Wise County is faced with paying back more than half a million dollars in sales tax to the state comptroller’s office, but a 15-year payment plan is in the works.
The county was notified in January that it would be required to pay the Texas Comptroller of Public Accounts $639,000 due to an overpayment of taxes by a business from July of 2005 until 2008.
County Attorney James Stainton told commissioners Monday the big bill came as a surprise.
“So what I did was start researching why we got this bill,” he said.
He explained that the county receives a half-cent for every sales tax dollar paid in Wise County.
“We had a taxpayer, and don’t ask me who because I’m covered by a confidentiality agreement and so is Ann [McCuiston, county auditor] and so is everybody else in the county,” he said. “But we had a very large taxpayer that spent a lot of money in the county, and we got the benefit of the comptroller’s refunds, but (the company) overpaid a substantial amount of taxes. They submitted a refund, the comptroller audited the refund and sent us a bill.”
The company submitted the refund request in 2009, and according to Stainton, “due to the nature and size, it took that long to get it back to us, and that’s why we’re here. The comptroller has already refunded the money to the business, and now the county must pay back the comptroller.
“The question was, ‘How do we pay this back?’ he said. “It took us nine years (from the first overpayment), and we didn’t get any notice.”
In researching the issue, Stainton was also told the same business has submitted three other refund requests, which could total $930,000, but he told the Messenger last week that the amount could change upon completion of the audit.
He said the business’ original request was for a $1 million refund, but the state lowered it to $639,000 after conducting the audit.
The final three bills will likely be received sometime between November 2014 and February 2015.
In the meantime, Stainton will finalize, with the approval of county commissioners, a 15-year payment plan with the comptroller’s office. He said the agency’s proposal includes monthly payments of $9,000, the first of which would be due in October 2014. They would be interest-free.
Between 2010 and 2013, the county averaged $357,000 per month in sales tax collections. The “payment” will be taken off the top of the county’s monthly receipts.
Leon Johnson with Southwest Securities, who also serves as the county’s financial adviser, said he felt like this was the best approach.
“(Stainton) has gotten you an option to where you can pay this off over 15 years,” he said. “If we pay it off over time, we know how much it impacts our taxes. If we continue and can get growth, the additional revenue will cover this.
“… we can’t think why it wouldn’t be best to let them take it out,” he said. “Our thought would be to let them take it out based on an agreed upon schedule.”
Johnson complimented the county on working to improve its bond rating and said bond attorneys have confirmed that this will not impact the rating.
McCuiston mentioned that if the county had been notified of the audit when it started in 2009, they could have been making financial plans for the payback.
“It’s the notification process that needs to be fixed,” she said.
Stainton said 65 jurisdictions were affected by this business’ refund request and none of them were notified prior to receiving the first bill.
“There’s no provision for it in the law,” he said.
Stainton said Rep. Phil King has indicated that he plans to propose legislation that would require entities be notified of large, pending paybacks.