Thousands will get car-tab tax refund

It's not quite an economic stimulus payment, but thousands of suburban residents will get a check in the mail to refund car-tab taxes improperly collected for Sound Transit.

The agency received 95,000 incorrect payments totaling $3.2 million from mid-2005 to mid-2008, said Brian McCartan, the agency's finance director, in a legal deposition.

The error is blamed on mismatches between addresses in a state GIS (geographic information systems) and those kept in the state Department of Licensing, which collects car-tab taxes for Sound Transit and state highways.

Suburban car owners whose residence status was unclear were billed for the transit tax, when in fact they lived just outside Sound Transit territory. Some fine print on their bills urged them to check whether they were exempt. But the 95,000 still paid for various reasons, said Licensing spokesman Brad Benfield.

The transit boundary zigs and zags to surround urban parts of Snohomish, King and Pierce counties.

Refunds will begin in one or two months, transit spokesman Geoff Patrick said.

"The agencies regret these issues occurred, and are working to fix them as rapidly as possible, and to get refunds out as quickly as we can," he said.

The problem was exposed through a class-action lawsuit by Rachel Ogle, a taxpayer who lives in the 98296 ZIP code, a growing area between Mill Creek and Snohomish. Transit officials say they first heard of it this summer via a complaint to the state auditor.

"In an age of Google maps and GPS," said plaintiff's attorney Michael Myers, "it's staggering to the lay person that on a house-to-house basis, or address-to-address basis, this problem can't be solved."

The number of mistakes exceeds 95,000, because the tax has been collected since 1997. Sound Transit presumed that on the lightly populated suburban fringes, there were so few errors the agency could simply instruct residents to dispute the occasional billing mistake. But in recent years, housing developments increased the number of people who were taxed incorrectly. Patrick said Thursday that the error rate was far higher than expected.

"Sound Transit is putting the onus on the taxpayer to find out whether they are inside or outside the boundary," Myers said.

DOL spokesman Benfield said Thursday that two-thirds of the flawed address records have been fixed so far. In addition, notices will be sent to people just outside the transit-tax line, alerting them they might have overpaid, Patrick said.

Officials said they will change their philosophy — if an address remains in doubt, bills will omit the tax. The snafu shouldn't disrupt transit projects. Even at $3.2 million, a refund equates to less than 1 percent of the agency's yearly income, projected at $513 million in 2008. This fall, voters agreed to boost an existing Sound Transit sales tax, to fund 34 miles of light-rail extensions and other projects.

Sound Transit's hotline is 877-755-4550 or main@soundtransit.org.

Mike Lindblom: 206-515-5631 or mlindblom@seattletimes.com