It appears the city of Bridgeport may have to pay back more than $650,000 in sales taxes due to overpayment by a business over the span of three years – beginning almost nine years ago.
However, city officials aren’t content with the minimal information provided and will attempt to collect more data before footing the bill.
At its meeting last week, the city council authorized staff to seek additional information from the Texas Comptroller of Public Accounts on the business and how the overpayment occurred.
Earlier this month, City Administrator Brandon Emmons received a letter from the comptroller notifying him the city had been overpaid a total of $659,342.09 in city sales and use taxes between July 2005 and January 2008.
According to the comptroller’s office, the overpayment was the result of a business that filed a refund claim for taxes they paid to their vendors in error, as well as an audit assessment by the comptroller’s office.
The comptroller validated the claim and refunded the net amount. Consequently, the city must now repay the state through one of the following options:
- full reimbursement by check. If the city chooses this option, the amount would be reduced by 2 percent, thus the city would actually repay $646,156.04.
- apply all monthly sales and use tax collections to the overpaid amount until it has been repaid.
- arrange a payback agreement where a monthly deduction is made from the monthly sales and use tax allocation until the amount is paid. If the city chooses this option, it would have up to four years before fees and penalties are assessed.
“There is a fourth scenario that isn’t listed on this that may not save us from having to pay the money, but it at least might give us a little more information on what the business was and how it occurred and when it actually occurred,” Emmons said.
Under that option, the city has 90 days to petition the comptroller’s office for all available sales tax returns and reports that relate to the refund.
“The reports are confidential so you can’t discuss them in open session … but as a council, you can look at that and find out when the errors occurred,” Emmons said.
According to the city’s attorney, Rob Allibon, there is a four-year “look-back provision” in the tax code. Any person or entity who wants to request a refund from the comptroller has to do it within four years.
“What’s really curious here is that this request goes back to 2005,” Allibon said. “That’s a lot more than four years ago. That’s got me scratching my head as to how this all came about … If it’s taken the comproller’s office that long to investigate and come up with their conclusions and report, maybe it all times out … But that’s a long gap.”
Aside from the fee the city may be charged for copies of the information, Allibon called pursuing the fourth option a “no-brainer.”
“At least we can try to make some sort of determination for a basis to challenge or object to what they are asking us to do,” he said. “Without the data we have no way of knowing any of that … Let’s get that information in, evaluate it and then we can decide are we ready to try to negotiate or does it look like we’re just going to have to do this.
“I don’t want everyone to get their hopes up that we’ll necessarily find a way to object … Again, we won’t know until we get some information on it.”
Should officials find no premise for a challenge, repaying the amount should not have an immediate impact on the city – “as long as our sales tax revenue continues to remain steady like they are,” Emmons said.