Four Installment Payment Method

Real estate tax bills will be mailed in early December like always. In the past, when you received your bill, you could pay the entire amount, or you could choose to pay in two installments: one installment due by January 31st, and one due by July 31st. Currently, when you receive your bill you can pay the entire amount by January 31st, or you can choose to pay in four installments: one due by January 31st, another by March 31st, another by May 31st, and a final installment paid by July 31st.

The biggest reason for this difference is to help property owners who otherwise might go delinquent in their payments. At least 60 municipalities in Wisconsin collect property taxes using this system of multiple installments. A study done by economists at the LaFollette School of Public Affairs at the UW-Madison showed that in those municipalities, the delinquency rate was one-half the rate for the municipalities that offered only two installments.

Not really. You can no longer pay the first installment in January and the second installment in July. The new system replaces the old system. However, nothing prevents you from paying the first two installments (or more) in December or January. If you do this, we will send you a reminder notice in May when the third installment is due. At that time you can choose to pay the third installment in May and the fourth in July, or, if you'd like, you can pay the remaining balance and be done with the 2022 taxes. It's up to you. We have created a number of different scenarios that give examples of how taxpayers might make their payments. In particular, scenarios 5 and 6 deal with this subject.

Not really. Different credits and charges are applied in different ways. For instance, if you are receiving a lottery credit for your principal residence, the entire amount of the credit reduces your first installment. Also, if you have a special charge or special assessment, the entire amount is added to your first installment. Therefore, it's typical for the first installment to be a different amount than the other installments.

If you choose to pay in installments, and then miss one of the scheduled payments, you are now delinquent and two things occur. First, you are no longer able to postpone future installments, all of the tax becomes due immediately. Second, you are charged 1% interest and .5% penalty for each month or portion of a month from February 1st. These charges are calculated on the outstanding remaining balance.

Unfortunately, if you pay less than the minimum, you will be considered delinquent. Wisconsin state statutes define what constitutes delinquency. They leave no "wiggle" room for errors that are unintentional or inadvertent. Please be careful and make sure that you are paying at least the minimum that is due.

The taxpayer follows the Four Installment Payment schedule:

First installment (due 1/31): $875. ($1,000 - $100 lottery credit - $25 of first dollar credit)

Second installment (due 3/31): $975. ($1,000 - $25 of first dollar credit)

Third installment (due 5/31): $975. ($1,000 - $25 of first dollar credit)

Fourth installment (due 7/31): $975. ($1,000 - $25 of first dollar credit)

Taxpayer varies the amount of the payments:

First installment payment on 1/31: $1,000. ($875 applied to 1st installment, $125 credited to 2nd installment).

Second installment payment on 3/31: $850. ($975 originally due reduced by $125 paid with 1st installment payment)

Third installment payment on 5/31: $975. (reverts to original schedule)

Fourth installment payment on 7/31: $975. (reverts to original schedule)

The taxpayer varies the amount of the payments:

First installment payment on 1/31: $875.

Second installment payment on 3/31: $2,925. (Taxes are now fully paid, and no further payments are necessary.)

In this example, the taxpayer forgets to pay the March 31st installment.

First installment payment on 1/31: $875.

Second installment payment on 3/31: $0.

The bill is now delinquent. The total outstanding ($2,925) comes due immediately. In addition, interest of $29.25 and a penalty of $14.63 is charged for each month of delinquency (February, March, and April). Therefore, in April, the total due is $3,056.63 ($2,925 tax, $87.75 for three months interest, and $43.89 for three months penalty.) On the first of each month, an additional $43.88 will be added to the balance until the bill is paid.

In this example, the taxpayer prefers to pay in two installments. 

First AND second installment payment on 1/31: $1,850.

Third AND Fourth installment payment on 5/31: $1,950.

Note that the taxpayer is not REQUIRED to pay the entire balance in May, but he wished to maintain his past practice of only paying twice. 

In this example the taxpayer has saved enough money to pay approximately half of the total tax bill. 

Payment of $1,850 is made by 1/31.

Payment of $975 is made by 5/31. (The large payment in January makes a March payment unnecessary.)

Payment of $975 is made by 7/31.