Growls

Yesterday, we growled that in transmitting the FY 2009 Comprehensive Annual Financial Report to the Arlington County Board, staff provided the explanation of why the county has the lowest tax rate in the region. It’s not that the county is the best run local government; rather, it’s because “a greater share of the tax burden is carried by the commercia sectorl, relative to homeowners, than any of its neighbors.”

A bit more reading in a section of the CAFR entitled, “Management’s Discussion and Analysis,” revealed a second gem. At the top of page 24, there's this:

“The other local taxes revenue category, which includes taxes on business licenses, general sales . . totaled $187.9 million. This represents a $2.0 million increase over the previous year, or 1.1%. This increase was due primarily to the reallocation of roughly $3.0 million in sales tax to Arlington that had previously been credited to another Virginia jurisdiction in prior years by the Virginia Department of Taxation.” (emphases added)

What’s up with that? Here's what we have learned:

“ . . . businesses with retail locations in multiple jurisdictions may make mistakes in attributing sales to specific store locations and/or the State Department of Taxation may be confused by the precise location of a retailer’s location (e.g. Alexandria City versus the Alexandria section of Fairfax County obviously causes significant confusion), there is the potential for the 1% local sales tax to be misallocated. For three years, between approximately late 2005 and late 2008, sales tax receipts from a large retailer with locations throughout the Commonwealth, and with a large presence in Arlington, were being allocated to another jurisdiction. Unlike many other local taxes, sales tax is administered by the State Department of Taxation. (emphases added)

"Since this error was uncovered, the Arlington County Commissioner of Revenue has been aggressively auditing sales tax returns from the State to ensure that remittances accurately reflect where retail activity occurred. Over the past year, the Commissioner has identified several other errors in sales tax remittances through its audit program to the benefit of the County . . . ."

We’re happy the sales taxes have been reallocated to Arlington County. However, for three years, Arlington taxpayers have had to pony up the equivalent of about 1/2-cent in real estate taxes because the county had not received its full allocation of sales taxes from the Commonwealth. Perhaps what Arlington County really needs is more auditors in order to look for all the loose change, including any waste, fraud and abuse.

All Arlington County taxpayers are urged to read the annual CAFR, which you can find at the Department of Management and Finance's webpage. And please send us any of those "gems."