In 2014, Uri Rafaeli underpaid his property taxes to Oakland County, Michigan by $8.41.In response to the underpayment, the county seized his property, auctioned it off and pocketed nearly $24,500 in profit.
“I had made an error, inadvertently underpaying my 2011 property taxes by $500. Once I learned about the mistake, I paid what I owed and thought that was the end of it. Besides that initial oversight, I paid my taxes on time and in full each year.
Unbeknownst to me, however, the interest on that overdue tax liability kept running while my check was in the mail, which left me with an outstanding tax debt — of $8.41. Based on that piddling sum, Oakland County officials swooped in and foreclosed on my property in 2014. Adding insult to injury, the county swiftly moved to sell the property at auction to a private investor, evicting the tenants who lived in the home, for the grand total of $24,500 — substantially less than its value. The county kept it all. And I was left with nothing, all owing to an overlooked debt of $8.41.”
Reason.com spoke to Christina Martin, an attorney with the Pacific Legal Foundation, a nonprofit law firm now representing Rafaeli and other homeowners in a class-action lawsuit that will go before the Michigan Supreme Court this month.She says “Michigan is currently stealing from people across the state.Counties have been authorized to take not just what they are owed, but to take people's life savings."
Rafaeli's attorneys estimate there have been more than 100,000 properties—along with the "entire equity in them"—that have been taken by Michigan counties since 2002.
They says “in thousands of instances each year, the proceeds for a given property sold at auction far exceed the delinquent tax amount and are far less than a delinquent taxpayer's equity in the property.This results in millions of dollars in surplus proceeds and equity for the counties and tax sale purchasers."
Rafeli writes “Government should not be able to take an entire home as payment for an $8 debt. And when a county does foreclose on a home to collect a tax debt, it should have to sell it for a fair price and refund the extra profits after collecting the debt, penalties, interest, and costs... My great hope is that in fighting back, I will not only achieve justice for myself, but also for others who have been victimized by Michigan’s corrupt tax law. It’s unlikely I’ll ever fully recoup the financial losses I suffered as a result of this event. But if we can protect other working people, families and retirees from suffering a similar fate, I’ll still consider that a moral victory.”