A $247 million accounting error by the state’s Department of Revenue resulted in taxing bodies in Douglas and other west Georgia counties receiving extra tax payments last month.
A representative with the state’s association of county governments told the Times-Georgian that he has questions about why it took the revenue department so long to catch the error.
He added the audit adjustment was made because a “large company” within Georgia made a mistake separating state and local sales taxes.
In Douglas County, the county school system received $1.5 million in ESPLOST revenue because of the adjustment, Director of Public Information Portia Lake said.
The Carroll County school system was paid $609,710.39 by the state Department of Revenue after an adjustment for 2015 to 2019 was conducted.
Delene Strickland, the Carroll County school system’s finance director, told the school board on Monday night she believed the large adjustment was due to a software error, and several school districts have also benefited from this audit.
And in Haralson County, Bremen City Schools received an additional about $167,000 while Haralson County Schools received an additional about $200,000, their respective finance officers said.
However, the audit adjustment did not just give school districts some extra ESPLOST revenue, which is the one-cent sales tax school systems use to fund school facility improvements.
Officials with other taxing bodies in Carroll and Douglas counties told the newspaper on Wednesday they also received additional LOST and SPLOST revenue because of the adjustment.
Carrollton Finance Director Jim Triplett said by email the city received $200,000 in local option sales tax revenue on the Sept. 20 distribution from Carroll County.
Meanwhile, Villa Rica Chief Financial Officer Sarah Andrews said the city received approximately $148,000 more than normal in LOST revenue and roughly $105,000 more than their normal SPLOST receipts last month.
“We have not received the SPLOST funds yet,” Andrews said. “The counties pay off their bonds for the first of their fiscal year and then they catch us up on our SPLOST allocations in January. We have not specified what those funds will be used for at this time.”
It is unknown how much extra revenue Carroll County government officials received, County Communications Director Ashley Hulsey said. That information is still being collected and is not complete.
In neighboring Haralson County, the cities and county received higher local option sales tax payments. Haralson County received $167,735 in August and $344,661 in September.
According to the Gateway-Beacon, the city of Bremen received $90,765 from Haralson County LOST in August and $186,504 in September, and Tallapoosa received $54,371 in August and $111,721 in September.
“I did a happy dance when I saw our September SPLOST numbers,” Allen Pullen, finance director for Bremen City Schools, told the Board of Education members at their meeting. “The Haralson SPLOST was over $268,000; Carroll SPLOST was over $102,000. Our average on Haralson is about $135,000; average Carroll is about $65,000.”
Mason Rainey, who is currently handling media inquiries for the Department of Revenue, told the Gateway-Beacon that the boost in SPLOST for the local taxing bodies was the result of an error found in a series of audits conducted by the Department from 2015 to 2018.
“It was found that the returns of a number of business taxpayers had misreported the state and local allocation of a significant portion of their remitted sales tax from late 2015 to early 2018,” Rainey told the newspaper by email. “All of the companies used the same tax accounting software that contained this error, causing significant amounts of payments to be incorrectly attributed to state sales tax.”
Last weekend, the state’s Association of County Governments (ACCG) was informed about the audit adjustments to LOST and SPLOST proceeds paid by the state’s revenue department with “dramatically higher payments.”
Dave Wills, the association’s executive director, sent a statement to local governments that said the funds should be considered as a one-time allocation, and the Department of Revenue will not disclose the name of the companies that were audited due to confidentiality.
“I know at least one very large company classified all their sales tax as a state sales tax and failed to separately categorize the local sales tax,” ACCG Legislative Director Clint Mueller told the Times-Georgian. “The sales tax manager is checking to see if they can release any further details to us.”
This “parent” company, as the county governments association calls it, has businesses located throughout the state that impacts nearly or all her counties, ACCG Executive Director Dave Wills said in an email.
Mueller told the Times-Georgian he thinks it could be an electrical service provider, because the company impacts most of the counties within Georgia. He added the state’s revenue department recently upgraded their computer system, which could be why the error was not caught sooner.
At the highest level of state government, the decision was made to pay local governments what was owed to them in a lump sum, doing so from state coffers. There will not be any subsequent payments to local governments as a result of the audit, Wills added, which covered 2015 to 2018.
“For those years, the parent company utilized software that collected the correct amount of sales tax for each jurisdiction, but incorrectly coded all the sales tax that was due to the state,” he said.
Gateway-Beacon Editor Laura Camper contributed reporting for this article.