RTAGate (Or How We Spent $20,000 Riding the 545 and 554)

"Sound Transit HQ," by Seattlest Flickr contributor romulusnr

We love the bus. We ride it whenever we can. We try to convince our friends, family, and neighbors to ride the bus. We even offered favors to our girlfriend if she would start riding the 41 from her Northgate crib to her downtown office. (She declined; we broke up. Draw your own conclusions.)

Last night, the P-I ran a story about Sound Transit having problems accurately determining the actual border of its district. It seems that if part of a city or zip code lies within the ST district, ~~the ST~~ Department of Licensing computers determined that the entire city or zip code was considered to be in the district.

Auto dealers, when calculating the excise tax on a pending sale, would tap into the same system, type in the customer's address and calculate the tax owed. The excise tax on autos is higher for residents inside the district. So if you lived outside the district, but in a city or zip that partially rested within the district, you probably overpaid the excise tax. This summer, a savvy car buyer discovered this problem and sued ST, who is now refunding $3 million in overcharged taxes to affected car buyers since 2005, including the $86 due to Rachel Ogle, the original complainant.

Problem solved? Hardly. There are plenty more checks to be written before this bus leaves the stop. Many millions (probably hundreds of millions) are owed to patrons of businesses and residents living in parts of Renton, Kent, Redmond, Sammamish, and Issaquah. Here's what we've discovered:

In October, when absentee ballots arrived at our 'burby hovel, we excitedly opened the envelope and noticed the Prop 1 contest was missing from the ballot. We found this odd, because the transit issues were on our ballots in previous years. A few Googles and iMaps later, and it appeared that somehow we no longer lived in the ST district. This was odd, because when we moved here five years ago, these same computers told us we were most assuredly ST homeys.

Later in the week, other neighbors noticed the situation, and calls were made. We were told we were not in the district, never were, and there was some sort of minor computer error. Since we were desperately trying to win an election and are located in the heart of the see-saw 8th CD, we and our political operatives (also known as work-at-home moms and dads and the retired guy who sells Xmas trees around the corner) made a "loose-lips-sink-ships" pact to not discuss this outside of our circle. We viewed this story as likely hurting the Prop 1 vote and also having a deleterious effect on the 8th CD and governor's race. (We told you we actually like transit out here, and we'll even get all conspiratorial for it.)

But, as we stood there, quietly sipping coffee and waiting for the school bus, our little group did the math in our foggy-as-the-valley heads and realized that we had overpaid nearly $250,000 to Sound Transit. And that's just the handful of people within the view of my home, all of whom are business owners in the affected area.

How did we come up with the quarter-million dollar figure? The auto excise tax is a simply a thin, shiny penny in the farebox, compared to the sales tax issue that no one in the media seems to have grasped yet. You see, the sales tax rate inside the district is 4/10th of a percent higher than the rate outside of the district. These on-the-border businesses have been overcharging sales tax for years. (Wait a minute...we're one of the bad guys?)

If we march down to the county offices and get our refund, then what? How are we to distribute the five-figure check to the thousands of our customers? It'll cost more than the value of the refund to distribute the money. Postage. Bookkeepers. Tracking down customers who have moved.

Every day that Sound Transit doesn't get out in front of this story, to notify the residents and businesses in the affected areas, the problem only gets worse. And since you are going to be mailing out a letter, how 'bout a free bus pass for our trouble, Joni?

Contact the author of this article or email tips@seattlest.com with further questions, comments or tips.

By Brad in News on December 4, 2008 10:00 AM

Comments [rss]

Sound Transit

Greetings:

This is Sound Transit signing on with some clarifying information.

The issue we're addressing affects about 1.5 percent of vehicles in the RTA Ddistrict. Vehicle owners in question have incorrectly paid at the time they paid for their vehicle license tabs (it's not something specifically tied to vehicle purchases, as suggested here, although in some cases the issue could have first occurred at that time). The state auditor flagged the issue and Sound Transit and the Department of Licensing are addressing it by sending refunds to those affected. The people affected live near, but outside, the RTA District boundary. When someone has overpaid, the amount of overpayment associated with the 0.3 percent RTA MVET has been $30 annually for each $10,000 of vehicle value. We regret the error and are working with DOL to send out refunds as soon as possible.

If you have any questions about this issue please visit http://www.soundtransit.org/x9917.xml, where you will find contact information in the event your question is not answered.

Thanks,

Sound Transit

alexjon

So how much did you overpay? Did you go back and look at your tax records?

You should check that before you go start filing against the state based on an assumption.

Brad

Yeah, AJ, I'd love to get hauled in to court for OVERpaying taxes for years. That would be about perfect considering the way this thing has been bundled.

alexjon

Your business is registered and taxed through the city/state/county. Your tabs and business license go through the DoL. The DoL registers based on zip code, your taxes are determined by address.

Furthermore, according to the DoR, the weight is on you to verify tax allocation to them. http://dor.wa.gov/Docs/Pubs/LocalSalesTaxChng/2001/KingCo.pdf

It even tells you how to figure it out.

I hope you're reporting your taxes correctly-- reporting wrongly could get you in trouble for tax fraud now that you know how to figure it all out.

rizzuhjj

I don't know if it's the DoR or DoL or even some mapping agency -- but my only hint is that the P-I article says "state agency computer." I think the correction is a positive one -- it's more precise. All agencies involved should address this problem and fix it now. It looks tremendously bad -- and it is.

Brad

I have to assume that the counties provide the data to the state, and the DoR system ties it together. So while the DoR may be responsible for disseminating bad info, the counties would be responsible for the data itself. GIGO.

rizzuhjj

(Not to undercut the point of this post, which is that the DoR and ST should fix this issue immediately and refund past receipts to businesses.)

Troy Morris

See? This is why computers are evil.

I'm really wondering how these lines got drawn up? Does anyone know how arbitrary it was.

Thanks for thinking of the greater good, Brad.

rizzuhjj

That's fine but I don't think that excuses putting the wrong information there. These weren't "ST computers" -- these are Department of Revenue computers. It's wrong to keep the current wording.

It's as if I conflated your business and your neighbor's -- they're in the same neighborhood but they're not the same thing.

Brad

Interdepartmental squabbling won't fix this. If the agencies stay quiet, they are just begging for a class-action suit.

Some org needs to take the lead on this.

rizzuhjj

Small correction:

"Last night, the P-I ran a story about Sound Transit having problems accurately determining the actual border of its district. It seems that if part of a city or zip code lies within the ST district, the ST computers determined that the entire city or zip code was considered to be in the district."

This correction is slightly incorrect. Per the linked article: "who lived outside the agency's taxing district due to shortcomings of a computer program at a state agency, court testimony shows." This seems to be a Department of Revenue issue and not a Sound Transit error.

It is incredibly unfortunate and it's good that you're reporting the issue. It does need to be addressed. In reality, I doubt customers will see a dime from this -- but the businesses who were over-charged should be compensated.