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Soldiers & Sailors Civil Relief Act (SSCRA)
Chapter 6, Taxation
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Purpose and Scope

Congress intended that service personnel be given relief from strict compliance with the rules for the payment of taxes to various tax authorities. Public policy dictates that the service member should be spared the loss of his/her home, the burden of penalties for nonpayment of income taxes, and the requirement to pay a myriad of taxes to jurisdictions where he/she is situated solely because of his/her military service. In this chapter, the provisions of sections 500, 513, and 514 of the Act [50 U.S.C. App. §§ 560, 573, and 574) will be discussed.

Taxes Respecting Personalty, Money, Credits, or Realty; Sale of Property to Enforce Collection; Redemption of Property Sold; Penalty for Nonpayment; Notice of Rights to Beneficiaries of Section

Section 500

(50 U.S.C. App. § 560)

(1) The provisions of this section shall apply when any taxes or assessments, whether general or special (other than taxes on income), whether falling due prior to or during the period of military service, in respect of personal property, money, or credits, or real property owned and occupied for dwelling, professional, business, or agricultural purposes by a person in military service or his dependents at the commencement of his period of military service and still so occupied by his dependents or employees are not paid.

(2) No sale of such property shall be made to enforce the collection of such tax or assessment, or any proceeding or action for such purpose commenced, except upon leave of court granted upon application made therefor by the collector of taxes or other officer whose duty it is to enforce the collection of taxes or assessments. The court thereupon, unless in its opinion the ability of the person in military service to pay such taxes or assessments is not materially affected by reason of such service, may stay such proceedings or such sale, as provided in this Act, for a period extending not more than six months after the termination of the period of military service of such person.

(3) When by law such property may be sold or forfeited to enforce the collection of such tax or assessment, such person in military service shall have the right to redeem or commence an action to redeem such property, at any time not later than six months after the termination of such service, but in no case later than six months after the date when this Act ceases to be in force; but this shall not be taken to shorten any period, now or hereafter provided by the laws of any State or Territory for such redemption.

(4) Whenever any tax or assessment shall not be paid when due, such tax or assessment due and unpaid shall bear interest until paid at the rate of 6 per centum per annum, and no other penalty or interest shall be incurred by reason of such nonpayment. Any lien for such unpaid taxes or assessment shall also include such interest thereon.

General. Section 500 involves the sale of property resulting from tax deficiencies as well as subsequent redemption rights. Taxes include any taxes or assessment, whether special or general, due before or during the period of military service. It does not include income taxes.

Property protected. The Act specifically protects certain classes of property:

(1) personalty;

(2) money;

(3) credits; and

(4) real property owned and occupied for dwelling, professional, business, or agricultural purposes by a person in military service or his dependents at the commencement of his/her period of service and still occupied by his dependents or employees.

Realty. Protection of realty under this section has been the subject of court interpretation. Courts have strictly construed the limitation on the use of the property by the service member. Where the service member never resided on the land, farmed it, raised livestock on it, or leased it to another for agricultural purposes, but merely inspected it periodically for trespassers, a court held that the service member was not in "occupation of the land for agricultural purposes" and, therefore, not protected against the sale for nonpayment of taxes.

Protection provided

Sale of property. Sale of the property described above may not be accomplished to enforce the collection of taxes or assessments except with permission of the court and then only when the court determines that the military service does not materially affect the service member's ability to pay. One court held that a deed issued in violation of section 500(2) was voidable. Another court held that a grantee under such a void tax deed had no cause of action against a service member for improvements the grantee placed on the land in reliance on the deed. The grantee had been notified that a person protected by the Act owned the property.

Right of redemption. In cases where the property may be lawfully sold to satisfy taxes or assessments, section 500(3) gives the service member a liberal period of time in which to redeem the property. Whenever protected property is sold or forfeited for the collection of taxes or assessments on the property, the service member is granted the right to redeem or commence action to redeem the property. Action must begin not later than six months after termination of military service or a later date, if a greater period for redemption is authorized by the laws of the state or territory. The ability to pay need not be materially affected by military service for section 500(3) to apply. Rights under section 500(3) are absolute rights and are not subject to judicial discretion.

If relief under section 500 is inappropriate, either because more than 6 months have passed since termination of service, or because the land is not one of the limited types listed in section 500, section 205 should be examined for possible relief. Section 205 suspends the time for computing the limitation of actions during the period of service. This includes the period "for the redemption of real property sold or forfeited to enforce any obligation, tax, or assessment." Using section 205 in conjunction with section 500, greater relief may be obtained. In Le Maistre v. Leffers, the Supreme Court held that section 205 is not restricted by section 500; rather, they supplement each other.

Next page > State Taxes > Page 1, 2, 3, 4

Above Information Courtesy of United States Army JAG Corps


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