This is not a bug, this is a quest.

You need to head to the north of town, just outside of town and find the thieves that stole the ceremonial items. Either kill the thieves and take the items or convince them to return the items. Then return to the mansion with the items, talk to the mayor about how worthless his guards are if they can't stop some punk kids from stealing.

At this point you should recieve an item in your back pack, it's gold bars that you can't sell.

Take those to the king and the quest will be over.

But the problem is that sometimes the flags are not set properly. Ive recently had the bug a couple of weeks ago.

I have easily played this quest 100 times, never have I been unable to finish this quest.

Different PCs, Different OS's, In Wine and other emulators as well. I have even helped other friends finish this quest. I can't reproduce this "bug". I even tried applying the hacked patches and the complete patches. Still can't make this quest fail.

I think the confusion is that you can't STEAL the taxes. They don't even appear until the side quest with the Mayor is completed.

If you are a low-int character, it will bug out every time.

Grunt at the King in Dernholm and he will send you to Blackroot. Talk to the mayor, and he blows you off. Show some initiative and kill the thieves, then talk to the mayor and he freaks out and agrees, but nothing happens.

The dialogue seems to suggest that you murdered the mayor's guards, but actually murdering them does nothing and just makes the town hostile.

Necro, but still relevant - even with UAP installed (though as others have noted, I don't think it helps), and even after correctly completing the ceremonial dagger quest for the mayor of Blackroot and getting his promise to align with Dernholm, he does not give me the "chest of gold" for the tax payment to Dernholm. I'm 100% certain I didn't sell any quest item, the mayor didn't drop the chest, the mayor doesn't have the chest on him in his pickpocket inventory, etc. etc. I go back to King Praetor and have a line saying I've brought the taxes, then he asks me to give them to him, then... nothing.

It's a bug.