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Decimal point flub costs manufacturing plant $275,000 in property taxes

Although a decimal point error cost a manufacturing plant $275,000 in property taxes it should not have owed, Henderson County won't refund the money. While Henderson County commissioners expressed sympathy for the Meritor Corp., one of the community's most respected industrial citizens, they said they were constrained by the state laws governing property tax collection and refunds.

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The plant, which manufactures axles for tractor trailers and other heavy trucks, incorrectly valued an upgrade of equipment at $54 million instead of $5.4 million when it filed its business personal property tax for the 2019-20 tax year. Company officials told the Board of Commissioners that everyone agrees that the valuation was made in error. They asked commissioners to authorize a refund of $275,000 based on one of three grounds for appeal in state law — that "the tax is imposed through a clerical error."

The error was not the county's, however, and that made a refund impossible under the law, commissioners said.

"We have a great corporate citizen, an entity that is highly valued with great people, but I think it's important that the citzens know of the constraint and the direction on the law," County Manager Steve Wyatt said.

County Attorney Russ Burrell responded.

"Unlike almost any other context you can come up with, if you make a mistake as a board, you as commissioners become personally liable for that mistake in terms of granting a refund that should not be made," he said. "That's different from anything in the whole world."

Here's the timeline Burrell laid out in a memo:

  • Jan. 31, 2019: Meritor files its business personal property tax listing.
  • Feb. 15, 2019: County assessor's office processes and accepts the listing, which increased the plant's value for tax purposes from $87,219,703 to $127,771,821.
  • Aug. 1, 2019: Tax office sends the company a tax bill based on the new value.
  • Aug. 31, 2019: Deadline passes for Meritor to appeal an incorrect tax assessment.
  • Nov. 18, 2019: Meritor timely pays the tax bill in full.
  • Jan. 9, 2020: Meritor appeals the 2019 assessment. Tax office informs the plant that its only avenue of appeal is under the state statute that spells out grounds for appeal.

Besides, a clerical error, other grounds for a refund are "an illegal tax" or a tax "levied for an illegal purpose." State law further says that taxes "paid voluntarily and without objection or compulsion cannot be recovered, even though the tax be levied unlawfully."

On Chairman Grady Hawkins's motion, the board voted 3-1 to take no action, meaning the refund was denied. Commissioner Michael Edney voted no. Board members said the company's next avenue would be a lawsuit in civil court.

When the company received a bill that was $275,000 higher than it should have been, "that was another opportunity for Meritor to recognize the error," Commissioner Rebecca McCall said. "So there were two opportunities" — when the listing was made in error and when the plant's accounts payable office received the property tax bill.