WA Payout Agreements

Tax bills not paid on or before the effective due date are considered delinquent. The amount of unpaid tax incurs interest and penalty. Interest typically starts with a certain percentage for the first delinquent month and accrues at a constant rate for each additional month (or portion thereof) the tax remains unpaid. Penalty charges can either follow this pattern or a flat penalty percent can be assessed.

A county treasurer office may allow a taxpayer to pay delinquent tax, penalties, and interest in periodic installments through a Payout Agreement.

PACS 9.0 offers three Payout Agreement structuring methods options:

Methods

• As of Effective Due Date
• Bond Interest Annual
• Bond Interest Annual Amortized

As of Effective Due Date Method

This method resembles the Add-on Interest method some lending and finance institutions use to calculate interest charges associated with a loan. The add-on interest method calculates the total interest charge by multiplying the entire loan amount by the interest rate, and then multiplying the total interest by the period covered by the loan. This interest charge is then added to the principal to determine the total, which is then divided by the number of payment periods to calculate the payment.

Example 1:

A $3,000 balance is to be paid in two annual installments. The annual contractual interest rate is 6%. To reach the installment amount, calculate as follows:

$3,000 * .06 * 2 = $360

The annual payments equal ($3,000 + $360) / 2 = $1,680

The method for calculating payments for a payout agreement as of the effective due date needs to include these interests and penalties.

Example 2:

The following example will use these terms:

The system creates a plan that produces even payments:

Set the due date for each individual payment.

There is no interest on the first payment. The payment for the Base Amount Due of $1,000 over a period of 10 months requires 10 monthly payments of $100. $100 is the Base Amount Due each period.

Now add the applicable interest on each payment based on the effective due date of 04/30. The first payment, due 05/15, is one month delinquent as of the effective due date. The second payment is two months delinquent and so on. The first payment incurs 1% interest, the second payment 2%, and the third payment 3%, and so on. The interest amount due is calculated using Base Amount Due * Interest which equals the Interest Due. The total Interest Due is $55.

The total Payment Due is the sum of the Base Amount Due and total Interest Due: $1,000 + $55 = $1,055

$1,055 evenly split into 10 monthly payments yields the payment amount due for each payment period: $1,055/10 = $105.50. $105.50 is the Actual Payment Due each period.

Finally, calculate the Actual Paid on Base Amount Due by dividing the Actual Payment Due by the total Payment Due, and multiply that value by 100: $105.50 / 101 = $104.455

Repeat these steps for each payment. Summing the Actual Paid on Base Amount Due should yield a total close to the Base Amount Due.

In the example above, the Number of Payments was already set in the terms. If the periodic Actual Payment Due amount is set in the terms, then the calculation is more straight forward, and starts at step six in the previous scenario.

Actual Payment Due = 105.5

Calculate the first payment under Actual Base Amount Due by dividing the Actual Payment Due by the total of 1 plus Interest: $105.50 / ( 1 + .01) = $104.455

Next, calculate the Actual Paid on Base Amount Due remaining after the first payment: $1000 – $104.455 = $895.544

Continue until the remaining Base Amount Due is zero.

Example 3

The taxpayer misses the first three payments of the schedule above and must begin with the 4th payment on 8/15/2007. Calculate the payment due as follows:

Each unpaid installment accrues 1% interest per month for the number of months delinquent. The first installment is three months delinquent, so it has accrued interest of 3%.

Multiply the Original Payment Due by the Interest to calculate the Interest Due on the delinquent payment: $105.50*.03 = $3.165

Sum the Interest Due and the Original Payment Due to reach the Current Payment Due: $105.50 + $3.17 = $108.67

Repeat the previous two steps for each delinquent payment, then sum all delinquent payments and the current payment to calculate the amount expected from the taxpayer on the current due date (08/15/2007).

In the above example, when the taxpayer starts paying on 8/15/2007, the base amount due is still $1,000 and the tax is four months delinquent when calculated as of effective due date of 04/30/2007. So, the total pay off amount due = $1,000 (1 + 0.04) = $1,040

Bond Interest Annual Method and Bond Interest Annual Amortized

Bond Interest methods resemble the Remaining Balance method often used for auto loans and mortgages. When using bond interest, we ignore the original effective due date on the tax bill (if the tax bill is in the payout agreement). Interest due on the bill is charged at the bond rate. Penalty and interest on delinquent installments are calculated as of the installment payment due date. This penalty and interest is levied upon both the interest due on the installments and the principal (the unpaid tax).

Using the remaining balance method, the bond interest charge is calculated each period by multiplying the bond interest rate by the remaining unpaid balance. Interest is not charged on what has been paid. Payment amounts decline each period because the balance on which interest calculates shrinks.

Bond Interest Annual Method:

Example 1:

Divide the Base Amount Due by the Number of Payments to reach the Principal Amount Due: $40,000 / 4 = $10,000

Multiply the Base Amount Due by the Bond Interest Rate to calculate the Bond Interest Due: $40,000 * 10% = $4,000

Sum the Principal Amount Due and Bond Interest Due to reach the Total Payment Due: $10,000 + $4,000 = $14,000

Repeat the previous three steps for each period, and note how payment amounts decline as shown in the Total Payment Due column above.

Example 2:

The taxpayer misses the first two payments and begins on the 3rd payment due date, 10/01/2006.

Calculation the total amount due including any delinquent interest and penalty on 10/01/2006 as follows:

Multiply the Base Amount Due by the Bond Interest Rate to reach the Bond Interest Due: $40,000 * 10% = $4,000

The first payment accrued delinquent interest for 24 months. At the Delinquent Interest Rate of accrual at 1% per month, this equals 24%. Multiply this Delinquent Interest by the sum of the Bond Interest Due and the Principal Amount Due to calculate the Interest Due: ($10,000 + $4,000) * .24 = $3,360

Sum the Principal Amount Due and the Bond Interest Due, and multiply that by the sum of 1 plus Delinquent Interest to reach the Total Payment Due: ($4,000 + $10,000)(1 + .24) = $17,360. This is now the total due for the first missed payment.

Repeat this for the remaining delinquent payment and the current payment to reach the Total Payment Due on 10/01/2006. This gives us $47,040.

We calculate the total pay off amount on this payout agreement as follows:

In our example, the taxpayer missed the first two payments and began on the 3rd payment. So, subtract the total paid on the principal amount as of the third payment from the original Base Amount Due to reach the remaining balance: $40,000 – $30,000 = $10,000

Then add the remaining balance to the Total Payment Due by the taxpayer on 10/01/2006 to calculate the total payoff amount: $10,000 + $47,040 = $57,040.

Bond Interest Annual Amortized Method:

This method is similar to how mortgages are structured. The payment amount for each period is the same but the proportion applied to the base amount due varies, with the remainder going to interest. Initially, a large portion of each payment goes toward the interest, but gradually larger portions go towards the base amount. The schedule is often called an amortization schedule.

Example 1:

Calculate the periodic payment as follows:

Total Payment Due per period = Bond Interest * Base Amount Due * (1+ Bond Interest) ^{[# Payments]} /

(1+ Bond Interest) ^{[# Payments]} – 1

Therefore,

Total Payment Due = (0.01 * 40000 * (1 + 0.01)⁴) / (1 + 0.01)⁴ – 1 = 12,618.83

The calculation of the payment schedule (also known as ) is as follows:

1. Multiply the Base Amount Due by the Bond Interest to calculate the Bond Interest Due: $40,000 * .1 = $4,000
2. Subtract the Bond Interest Due from the Total Payment Due to reach the Principal Amount Due: $12,618.83 – $4,000.00 = $8,618.83
3. And so on. The schedule shows that initially a large portion of each payment goes to interest, with gradually larger portions going towards reducing the base amount due.

Purpose

Use this procedure to create, define, and configure payout agreements on properties for the payment of tax, penalties, and interest in periodic installments.

Prerequisites

• In order to perform this procedure, the following user right is required:
  • Payout Agreement > Create/Edit Payout Agreement

Procedure

1. In PACS 9.0, choose Activities > Payout Agreements > New Payout Agreement.
2. In the Payout Agreement Wizard, enter criteria to specify properties to be included in the payout agreement.
3. Select the property or properties to be included and click Next.
4. Complete the following fields in the Initial Setup page of the Wizard:

   

   • Grouping

     The Single Payout Agreement option generates one payout agreement that includes all the properties on the grid.

     The Multiple Payout Agreement option generates multiple payout agreements when multiple properties are selected.

   • Agreement Type

     When the Multiple Payout Agreements option is selected as the grouping mechanism, then this Payout Agreement type code applies to all the agreements created by this procedure. This is a required field.

   • Ref ID

     If required, you can use this field to enter an internal reference number.

     Note If Multiple Payout Agreements grouping is selected, the system creates a payout agreement for each property in the list.

5. If you selected Single Payout Agreement and have multiple properties listed in the grid select Primary to designate the primary property account on the agreement. When you have completed the initial setup options, click Next.
6. On the Statements page of the Wizard, select the statements to include in the payout agreement. A statement can be expanded if you wish to view tax details on the statement. After you have selected statements, click Next.

   

   Note Only statements as a whole can be added to the agreement. When a statement is added to the agreement, all the bills that are part of the statement are automatically included on the agreement.

7. On the Penalty and Interest page of the Wizard, choose one of the following:

   

   • If you need to set up interest that will override interest currently on the bills and specify that the payment schedule will be calculated using bond interest, in the Bond Interest section, select Use Bond Interest. Then do the following:
     1. Select either Annual or Annual Amortized.
     2. Enter the bond interest percentage.
     3. Complete the Begin Date and End Date fields.

        Date after which the bond interest is not charged on the base amount due.

        Date from which the bond interest is levied upon the base amount due.

   • If you need to specify that the payment schedule is calculated as of the effective due date, select Use Effective Due Date.

     Note For more information about all of these structuring methods, please see About Payment Agreements and Methods.

8. If you need to override any interest and penalties on the bills with new interest and penalty on the grid, select Override Penalty and Interest on Bills. Then, in the Delinquent Penalty & Interest section, click Add to add new penalty and interest values to the payout agreement.
9. Click Next.
10. In the Payment Terms page of the Wizard, complete the Start Date and Payment Terms fields.

    

11. Choose one of the payment options:
    • Number of Payments

      The number of payments to be made.

    • Payment Amount

      The amount to be paid each month.

    

12. Click Calculate Payment Schedule(s) to display the number of payments and total payment amount. You can change payment options and choose Calculate Payment Schedule(s) as often as necessary before clicking Finish.
    • To view the details of a individual payments within the schedule, expand the payout ID row.
13. Click Finish to complete the payout agreement creation.

Prerequisites

• In order to perform this procedure, the following user right must be assigned to your ID:
  • Letter Processing
• A connection to the default printer is set up.

Procedure

1. Choose one of the following:
   • To print a single payout agreement letter from an individual payout agreement record, open the payout agreement record. Then choose Commands > Print Payout Agreement Letter.
   • To print payout agreement letters for multiple payout agreements, in Microsoft Word, select the PACS 9.0 Menu ribbon. Then click Letter Processing and choose Print Payout Agreement Letters.
   • To print payout agreement letters for multiple payout agreements, in PACS 9.0, choose Activities > Letter Processing > Print Payout Agreement Letters.

   

2. In the Letters section of the Print Payout Agreement Letters dialog box, set the following field:
   • Letter

     The type of letter to print.

   • Template

     A collection of letters and/or forms that can be printed as a group. The number of copies to be printed for each item in the collection can be specified.

     The template is set up in PACS.ADMIN (Tools > Letter Template Maintenance).

3. In the Letters/Template drop-down list, select the letter or template to be printed.
4. In the Print Methods section, select one of the following print methods:
   • Query

     Use the drop-down list to set the Select Query field. To validate the query, click Validate.

   • Payout Agreement IDs

     Type the relevant payout agreement IDs, separated by carriage returns.

5. If there are flex fields, in the Flex Field Value cell of each flex field, enter the data to be printed for the fields on the letter.

   

6. To start printing the letters from the default printer, click Print.

Purpose

Use this procedure to generate a report that itemizes each payment in a payout agreement schedule as well as payments that have been made.

Procedure

• Open the payout agreement. Then choose Commands > Print Schedule.

Result

The report is sent to your PACS inbox.

Purpose

Use this procedure to generate special assessment payout agreement statements, which detail the schedule and history for a specific payout agreement.

Procedure

1. In PACS 9.0, choose Activities > Payout Agreements > Generate Special Assessment Payout Statement.
2. In the Statements for Special Assessment Payout Agreements dialog box, click Add .
3. In the Special Assessment Payout Statement dialog box, select the Agreement Type and Special Assessment Agency.
4. Complete the following options as required:
   • Delinquent Payout Agreements

     To print delinquent payout agreements for payouts that have missed the number of payments specified in the Print for Payouts that have missed field, select this option. Then complete the Print for Payouts that have missed payments field.

   • Print for Payouts that have missed payments

     When you select the Delinquent Payout Agreements check box, complete this option also. The statements printed will be restricted to those that have the number of missed payments specified here.

   • Exclude Payouts with Zero due

     Exclude the payouts that do not have an amount due.

   • Effective Date

     Statements will be printed as of the date specified in this field.

     Further, the date specified here will determine which installments print on the statement and the total amount to pay as of the date entered. Any installments with a payment due date less than or equal to the date specified will be included in the statement.

5. If the statements should be printed as part of a template, which is a collection of letters and/or forms that can be printed as a group , in the Advanced Print Options section, select Print Template and choose the template.
6. To set the output settings, complete the following fields in the Output Settings section:
   • In the Format drop-down list, select the report output format.
   • In the Filename field, enter the report file name.
   • In the Description field, enter a report description.

     Note We recommend that you enter a specified description to help you identify this report later. You can display reports from the inbox after they are generated. The file name will be listed as the Subject, so a detailed description will help to better identify the report.

7. Click Preview to preview the report. Click Post to generate the report.

Purpose

Use this procedure to generate a report that reflects payments posted for the payout agreement as of a date that you specify.

Procedure

• Open the payout agreement. Then choose Commands > Print Payoff.

Result

The report is sent to your PACS inbox.

Purpose

Use this procedure to post payments submitted for a payout agreement.

Note If the bills will be delinquent on the scheduled payment date, then penalty and interest calculate on each scheduled payment even if the payment is made on time.

Procedure

1. In PACS 9.0, open the payout agreement.
2. In the Payment Schedule section, select the items to be paid. Then click Pay.

   

3. In the Payment Cart dialog box, if required, change the posting date. then click Post.
4. In the Post Payment dialog box, do the following:
5. In the Payment Information section of the Post Payment dialog box, complete the following options as required.

   

   • Change Batch

     Click this button to create a new batch, select an already existing batch, or change the current batch. The selected batch is displayed in the field to the right of this button.

   • Drawer

     Click this button to create a new cash drawer, select an already existing cash drawer, or change the current cash drawer. The default is the last drawer you selected in the current PACS session.

     The cash drawer selected will be displayed in the field to the right of this button.

   • Paid Under Protest

     Select this option if the payment is being made under protest.

   • Paid By

     The payor. To clear this field and to document who the payment is being received by without creating a new taxpayer or selecting an existing taxpayer, click the X to the right of this field.

   • Change

     Click this button to change the payor; it opens the Account Search Wizard and will allow you to choose an existing taxpayer or create a new taxpayer.

   • Amount Due

     The amount due.

     In the payment cart, this field displays the total amount due from the cart.

   • Payment Code

     Indicates the type of payment.

     • Full – The taxpayer paid exactly the amount that was owed.
     • Partial payment – The taxpayer paid less than the amount that was owed and will have to pay the rest later. The money will be distributed among the bills and fees that can be partially paid.
     • Underpayment – The taxpayer paid an amount less than what was owed, but within the allowed underpayment variance. The taxpayer will not be billed for the difference.
     • Overpayment – The taxpayer paid an amount more than what was owed, but within the allowed overpayment variance. The taxpayer will not be refunded the difference.
     • Overpayment credit – The taxpayer paid more than what was owed outside of the allowed overpayment variance.  An Overpayment Credit will be created that can later be refunded.
6. In the Amount Paid section, enter information about the tenders, one per row, used to make the payment.

   

7. To add a tender, click Add.
   • To delete a tender, select it and click Delete.
   • To edit a tender, double-click it and complete the following fields as required:
     • Tender Type

       The tender type, such as Check or Cash.

     • Amount Tendered

       The amount of the tender.

     • Ref. Number

       The reference number of the tender, such as the check number.

     • Desc. (Date, Name, etc.)

       Stores reference information of your choice. This field may be useful, for example, for storing individual payor names when there are multiple payors contributing to a payment.

     • DL Number

       The driver license number.

     • DL State

       The state in which the driver license was issued.

8. In the Amount Paid section, complete the following fields as required:
   • Credit Card

     The amount of the credit card payment.

   • Type

     The type of the credit card, as selected from the drop-down list in this field.

   • Last 4#

     The last four digits of the credit card.

   • Auth. Code

     The authorization code of the credit card.

   • CCCC

     Credit card convenience charge of 3%, if applicable.

   • Swipe

     The amount in the Credit Card field plus the credit card convenience charge (CCCC). Total amount paid.

   • Total Paid

     The total amount of payments to be posted.

     In the Payment History panel, this field reflects the sum of the amounts in the Amount Paid column.

   • Balance Due

     The balance that will remain due on the bills included in the transaction.

   • Change Due

     Change due to the payor that was paid in excess of the amount due.

9. In the Options section, select the following options as required:

   

   • Print Receipt

     If the application is configured to use a receipt printer, a receipt printer is used to print a receipt.

     Receipt printers are configured in the Workstation Configuration dialog box in PACS.ADMIN (Tools > Configure Workstation).

   • Copies

     The number of receipts to print.

   • Validate Checks

     Select this option to validate the checks with a check validator attached to your workstation.

     For information about configuring this option, see Configuring Workstation Devices.

   • Print Statement

     This option will print a tax statement for the properties and tax years included in the payment transaction. When this box is selected it will enable the As Of Date field to be used to calculate the penalty and interest on the statement.

10. Click Post to post the payment.
11. If you selected the Overpayment Credit payment code, in the Payment Distribution dialog box, specify the property or properties that should receive the credit and then click OK:

    Note If you need to select a property that is not listed, click Add to add the property to the list.

    

12. If a slip printer is configured for your workstation, after any receipts have been printed, in the Validation dialog box, use the following options as required:
    • Validate & Advance – Sends the validation line to the slip printer and advances the selection to the next row.
    • Validate – Sends the validation line to the slip printer.
13. Skip – Advances the selection to the next row.

Purpose

Use this procedure to place a payout agreement in default status when the taxpayer has missed scheduled payments.

Procedure

1. Open a payout agreement.

   

2. In the Payment Schedule section, click Default.
3. Enter comments relevant for the default. Then click OK.

Purpose

Use this procedure to place multiple payout agreements in default status at the same time for taxpayers that have missed scheduled payments.

Procedure

1. Choose Search > Payout Agreement. Then enter criteria with which to retrieve payout agreements and click Search.

   Note You can specify delinquent agreement search criteria and/or criteria for agreements that have missed a certain number of payments.

   

2. In the Payout Agreement Search Results window, select the payout agreements to default.

   Tip To select multiple agreements that are not adjacent to each other in the list, press CTRL and click the row for each agreement.

3. Right-click and choose Mass Default.

   

4. In the Mandatory dialog box, enter the comments relevant for the default. Then click OK.

Result

The status of the agreements is changed to Defaulted.

Payout agreement reports are currently being developed.