The annual D.C. government sale of properties with unpaid tax bills will be delayed at least two months as the District’s scandal-plagued tax office attempts to reduce the chances of being ripped off through the auction process.
The real property tax sale, traditionally a rite of summer for the Office of Tax and Revenue, will not be held until September, said Natalie Wilson, OTR spokeswoman.
At this time last year, the office had already advertised a list of 3,000 properties, totaling $11 million in liens, to be auctioned during the five-day event.
The holdup is another repercussion of the tax office theft, which was uncovered nearly eight months ago and resulted in more than a dozen people losing their jobs.
“The tax sale is being pushed back in order to institute controls on payments and refunds,” Wilson said.
One of the District’s key revenue-recovery vehicles, the annual sale results in the collection of tens of millions in back taxes, interest and penalties, as property owners are threatened with the loss of their real estate unless they pay up.
During the auction, participants purchase the liens of properties with taxes owed from the previous year, giving them the option of starting foreclosure proceedings later. If the owners pay the back taxes, which they usually do, the bidder gets a refund from the city plus interest, minus the $150 tax sale fee.
It is the real property refund process that former OTR employee Harriette Walters allegedly manipulated to steal more than $20 million.
Walters and her alleged conspirators were arrested last November, and follow-up investigations revealed stunning internal control failures within the Office of the Chief Financial Officer.
“We’re taking extra steps to ensure the sale goes smoothly,” Wilson said.
In the wake of the theft, Chief Financial Officer Natwar Gandhi fired numerous top aides whose responsibilities included managing the auction.
So many people were fired that no one was left to make certain the auction went forward as usual, sources close to the tax office said.
One of the new hires, Ritchie McKeithen, started as director of the Real Property Tax Administration only last week.
“I think the extra effort seems prudent especially since we want to make sure everything is OK,” said D.C. Councilman Jack Evans, chairman of the Finance and Revenue Committee.
The tax sale postponement will not affect 2008 revenues because all of the money from bidders is collected up front, Wilson said.
