Under a practice started in 2006, New Orleans property owners who did not pay their taxes on time were also required to pay a 10% late penalty and a 9.5% penalty to cover attorney and collection fees. Civil District Judge Ethel Simms Julien ruled in early April that the penalties are unconstitutional.
The Louisiana Supreme Court already ruled in 2008 that New Orleans' system of using private attorneys to collect overdue taxes and charging delinquent taxpayers penalties and collection fees violated the constitution. Despite this ruling, the city has continued to charge penalties.
A spokesman for Mayor Mitch Landrieu's administration said the city is reviewing its legal options and continues to believe it ought to be able to recoup the costs of making sure people pay their taxes.
It's uncertain whether the city will continue to assess the penalties while an appeal of Judge Julien's decision makes its way through the courts. It's also unclear whether the city will have to refund money only to the handful of taxpayers who filed suit against the penalties or to a much larger group of taxpayers who were assessed the fees but did not file suit.