Lewis County Owes Nearly $1 Million After State’s ‘Snafu’

‘Accounting Nightmare:’ Department of Revenue Overpaid Lewis County Since 2018

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After three years of overpaying Lewis County in forest taxes, the state Department of Revenue (DOR) is now asking to rake back $989,418.

It’s the department’s “for lack of a better term, snafu,” Lewis County Treasurer Arny Davis told county commissioners this week. 

In a memo to Davis late last month, DOR Forest Tax Field Operations Manager Mark Longrie said the accounting error is the result of a technical issue with the department’s tax and licensing system, which launched in 2018.

In doling out tax revenue to 35 counties, administrative fees due to DOR weren’t deducted. Now, under state law, DOR is required to get that money back.

The timber excise tax in Washington state began in 1971, and requires timber owners to pay a 5% tax on the stumpage value of their harvested wood.

Davis pointed out that multiple counties across the state are dealing with the same issue. But the area’s “heavy involvement in timber,” he said, means Lewis County has to hand back nearly a million dollars.

It’s an “accounting nightmare,” said Budget Manager Becky Butler, describing how her office will have to track the local impacts of the payback.

“It doesn’t just hit the county general fund. It hits the county road fund, social services and veterans as well as special purpose districts,” she said.

Those special purpose districts, Butler told The Chronicle, are of particular concern. Things like the county’s fire, hospital and cemetery districts have smaller budgets that may be more impacted.

Davis recommended that the county pay back the amount in three equal chunks over the course of three years. DOR, he said, won’t collect interest and is being “fairly flexible” in allowing counties to figure out how to pay back the money.

For special purpose districts that have already set out their budgets for the near future, he said, they’ll have to figure out how to operate with less than expected, “and I don’t know any other way around that.”

According to DOR’s letter, the department “is in the process of configuring its tax and licensing system to ensure the county administrative costs are deducted before distribution time for the August 2021 distributions.”

Besides the issue of repayment, Davis remarked that the approximately $300,000 annually taken as administrative costs by DOR “appears to be a little bit excessive for what they perform, but that’s a whole other (thing).”

Comments

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Bill Serrahn

It really sounds like such a basic error by DOR that there must be some huge incompetence in that department. Of course they blame it on the computer, but a simple spreadsheet would have shown how much the counties get and the DOR fees (which are excessive). I'm really surprised that Lewis County didn't catch the error and hold that amount in reserve. I thought they have known about this for at least over 1 year. You would think that at least one of these counties would have figured out they were being overpaid.

That said, it's a common practice in business to recoup overpayments. All retailers do it. The government tries to do it, but they are not very good a claiming it or getting it.

Friday, July 16
Uintah

This is nonsense. Change the state law to allow for a one-time dismissal of fees 2018-2021. It was the state's error; let them bear the brunt of it, especially in a year of record state funds.

Saturday, July 17
Phil B.

Lewis County should make a claim with State Risk Management for the Error & Omission. Washington carries E&O in its high deductible self-funded program. This is an E&O. The deductible should be charged back to the DOR budget as an incentive to do better in the future.

It might not be successful, but following it through would be the professional course of action & force changes we want to see between County Treasurers & Revenue.

Saturday, July 17
Phil B.

It might also point out an error with a software sub-contractor, who also carries E&O, which takes taxpayers off the hook.

Saturday, July 17
Friedrich

Do you really know and understand what "SNAFU" means?

Monday, July 19
Raymon

At least the DOR is being reasonable about repayment.

When the County discovered they overpaid the Senior Centers they DEMANDED PAYMENT immediately!

Glad DOR is a lot more understanding.

Monday, July 19