ARIZONA STATE SENATE
Phoenix, Arizona
delinquent property taxes;
interest
Changes the interest rate on
delinquent property taxes from 16 percent to prime rate plus two percent.
Background
Currently, interest on
delinquent property taxes is calculated at a fixed rate of 16 percent. In comparison, the Internal Revenue Code
determines the interest rate on delinquent and overpayment of taxes by adding two
or three percent to the federal short-term rate. Additionally, the Department of Revenue determines the interest
rate on delinquent and overpayment of taxes by adding three percent to the
federal short-term rate. The federal
short-term interest rate is set by the Secretary of Treasury and is the
interest rate used on loan contracts or debt instruments such as Treasury
bills, bank certificates of deposit or commercial paper having maturates less
than one year.
S.B. 1201 changes the
current fixed interest rate of 16 percent applied to delinquent property taxes
to a floating rate of prime plus two percent.
Prime rate is the rate charged by banks to their most creditworthy
customers.
A fiscal note has been
requested from Joint Legislative Budget Committee staff, but has not been received
Provisions
1. Changes from 16 percent to prime rate plus two percent the interest rate on delinquent property taxes.
2. Defines “prime rate” as the rate charged by banks on short-term loans as determined by the federal reserve on the first day of each month.
3. Makes a technical change.
4. Provides for a general effective date.
Prepared by Senate Staff
February