Analyst Rounds Up Stray Taxes For County Wrong Coding Often Sends County Revenue To City Coffers

Armed with a county map, calculator and telephone, Margaret Smith is a bounty hunter.

In less than four years, she has corralled nearly $650,000 in sales tax money that should have gone to Spokane County but was misdirected to the city of Spokane and other government entities.

The county budget analyst also has pinpointed businesses and citizens who were overcharged.

While the sales tax rate in most of Spokane County is 8.1 percent, it’s 7.8 percent in the extreme outlying areas - those not served by the Spokane Transit Authority’s bus system.

“It’s not a whole lot of money,” Smith says of individual overcharges. “It’s more the principle of the thing.”

More importantly, Smith says, when businesses inaccurately code sales taxes, some government entities - usually the county - get slighted for big bucks.

For example, if a landscaping business located in the city of Spokane services a yard in the county but doesn’t record the right geographic code, the city gets a disproportionate share of the taxes.

Spokane County is one of the most aggressive when it comes to chasing wayward sales taxes, says Snohomish County Finance Director Dan Clements, who has worked with Smith in the past.

“She’s one of the class people,” he says.

Spokane County was the first in the state to discover a snafu within the Washington State Department of Licensing. The problem occurred on title transfers following vehicle transactions between private parties.

Say, for example, that a Colbert resident bought a used car from a South Hill resident. The sales tax often would be based on where the title company was located - usually the city - instead of the new owner’s residence.

Not only was the car buyer overcharged ($30 on a $10,000 purchase), but the city of Spokane received hundreds of dollars in taxes instead of the county.

“The way people pay their taxes determines how we fund city police or the county sheriff or city parks or county parks,” Smith says.

Ken Stone, the city of Spokane’s director of management and budget, credits Smith for being an advocate for county taxpayers, but also for returning sales tax to the city when errors are made in the county’s favor.

“She does an outstanding job,” Stone says.

While chasing sales tax revenue is only a small part of her job, it’s a never-ending educational process, Smith says.

Businesses constantly must be reminded to correctly code their taxes. So Smith reviews building permits and notifies contractors about which codes to use. She also provides coded maps at no charge to businesses and periodically reviews those firms that have locations both in the city and in the county.

“People really want to make sure their sales tax goes to the county, especially if they live in the county,” she says, referring to rural community pride.

“This is the rewarding part of my job,” she says. “You can see what you’re accomplishing.”

, DataTimes ILLUSTRATION: Color Photo