According to the report by Terry Sercer, a number of individuals overpaid their taxes–(including the County Treasurer by $346.32 in 2006) because of problems in the way the interest was calculated. The report said that a number of individuals overpaid by around $800. (It wasn’t clear if this is the sum of all overpayments or an average per person.) These individuals should be receiving a refund in the coming weeks.
Mr. Sercer has provided a summary of his findings from his audit. FortScott.biz has requested the details from Bourbon County, but at first they were not available under Kansas Open Records Act because the Commissioners had yet to request them. Since the Kansas Attorney General hasn’t indicated that their investigation is complete, the Commissioners didn’t originally want to request this information (and thus make it public) in case it would damage the Attorney General’s efforts. After weeks of not hearing anything from the Attorney General’s office, the commissioners decided that the importance of getting the refunds made outweighed any potential benefit to the Attorney General and went ahead and requested the details which we published here.
When it comes to interest that should have been charged, but not paid it turns out that there are provisions in the law for this.
If you look at this opinion by the Attorney General, it talks about payment plans and makes it clear that neither the Commissioners nor any other officer of the county can change the amount of tax due or interest charges.
Thus, except for very limited exceptions, no board of county commissioners or other officer of the county has the authority to release, discharge, remit or commute any portion of taxes that have been levied or assessed against a person or property.
The exceptions have to do with bankruptcy and a situation where there was a very specific program established by law for Wyandotte County.
The law cited is KSA 79-1703 which says:
Except as provided in subsection (b) or as otherwise provided by law, no board of county commissioners or other officer of any county shall have power to release, discharge, remit or commute any portion of the taxes assessed or levied against any person or property within their respective jurisdictions for any reason whatever.
So if you owe taxes, no one can change what you owe other than changing the actual assessment. So what happens if Commissioners or another elected official does “release, discharge, remit or commute” a portion of the taxes? For example, what happens if they mark the taxes and interest as paid when the proper amount was not collected? There is a provision for that.
Any taxes so discharged, released, remitted or commuted may be recovered by civil action from the members of the board of county commissioners or such other officer and the sureties of their official bonds at the suit of the attorney general, the county attorney, or of any citizen of the county or the board of education of any school district a part of the territory of which is in such county, as the case may be, and when collected shall be paid into the county treasury to be properly apportioned and paid to the county, municipalities, school districts and other taxing subdivisions entitled thereto
So basically if any commissioner or official releases a tax payer from paying taxes, they become liable for them personally and they can be sued by the Kansas Attorney General, County Attorney, any citizen of the county, or the board of education. This provision means that trivial amounts, while they can’t technically be written off, are unlikely to be something that will incur a lawsuit. If someone owes $0.32 on their taxes and a county official decides it isn’t worth pursuing and marks it as paid, someone could sue that person to recover the $0.32, but it would be a whole lot of effort for very little.
Notice that the wording of the law refers to “taxes assessed or levied.” It doesn’t specifically say that interest on unpaid taxes gets the same treatment. However, the Attorney General’s opinion concludes with:
However, K.S.A. 79-2024 does not authorize the county treasurer to abate or forgive delinquent tax or interest on tax debts, which remains prohibited by K.S.A. 79-1703.
79-1703 doesn’t mention the word interest. The Attorney General appears to assume that the interest on taxes is treated the same way as the taxes themselves and cannot be changed.
It appears that if a county official released someone from their tax obligation by marking it as paid when they hadn’t paid the proper amount, the county official becomes liable for the amount that wasn’t paid. The law says that the funds may be recovered from them and the sureties of their official bonds by civil action. I called the County Clerks office and asked if Bourbon County Officials are bonded. They are and here is the bonded amount for a few of them.
- $5,000 – County Commissioners
- $10,000 – County Clerk
- $25,000 – County Treasurer
Bonds are basically a type of insurance so that funds can be recovered if an elected official acts inappropriately. The county pays a premium for elected officials to be bonded. This helps remove some of the risk for the county of an official making off with county money. If that were to happen, the bond company would pay the claim up to the amount of the bond and then it would be up to the bond company to track down and collect from the public official. So basically a bond allows the county to get its money quickly if something goes wrong without depending on whether or not an elected official has the means to pay.
So is a the bond company that insures Bourbon County elected officials on the hook for interest that was not collected? It may depend on the circumstances.
According to Mr. Sercer’s audit report, there was one individual who had their taxes marked paid even though they underpaid by around $5,000 for a two year period. If it could be proven that an official in the county marked the amount as paid even though it was too little, then it appears that the official would be liable to pay back the $5,000 that was not paid.
However, if it could be shown that the computer system incorrectly calculated the interest, it might be a bit more complicated because it might be hard to actually win a civil suit against the county official. The computer company might have some liability, but in Bourbon County, it appears that the system that was producing incorrect numbers was no longer under any type of maintenance plan which would likely remove the company from having any liability since they stopped updating the software when the maintenance plan lapsed. On the other hand, there may possibly be some liability if a county official signs off on something that has obvious error–regardless of what computer system generated them.
While it is not clear how the larger amounts might be treated in court if a civil suit were to be filed, the audit report mentions one instance where $1,130 in interest was not paid. According to Mr. Sercer’s report, it was written off based on a belief that the money probably wouldn’t be recovered in a tax sale. Based on KSA 79-1703 it appears that the official who wrote of the $1,130 could be compelled to pay that money back to the county (in which case their bond would probably be the mechanism that the county would be paid).