If no redemption occurs in 5 years, the premium becomes part of which entity?

Study for the Tax Collection Exam with flashcards and multiple choice questions, each with hints and explanations. Get ready for your exam!

Multiple Choice

If no redemption occurs in 5 years, the premium becomes part of which entity?

Explanation:
In a tax sale, the winning bidder may pay a premium above the delinquent tax amount to secure the lien. That premium is treated as revenue of the local government that issued the lien. If no redemption occurs within the statutory redemption period (five years in this case), the municipality keeps the premium as part of its tax-collection proceeds. It doesn’t go to the state or county, and “redeemed funds” isn’t applicable because redemption did not happen. This is why the premium becomes part of the municipality.

In a tax sale, the winning bidder may pay a premium above the delinquent tax amount to secure the lien. That premium is treated as revenue of the local government that issued the lien. If no redemption occurs within the statutory redemption period (five years in this case), the municipality keeps the premium as part of its tax-collection proceeds. It doesn’t go to the state or county, and “redeemed funds” isn’t applicable because redemption did not happen. This is why the premium becomes part of the municipality.

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