Summary

On demand penalty and interest when enabled and setup allows SmartFusion to calculate penalty and interest on demand by either a date on the screen or the current date depending on process/report. It is not a direct replacement for the manual processes for penalty and interest currently in the application so before it is enabled and turned on verification is required it will meet the needs of the customer. There are global settings as well as tax year settings to allow for a wide range of setups.

How to enable

On demand penalty and interest is an interface in the license file. It can be turned on by using the Support Tools application. Please verify you are running the latest version of Support tools. The interface is named Tax INT/PEN on Demand.

How to turn on

Even if the interface is enabled in the license file on demand penalty and interest needs to be turned on. This is done in the System File (Tax Collection | Parameters | Tax Collection System File. Under the General Settings section there is a tab for Penalty & Interest. There is a drop down named Penalty & interest calculation. When this is set to On Demand it is turned on.

What is needed to setup On demand Penalty and Interest

After enabling the interface and turning on the options and configuring the Tax Collection System Settings you will need to create Penalty Schedule and then configure the Tax Year Penalty Schedule and Interest Schedule.

How Penalty is Calculated

When the penalty schedule is setup for a tax year the Date Valid To is the last date the schedule can be considered to be used. This is based on the setup as well as information on the bill. It is possible for bills in a tax year to use multiple schedules.

A blank Tax Type means the schedule line can be considered for all tax types. When searching for a potential match we first will search for a matching tax type and then a match without a tax type.

Date Valid To can also be blank which means it does not expire. We will first search for lines that contain dates before looking for one that does not.

The first step is computing the date to determine what schedule can be considered. We will call this ScheduleDate throughout this process.

ScheduleDate is calculated by taking the bill or due date from the bill (This is determined by the setting in the System File) and adding the number of days from the penalty section of the tax year.

  • The first items done are scenarios that would make the penalty be zero are checked.
    • Bill is paid
    • Bill is flagged as omit penalty
    • Valid partial payment agreement is in place
    • Exclusion based on homestead setup and exemptions on the bill
    • Bill has met minimum balance subject to penalty
    • If penalty calculation method is amount and a penalty has already been applied to the bill

If a bill is marked as as bankrupt(Bankruptcy Date has a value) all calculations and balances are used up to that date.

The next step is to determine what schedule will be used.

How is it determined which penalty schedule is used for the calculation

This can be broken down into multiple steps.

  • Schedules that have a tax type that match the tax type of the property associated with the bill or a blank tax type and either have a blank Date Schedule Valid To or a where the Date Schedule Valid To is greater or equal to the ScheduleDate. Any setups that have a date prior to this are considered expired and invalid.
  • A match is then looked for in the following order
    • matching tax type and a Date Valid To equal or greater than the ScheduleDate
      • If a match(s) is found the record with the earliest date is selected
    • matching tax type and no Date Valid To
    • blank tax type and a Date Valid To equal or greater than the ScheduleDate
      • If a match(s) is found the record with the earliest date is selected
    • blank tax type and no Date Valid To

If a valid schedule has been found it will then do the calculation. The number of days of the line added to the ScheduleDate will be referred to as LineDate below.

  • Determine the last date penalty has been applied. If any penalty has ever been applied the date is available on the detail screen of the bill.
  • LineDate is greater than the last date penalty was applied to the bill and the LineDate is before or on the date we are calculating the penalty to.
  • All lines that fit the criteria and will be calculated based on options setup in the system file
  • After the calculation if the minimum amount from the system file is not met the minimum amount is the penalty.

Calculation exceptions for penalty

If a bill is a homestead bill there is the potential for the calculation to change. This all depends on the setting in the tax year for the bill. The Setting name is Homestead only penalty exemption. The 3 choices are Ignore, Yes, No

  • Ignore - The penalty exemption is not used
  • Yes - The penalty exemption is used in all instances
  • No - The penalty exemption is only used on bills under the amount specified for the Homestead only penalty exemption amount it will reduce the amount subject to penalty by that amount (which will make the penalty zero).

When using the yes option the penalty is calculated with the exemption amount and without and the lower amount is used.

Examples

How Interest is Calculated

When the interest schedule is setup for a tax year the End Date is the last date the line is the schedule is valid to. This is based on the setup as well as information on the bill. Using multiple lines to compute interest is possible.

The first step is computing the date to determine what lines in the schedule can be considered. We will call this ScheduleDate throughout this process.

ScheduleDate is calculated by taking the bill or due date from the bill (This is determined by the setting in the System File) and adding the number of days from the interest section of the tax year. This is where the first month starts of interest. The day of this date is important as well as the interest will always be calculated on this day in the upcoming months. If the day does not exist in the month it is the last day of the month.

The second step is determining how the months are calculated. This is setup in the system file. Options available are Standard End of Month and Georgia County Tax. This has to do with how dates are calculated when the due date falls on a day which not every month contains

Standard End of Month

Due date on bill is 11/30/2016 and interest starts one day after.  The dates would be as follows

12/1/2016
1/1/2017
2/1/2017
3/1/2017
4/1/2017
5/1/2017
6/1/2017
7/1/2017
8/1/2017
9/1/2017
10/1/2017
11/1/2017
12/1/2017
Georgia County Tax 

Due date on bill is 11/30/2016 and interest starts one day after.  The dates would be as follows

12/1/2016
12/31/2016
1/31/2017
3/1/2017
3/31/2017
5/1/2017
5/31/2017
7/1/2017
7/31/2017
8/31/2017
10/1/2017
10/31/2017
12/1/2017
12/31/2017
bill date is 10/16/2017
1 day in the tax year until due so 10/17/2017

Will be calculated to 1/17/2018.

This we generate 4 months of interest

The first items done are scenarios that would make the interest be zero are checked.
Bill is paid
Bill is flagged as omit interest
Valid partial payment agreement is in place
Exclusion based on homestead setup and exemptions on the bill
Bill has met minimum balance subject to penalty
Tax type is flagged to not calculate interest

If a bill is marked as as bankrupt(Bankruptcy Date has a value) all calculations and balances are used up to that date.

How is it determined which interest line(s) is used for the calculation

A blank End Date means the current line has no end date.

Step 1

  • All lines that have an End Date that is greater or equal to the last date interest has been paid (this is located on the bill) or do not have an End Date.
    • We also create a ComputedEndDate which is either the EndDate or if the EndDate is blank is the max date

Step 2

From there we find lines that

  • The ComputedEndDate is before or equal to the calculation date
  • End Date has a value and lines from Step 1 are found where the ComputedEndDate is equal or less than the ComputedEndDate of the current line
  • End Date is blank and no lines from Step 1 where an End Date is provided and have an End date greater than the date to calculate to
  • We order the lines based on the ComputedEndDate

Step 3

  • We take all lines found except if we have more than no lines where the ComputedEndDate equal to or less than the date we are caluclating to for which we only take the first line.

Step 4 For each line found

  • Figure out the date to compute to which if the ComputedEndDate before or equal to the date to calcualte to we use the ComputedEndDate else we use the date to calculate to.
  • Compute the number of months based on the last date interest was applied which is either from the bill or the ScheduleDate or the ComputedEndDate from the previous line if multiple lines need to be computed

After the calculation if the minimum amount from the system file is not met the minimum amount is the interest.

MyGovHub

If a customer is using On Demand Penalty and Interest and is also set up for MyGovHub, all necessary settings related to On Demand P&I will automatically be synced to MyGovHub. NOTE: There is no setting in MyGovHub to enable or disabled on demand P&I - if On Demand P&I is enabled in SF, it will be enabled in MyGovHub as well. Depending on settings for the transaction codes (Subject to penalty/Subject to interest), the Interest and Penalty will each either display their values or 0.00.

If On Demand P&I is enabled, MyGovHub users should see the penalty and interested reflected on the following screens:

  • Dashboard
  • Tax Properties
  • Tax Properties > Bill
  • Payment
  • Quick Pay