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Local Tax Brawl
« on: Feb 23rd, 2005, 11:19am » |
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http://www.kansascity.com/mld/kansascity/news/10939212.htm?1c
Dropped decimal becomes a costly point of contention
By TONY RIZZO The Kansas City Star
There's a good reason it's important to dot all the i's and cross all the t's.
Or put decimal points in the right place.
A misplaced decimal point resulted in one company paying Johnson County $120,000 in taxes on a piece of industrial equipment, instead of the $1,200 the firm rightfully owed.
County officials say they do not have to pay back the money because it was the company, not the county, that made the mistake and because the company waited too long to take the proper grievance action.
The case now is in the hands of Johnson County District Judge Kevin Moriarty, who heard arguments from attorneys Friday.
Moriarty's final question to the attorneys was simply, "What's the right thing to do, and why?"
"The full amount should be refunded," said Lawrence attorney John Knox, who represents Fleet Business Credit Corp.
Kathryn Myers, assistant county attorney, asked the judge to follow the law.
"I'm very sorry for Fleet," Myers said. "But the county shouldn't have to bear the burden of its mistake."
The dispute is over a $54,589.62 industrial sander that Fleet, based in Chicago, purchased in 1999 and leased to a Johnson County company. When submitting information for tax purposes, the company mistakenly listed the purchase price at $5,458,962.
The tax on the equipment was assessed by the county at $120,369.98. The company dutifully paid the full amount before the end of 1999.
It was not until May 2000 that an agent who handled tax matters for the company notified the county of the misplaced decimal point. But according to a set of facts agreed to by both sides, it was more than two years later that the company followed up with a written grievance to the county's Board of Tax Appeals.
The board dismissed the grievance in December 2002 because Kansas law allows it to rectify errors made only by the county, not by a taxpayer.
Fleet then sued in Johnson County District Court.
Myers said that the company could have gotten the money back if it had filed the tax under protest.
Moriarty questioned how someone could protest a mistake if they did not even know a mistake had been made.
He asked Myers whether every taxpayer in Johnson County should file their taxes under protest "just to cover all the bases."
"A lot of them do," she replied.
Myers said that if the company had not waited more than two years to file the formal grievance, the county might have refunded the money, although she conceded, "I can't say for sure."
"Why they waited two years is beyond me," she said.
Ordering a refund now would pose a hardship for the county because part of that money has been distributed to other entities such as cities and school districts. "We would have to eat the whole thing," Myers said.
Myers also said state law did not allow the county to offer the company a credit for future tax payments.
Knox told the judge that he did not know why the company did not follow up after discovering the error.
"It was a mistake, no doubt about it," he said.
Knox said that perhaps after the company notified the county of the error in 2000 it simply thought the county would do the right thing.
Although Fleet is a subsidiary of a large national company, he said, its rights should not be any different than those of any other taxpayer. And although the amount of money might not be great for a company that size, Knox said that "120,000 bucks is 120,000 bucks."
Moriarty took the matter under advisement and said he would issue a ruling soon.
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