Can A Court Stay Payment of Property Taxes During a Divorce?

Full Question:

My mother filed a Divorce Action Feb 5, 1988 in PA. The action was bi-furcated and a divorce decree was entered Feb 22, 1989. Property settlement /equitable distribution occurred Oct 25, 2005. The Northampton County Court of Common Pleas held 650 properties in 42 counties 'in custodia legis' and The Court Ordered that the properties were 'stayed' from real estate tax sales in Northampton County. The properties will be put up for tax sales this September 2010. Under the Pennsylvania Divorce code The Court has Equity Powers which gave it authority to stay the Tax Sales because of econmic hardship during litigation to preserve the assets of the parties. 150 parcels were sold, 400 properties were let go during the litigation. I paid $750,000.00 in legal fees, $200,000.00 in water bills to the City of Easton during the litigation and $350,000.00 in real estate taxes after the litigation settlement on Oct 25, 2005. Many properties were 'let go' because the taxes accrued and exceeded their market value. There are nine properties in Easton that have delinquent taxes due in the amount of approximately $400,000.00. Since the PA Divorce Code allowed authority for the Stay Order, is there any precedent or other doctrine whatsoever to allow tax relief here? Whether or not PA can allow relief for taxes during litigation when a Court Ordered Stay allowed under PA Divorce Code Rules deferred the taxes? Can the said relief extend only to penalties and interest and not to the principal property taxes?
05/23/2010   |   Category: Taxes   |   State: Pennsylvania   |   #22198

Answer:

The answer will depend on the wording of the court order. It would be a matter for a higher court to review the legality of the court order. While the court has powers to prevent the dissipation of marital assets and can order the sale of property to be made to facilitate division of assets, enjoining another branch of government from tax collection may raise separation of powers issues. Actual separation of powers is achieved when the power which may raise taxes does not have the last word on how to allocate tax revenues. The U.S. government has a partial separation of powers. It distinguishes between three groups. The executive, the legislative, and the judicial. The legislative branch has the ability to enact laws. The executive branch has the ability to see those laws enforced. Tax collection falls under the executive branch. The judicial branch has the ability to decide the liability of a party under the laws.

Please see the following PA statutes:

RULE 3183. STAY OF EXECUTION. SETTING ASIDE EXECUTION

(a) Execution shall be stayed as to all or any part of the property of
the defendant

(1) upon written direction of the plaintiff to the sheriff;

(2) upon a showing of exemption or immunity of property from execution;

(3) upon a showing of a right to a stay under the provisions of
an Act of Congress or an Act of Assembly.

(b) Execution may be stayed by the court as to all or any part of the
property of the defendant upon its own motion or application of any party
in interest showing

(1) a defect in the writ or service; or

(2) any other legal or equitable ground.

(c) In an order staying execution the court may impose such terms and
conditions or limit the stay to such reasonable time as it may deem
appropriate.

(d) The court may on application of any party in interest set aside the
writ or service

(1) for a defect therein; or

(2) upon a showing of exemption or immunity of property from
execution; or

(3) upon any other legal or equitable ground.

(e) All objections by the defendant shall be raised at one time.

(f) After the termination of a stay, execution may proceed without
reissuanee of the writ.

72 P. S. § 3310-211. Authority to remove lien

The secretary shall remove the lien on any property and shall promptly
notify the property owner that the lien has been removed if any of the
following apply:

(1) the debt which underlies the lien has been otherwise satisfied;

(2) removal of the lien will facilitate the collection of the
outstanding debt; or

(3) the taxpayer has entered into an agreement under section 205[fn1]
to satisfy the outstanding debt by means of installment payments and
such agreement provides for the removal of the lien.