August 2, 2013

Whitfield, local cities have sales tax revenues withheld to pay back overpayment

Local schools also affected

Charles Oliver
charlesoliver@daltoncitizen.com

— The Georgia Department of Revenue withheld $368,000 from Whitfield County’s June Local Option Sales Tax (LOST) revenues when it sent a check with those funds earlier this week.

And county officials say they expect the state will withhold a similar amount when it sends the July LOST check later this month.

“A local business appealed its payments, and the (the Department of Revenue) found they paid too much revenue in 2009, 2010 and 2011 on some type of purchase,” said Board of Commissioners Chairman Mike Babb. “The state said we would have to repay that money. Everything goes through the state, so this month they withheld $368,000 to repay them, which is one half of our share of what we owe. They’ll take the rest out of our next check.”

All told, the business is getting back around $890,000 in LOST dollars from Whitfield County. A Department of Revenue spokesman said confidentiality laws forbid the agency from saying which company overpaid its taxes.

LOST dollars are divided among the county and the city of Dalton and the other cities in the county. Under the agreement in place at the time those taxes were collected, the county received 83.24 percent of LOST revenues, Dalton got 14.93 percent and the smaller cities divided the rest. So that’s how the repayments were assessed.

Babb said the county will also have to refund about $500,000 in Special Purpose Local Option Sales Tax (SPLOST) payments. Whitfield County does not currently have a SPLOST, so the state will withhold those funds when the county imposes another SPLOST.

“Basically, the next time we create a SPLOST, we’ll start out in the hole,” said Dalton Finance Director Cindy Jackson.

The business is also getting back about just under $890,000 for overpayments of the Whitfield County Education Special Purpose Local Option Sales Tax (ESPLOST).

Babb says local officials found out they would have to repay that money just last week.

“If we’d been notified several months ago there might be a reduction it would have helped us plan for it. And I wish they’d scattered it over a few more months, not just two. It would have been easier to handle,” Babb said.

He said the county will have to dip into its fund balance of approximately $14 million to offset the losses.

Asked why the money was being taken away from the county over just two months, Nick Genesi, the spokesman for the Department of Revenue, said the money for a refund is taken all at once from the system.

“For this case there were three refund requests, one for each year. One of the three was processed before the July distribution. The other two were processed after the July distribution,” he said.

Concerning the confidentiality laws, “I can say that it is a refund of sales tax paid on manufacturing equipment that is exempt under state law,” he said.

Dalton Mayor David Pennington said the lack of information from the state is frustrating.

“We levy the tax, not them. They just collect the tax for us. They need to tell us what happened,” he said.

Babb said he shares that frustration.

“It’s like the bank taking money out of your account and telling you that it took that money to pay back someone who sent you a check for too much money. But they won’t tell you who that person was,” he said.

The Dalton and Whitfield school systems are also seeing their ESPLOST funds withheld to pay back the overpayments.

“We think the total of our share of that will be just under $300,000, but we don’t have an exact figure yet,” said Dalton Public Schools Communications Director Pat Holloway.

Dalton Public Schools gets roughly a third of county ESPLOST funds.

Holloway said that means the school system may have to adjust plans for its current ESPLOST projects, the expansion of Dalton Middle School and Morris Innovative High School.

“We just started collecting that tax in January, so it’s early in the planning process, and we can make those adjustments if we need to,” she said.

When the ESPLOST passed last year, officials projected it would raise $105 million over five years, with county schools taking $68.65 million and city schools getting $36.35 million.

Officials at Whitfield County Schools did not immediately return telephone messages at their offices Thursday afternoon.

Whitfield County isn’t the only county affected.

Walker County Sole Commissioner Bebe Heiskell said the Department of Revenue withheld $80,000 from its latest sales tax check and she expects it will also withhold money in its next payment.

“I’m told it’s to refund money to a company that overpaid its sales tax,” she said.

Murray County Finance Director Tommy Parker says that county wasn’t affected.