By Claudia Yaw / cyaw@chronline.com
After three years of overpaying forest taxes, the US Treasury Department (DOR) is now demanding back $ 989,418.
It’s the department’s “snafu,” “for lack of a better term,” Lewis District Treasurer Arny Davis told the district chairman this week.
In a memo to Davis late last month, Mark Longrie, DOR Forest Tax Field Operations Manager, said the accounting error was the result of a technical problem with the department’s tax and licensing system introduced in 2018.
When the tax revenue was distributed to 35 districts, the administration fees due to DOR were not deducted. Now, DOR is required by state law to get that money back.
The Washington State wood excise tax began in 1971 and requires wood owners to pay a 5% tax on the stump value of their harvested wood.
Davis pointed out that several counties across the state are addressing the same issue. But the region’s “heavy wood stake” means Lewis County must return nearly $ 1 million.
It’s an “accounting nightmare,” said Budget Manager Becky Butler, describing how her office needs to track the local impact of the payback.
“It doesn’t just affect the district’s general fund. It hits the county road fund, social services and veterans as well as special districts, ”she said.
These specialty 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 harder hit.
Davis recommended that the county repay the amount in three equal installments over a three-year period. DOR, he said, will not collect interest and will be “fairly flexible” if it allows counties to figure out how to repay the money.
For special wards that have already set their budgets for the near future, they need to figure out how to work with less than expected, “and I don’t know of any other way.”
According to the DOR letter, “the department is in the process of configuring its tax and licensing system to ensure that the county administrative expenses are deducted prior to the date of the distribution for the August 2021 distributions”.
Regarding the repayment issue aside, Davis noted that the approximately $ 300,000 annual administrative fee that DOR claims “seems a bit over the top for its performance, but that’s another matter entirely”.