Call Kurtis Investigates: Lawmakers Criticize Fire District For Not Returning Wrongfully Collected Taxes

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SACRAMENTO (CBS13) -- Sacramento Metro Fire is taking heat from state lawmakers after a Call Kurtis investigation revealed the agency will not be returning more than a million dollars in taxes it wrongly collected from Rancho Cordova property owners.

Assemblyman Ken Cooley and Sen. Jerry Hill called out the agency a day after the details of its eight-year $1.3 million tax mistake, which affects thousands of property owners, were reported exclusively by Call Kurtis.

"It's wrong they collected it," said Sen. Hill, a Democrat who has represented the San Mateo area since 2008. "It's wrong they don't pay it back."

Assemblyman Cooley, who represents Metro Fire's District 8 after serving 10 years as a Rancho Cordova city councilman, shared the same sentiment.

"Paying back the wrongly collected funds in full," he said, "is the only fair taxpayer result."

He debated whether the tax code actually applies to Metro Fire's claim that it cannot legally refund taxes paid more than four years ago.

"While California law does have a four-year limit on recovery of corrected tax payments, in this case no tax was actually owed by the property owners," he said in a statement. "I do not believe the four-year limit applies to this situation."

Even if the statute of limitations is an issue here, Metro Fire could work with a state lawmaker to craft a district bill -- something that applies only to a district -- which would allow the agency to pay back the money it wrongly collected.

"If you're government, you represent the people," Sen. Hill told CBS13 consumer investigator Kurtis Ming. "You can't hide behind the statute of limitations to do the right thing, and that's what they're doing."

"It's wrong," Hill said.

Senate Pro Tem Darryl Steinberg also told Call Kurtis he was looking into Metro Fire refunding taxpayers.

The agency announced it would offer tax refunds Jan. 10, after an audit discovered 3,841 Rancho Cordova properties had been wrongly charged an annual $100 fire tax.

An agency letter sent to homeowners explained it had collected a "Special Fire Tax" by mistake for tax years 2009-13. Homeowners were also sent a refund application for those four years.

But Metro Fire's letter didn't mention the agency's erroneous tax actually began in 2005, four years earlier. The agency said it will not return the $1.3 million it wrongly collected during those earlier years.

In total, the agency collected a total of $3.01 million from taxpayers it never should have taxed, a Call Kurtis investigation learned.

"A $400 check in your mailbox is awesome," said homeowner Andy Payne of Rancho Cordova, who received her refund check in mid-February for tax years 2009-13. But she found her tax records prove she paid the fire tax since she moved in to the Anatolia neighborhood in 2005.

She thinks she's owed the rest of her money back -- which is at least $300.

Michael Darrett, who moved into the Kavala Ranch neighborhood in 2008, said he paid the $100 "Sloughhouse Fire Protection" tax for five years, costing him $500.

He said he'll only get back $400.

"They told me that legally they only have to pay me for four years," he said.

"[Metro Fire is] ignoring the fact that there's four years that [it] still took money from us," Payne said.

Metro Fire spokesman Deputy Chief Chris Holbrook told consumer investigator Kurtis Ming the agency would like to return the $1.3 million it wrongly collected, but claims its hands are tied.

"Why are you only going back four years?" Ming said.

"Per legal counsel, the limitations on that was four years that we could refund," Holbook said.

The agency cited its legal counsel's interpretation of CA Revenue and Taxation Code 5097(a).

Ming asked for further clarification.

"You're telling me you can't legally return money that you never should've taken in the first place?" he said.

"Yes," Holbrook said, "according to legal counsel, the statute of limitation is four years."

"I don't think that's quite true," said professor John Sims of Pacific McGeorge School of Law.

Sims said that specific code section actually means courts cannot force a public agency to pay back taxes collected beyond four years.

"That's not the same thing as saying they're not allowed to pay," Sims said.

"So, legally they can hide behind this statute, but morally they have every opportuntiy to pay this back?" Ming asked.

"I believe so," said Sims. "They just apparently don't want to."

Taxpayer advocate Jon Coupal doesn't think that's right.

"In any situation where a tax has been collected illegally, that money should go back to the taxpayers," he said.

But Metro Fire stood by the amount its refunding -- about 56 percent of what the agency wrongly collected.

"We absolutely feel we did that within the confines of the California tax code," Holbrook said.

"Conveniently, that means some money is going to be kept that never should have been collected to begin with?" Ming asked.

"I don't necessarily buy into 'conveniently,'" Holbrook said. "I think it's unfortunate."

Sims again disagreed.

"It's not really 'unfortunate' for them if it's their choice not to make the payments back," he said.

"It's disheartening," Darrett told Call Kurtis.

Payne realized she may not win in court under the statute, but said she thinks Metro Fire is cheating homeowners by hiding behind the law.

"We're the little man," she said. "We don't want to be taken advantage of, especially by the fire district."