HomeMy WebLinkAbout(0003) IR 21-10587 - Status of Sales Tax OverpaymentINFORMAL REPORT TO CITY COUNCIL MEMBERS
No. 21-10587
To the Mayor and Members of the City Council May 18, 2021
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4 SUBJECT: SALES TAX OVERPAYMENT REFUND
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On May 5, 2021, the City of Fort Worth ("City") and the Fort Worth Crime Control District ("CCPD") each
received a letter from the Texas State Comptroller requesting a refund for an overpayment of sales taxes by a
single taxpayer. This is the second time in ten years that we have received such a payback request.
The Comptroller states that the City was overpaid $12,413,695.66 and the CCPD overpaid $6,206,847.83.
Both amounts must be repaid to the State. The State Comptroller provided three options for repayment:
1. Full reimbursement by one-time check to include a 2% fee discount;
2. Apply all monthly collections to the overpaid amount until the amount has been repaid; or
3. Enter into a 72-month (six -year) payback agreement.
We have spoken informally with the Comptroller's Office and they have expressed interest in the possibility of
extending the repayment period to 144 months (twelve years) for both entities. In 2011, the City entered into a
Repayment Agreement with the Comptroller for overpaid sales taxes in the amount of $9,306,918.07. That
agreement allowed for a twenty-year repayment period.
Relevant Law
Texas Tax Code section 322.2022(f) states that sales tax information relating to a single taxpayer is
confidential and is not open to public inspection. Texas Tax Code section 321.510, however, states that a
municipality may request a review of all available sales tax returns and reports filed by not more than five
individual taxpayers that relate to a refund.
Issue
The Comptroller remits sales taxes to the City and CCPD but does not inform either entity that a refund has
been requested by a taxpayer. The City and CCPD therefore allocate the sales tax revenues in their budgets
and then must account for a refund after those funds are expended.
Potential Solutions
We may wish to pursue a legislative remedy in the 2023 legislative session. There were pending bills to do so
this year, supported by other cities, but those bills died in committee. Nevertheless, the City will reach out to
the Texas Municipal League and to other cities about this issue. Potential solutions include (a) a requirement
that the Comptroller provide notice to a municipality when a refund request is made; and (b) expand the
information available to municipalities under Tax Code section 321.510 to include add audit reports and audit
working papers. This information would give the Planning and Data Analytics Department the necessary
information to inspect the refund request and plan for future refund payments. A combination of the above two
solutions would give the City requisite notification and ability to prepare future budgets. The confidentiality of
sales tax records could be satisfactorily addressed by restricting the number of persons who can view these
records.
If you have any questions, please call Mark McAvoy, Director of Planning and Data Analytics, at 817-392-6222.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS