any conveyance between husband and wife.

(8) Any conveyance between persons who were previously husband and wife, but who have since been divorced, provided that such conveyance is made after the granting of the final decree in divorce and the real estate or interest therein subject to such conveyance was acquired by the husband and wife, or husband or wife, prior to the granting of the final decree in divorce.

(9) Any conveyance between parent and child or the spouse of such child.

(10) Any conveyance to a trustee, nominee or straw party for the grantor as beneficial owner; for the beneficial ownership of a person other than the grantor where, if such person were the grantee, no tax would be imposed upon the conveyance pursuant to this article; or from a trustee, nominee or straw party to the beneficial owner.

(11) Any conveyance between a parent corporation and a wholly owned subsidiary corporation, provided that such conveyance is without actual consideration.

(12) Correctional deeds without actual consideration.

(13) Any conveyance to or from the United States or this state or to or from any of their instrumentalities, agencies or political subdivisions and the University of Delaware.

(14) Any conveyance to or from a corporation or a partnership where the grantor or grantee owns stock of the corporation or an interest in the partnership in the same proportion as his interest in or ownership of the real estate being conveyed; provided, however, that this Subsection A(14) shall not apply to any distribution in liquidation or other conveyance resulting from the partial or complete liquidation of a corporation, unless the stock of the corporation being liquidated has been held by the grantor or grantee for more than three years, provided, further, that this Subsection A(14) shall not apply to any conveyance from a partnership to its partners unless the partners' interest in the partnership has been held for more than three years.

(15) Any conveyance by the owner of previously occupied residential premises to a builder of new residential premises, when such previously occupied residential premises are taken in trade by such builder as a part of the consideration from the purchaser of new, previously unoccupied premises.

(16) Any conveyance to the lender holding a bona fide mortgage, which is genuinely in default, either by a Sheriff conducting a foreclosure sale or by the mortgagor in lieu of foreclosure.

(17) Any conveyance to a religious organization or other body or person holding title to a real estate for a religious organization, if such real estate will not be used following such transfer by the grantee, or by any privy of the grantee, for any commercial purpose; provided, however, that only that portion of the tax which is attributable to and payable by the religious organization or other body or person holding title to real estate for a religious organization under 30 Del. C. § 5402 shall be exempt.

(18) Any conveyance to or from a volunteer fire company, organized under the laws of this state; provided, however, that only that portion of the tax which is attributable to and payable by the volunteer fire company under 30 Del. C. § 5402 shall be exempt.

(19) Any conveyance without consideration to an organization exempt from tax under § 501(c)(3) of the Federal Internal Revenue Code [25 U.S.C. § 501(c)(3)] or exempt from Town ad valorem real estate taxes.

TRANSACTION

The making, executing, delivering, accepting or presenting for recordation of a document.

VALUE

In the case of any document granting, bargaining, selling or otherwise conveying any real estate or interest or leasehold interest therein, the amount of the actual consideration thereof, including liens or other encumbrances thereon and ground rents, or a commensurate part of the liens or other encumbrances thereon and ground rents where such liens or other encumbrances and ground rents also encumber or are charged against other lands, tenements or hereditaments, provided that where such documents shall set forth a small or nominal consideration, the value thereof shall be determined from the price set forth in, or actual consideration for, the contract of sale or lease, or, in the case of a gift or any other document without consideration, from the actual monetary worth of the property granted, bargained, sold or otherwise conveyed, which, in either event, shall not be less than the amount of the highest assessment of such lands, tenements or hereditaments for local tax purposes.

[1] Editor's Note: See 31 Del. C. § 4501 et seq.

B. The term "document" defined in Subsection A of this section shall include the following:

(1) Any writing purporting to transfer a title interest or possessory interest for a term of more than five years in a condominium unit or any unit properties subject to the Unit Property Act (25 Del. C. § 2201 et seq.)

(2) Any writing purporting to transfer a title interest or possessory interest of any lessee or other person in possession of a real estate owned by the state or other political subdivision thereof.

(3) Any writing purporting to assign or transfer a leasehold interest or possessory interest in residential property under a lease for a term of more than five years. For this purpose, the term "residential property" means any structure of part of structure which is intended for residential use, and excluding any commercial unit subject to tax under 30 Del. C. § 2301(a)(6), relating to commercial lessors.[2]

[2] Editor's Note: Amended at time of adoption of Code (see Ch. 1, General Provisions, Art. III).

C. In determining the term of a lease under Subsection B above, it shall be presumed for the purpose of computing the lease term that any rights or options to renew or extend will be exercised.

D. For the purposes of the definition of "value," in the case of a document described in Subsection B, under which the consideration is based whole or in part on a percentage of the income or receipts to be received in the future, actual consideration shall include the amounts actually received under such percentage of income or receipts provision; provided, however, and notwithstanding any other provisions of this article, that the tax imposed by this article shall be due and payable to the Town within 30 days after date such amounts become due and payable under the agreement.

E. Conveyance of interest.

(1) Except as provided in Subsection E(1) and (2), where beneficial ownership in real estate is transferred through a conveyance or series of conveyances of intangible interests in a corporation, partnership or trust, such conveyance shall be taxable under this article as if such property were conveyed through a duly recorded document as defined in this section, and subject to the exemptions contained therein, except those exemptions contained in Subsection A(10) and (14) of the definition of "document."

(2) No bona fide pledge of stock or partnership interest as loan collateral nor any transfer of publicly traded stock or publicly traded partnership interest shall be deemed subject to taxation under this subsection.

(3) Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this subsection own 80% or more of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under this subsection; where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this subsection own less than 80% of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under this subsection unless, under regulations promulgated by the Secretary of Finance of the State of Delaware, such transfer or transfers are properly characterized as a sale of real property. Such characterization shall take into account the timing of the transaction; beneficial ownership prior to and subsequent to the conveyance or conveyances; the business purpose of the corporation, partnership or trust, and such other factors as may be relevant.

§ 194-9 Rate of tax; when payable; exception.

A. Every person who makes, executes, delivers, accepts or presents for recording any document, except as defined or described in § 194-8B herein, or in whose behalf any document is made, executed, delivered, accepted or presented for recording, shall be subject to pay for and in respect to the transaction or any part thereof a realty transfer tax at the rate of 1 1/2% of the value of the property represented by such document, which tax shall be payable at the time of making execution, delivery, acceptance or presenting of such document for recording. In the absence of any agreement to the contrary, the burden for paying the tax shall be apportioned equally between the grantor and the grantee.

B. No tax shall be imposed on conveyances when the actual value of the property being transferred is less than $100.

C. Every person who makes, executes, delivers, accepts or presents for recording any document, defined or described in § 194-8B herein, or in whose behalf any such document is made, executed, delivered, accepted or presented for recording, shall be subject to pay for and in respect to the transaction or any part thereof a realty transfer tax at the rate of 1 1/2% of the value of the property represented by such document, which tax shall be payable as follows:

(1) The tax on the consideration attributed to the first year of the term shall be payable at the time of making, execution, delivery, acceptance or presenting of such document for recording.

(2) The tax on the consideration attributed to each successive year of the term thereafter shall be paid annually to the Town.

§ 194-10 Transfer by broker.

Where there is a transfer of a residential property by a licensed real estate broker, which property was transferred to him within the preceding year as part of the consideration for the purchase or other residential property, a credit for the amount of the tax paid at the time of the transfer to him shall be given to him toward the amount of the taxes due upon transfer. If the tax due upon the transfer from the licensed real estate broker is greater than the credit given for the prior transfer, the difference shall be paid, and if the credit allowed is greater than the amount of the tax due, no refund shall be allowed.

§ 194-11 Payment from proceeds of judicial sale.

The tax imposed by this article shall be paid from the proceeds of any judicial sale of real estate as part of the costs of such sale and of the writ upon which the sale is made before any such proceeds are applied toward any obligation, claim, lien, judgment or estate, unless such transfer is exempt pursuant to the provisions of § 194-8A(16) herein.

§ 194-12 Affixing of notation of payment.

The payment of the tax imposed by this article shall be evidenced by a notation of payment on the document. The collector shall note on the document the payment of the tax, the amount of payment, the date of payment and the initials of the person receiving payment and his office. Such notation shall be conclusive evidence of payment as to any subsequent purchaser relying thereon.

§ 194-13 Collector of tax.

The Recorder of Deeds, in and for Sussex County, or such other person or entity as determined by the Town shall be the collector of the tax imposed by this article and shall be provided with an official stamp to be used to indicate on the document the tax paid.

§ 194-14 Payment of tax prerequisite to recording of document.

No document upon which tax is imposed by this article shall be recorded in the office of the Recorder of Deeds, in and for Sussex County, unless proof of the payment of the transfer tax appears on the document.

§ 194-15 Statement of value required for recording.

Every document, when lodged with or presented to the Recorded of Deeds, in and for Sussex County, for recording shall set forth therein as part of such document the true, full and complete value thereof or shall be accompanied by an affidavit executed by a responsible person connected with a transaction showing such connection and setting forth the true, full and complete value thereof or the reason, if any, why such documents is not subject to tax under this article.

§ 194-16 Unlawful acts; violations and penalties.

A. It shall be unlawful for any person to:

(1) Make, execute, deliver, accept or present for recording or cause to be made, executed, delivered, accepted or presented for recording any document without the full amount of tax thereon being duly paid.

(2) Fraudulently affix to any document upon which tax is imposed by this article any evidence of payment of the realty transfer tax, when the full amount of tax thereon has not been duly paid.

B. Any person who violates this section shall be deemed to be guilty of a misdemeanor and, upon conviction in a court of competent jurisdiction, shall be fined not more than $500 and imprisoned for not more than one year, or both, and in addition shall be required to pay to the Town any unpaid transfer tax plus accrued interest.

§ 194-17 Failure to pay tax; determination; redetermination; review; interest.

A. If any person shall fail to pay any realty transfer tax imposed by this article for which he is liable, the Town may make determination of additional tax and interest due by such person, based upon information within his possession or that shall come into his possession. All such determination shall be made so that notice thereof shall reach the party or parties against whom it is made within three years after the recording of the document.

B. Promptly after the date of such determination, the Town shall send, by registered mail, with return receipt requested with postage prepaid, a copy thereof to the person against whom it is made.

C. Within 90 day after the date upon which the copy of any such determination of additional tax was mailed, such person may file with the Town a petition for redetermination of such tax. Every petition for redetermination shall state specifically the reason or reasons which petitioner believes entitles him to such redetermination, and it shall be supported by affirmation that it is not for the purpose for delay and that the facts set forth therein are true and correct.

D. It shall be the duty of the Town within six months after the date of any determination, to dispose of any petition for redetermination. Notice of the action taken upon any petition for redetermination shall be given to the petitioner promptly after the date of redetermination by the Town.

E. Any person shall have the right to review, by a court of competent jurisdiction, any determination made by the Town pursuant to this section.

F. Interest shall be added to any determination of additional tax and shall be computed at the statutory rate from the date any transfer tax shall have been paid to the date paid.

§ 194-18 Refunds.

A. Upon determination that any tax collected pursuant to this article has been collected improperly, the Town shall refund to the taxpayer the sum so paid with interest from the date of payment at the statutory rate.

B. When the Town disallows a claim for refund, in whole or in part, the disallowance shall become final 90 days from the date when notice of disallowance is mailed to the taxpayer, unless within the period the taxpayer files a written protest with the Town in which he shall set forth the grounds on which the protest is based. If a protest is filed, the Town shall reconsider the disallowance. Notice of the Town's determination shall be mailed to the taxpayer by registered or certified mail. The action of the Town on the taxpayer's protest is final upon the expiration of 30 days from the date when he mails notice of his action to the taxpayer, unless within this period he seeks review of the Town's determination.

§ 194-19 Use of funds by Town.

Funds realized by the Town pursuant to this article shall be segregated from the Town's general fund, and the funds and all interest thereon shall be expended solely for capital and operating costs of public safety services, economic development programs, public works services, capital projects and improvements, infrastructure, projects and improvements and debt reduction.