By Corinne Murdock |
The Goldwater Institute asked a judge to make Pinal County return the $80 million in taxes it illegally collected. It’s been nearly a year and a half since the county learned it had to return the funds to the taxpayers.
The organization filed a request for a permanent injunction with the Arizona Superior Court in the Arizona Tax Court on Monday.
The $80 million came from a sales tax disproportionately applied to purchases under $10,000. Arizona law doesn’t allow that sort of tax arrangement, which the Arizona Supreme Court affirmed in a ruling issued last year, in Vangilder v. Arizona Department of Revenue.
The Arizona Department of Revenue (ADOR) promised to return the $80 million quickly. The Pinal Regional Transportation Authority (PRTA) has held the funding in an interest-bearing escrow account, with ADOR playing an administrative role in the distribution of the funds.
ADOR gave notice to the superior court last September that it was “setting up a system to process refund claims.”
Yet at the close of last month, ADOR announced that it wouldn’t process refunds at all until PRTA decides the final disposition of the funds. ADOR also indicated that it was the legislature’s duty to figure out how to return the funding, and that no laws were passed during this last session to that effect.
“For these reasons, until the PRTA makes a decision regarding the final disposition of these funds, the Department cannot process any refund claims for the invalidated Pinal County transportation tax,” said ADOR.
The Goldwater Institute declared in their request for a permanent injunction that this decision was unlawful, a “knowing defiance of the law” that constituted an illegal withholding of taxpayer funds violative of court rulings.
“Neither PRTA nor ADOR has any lawful authority to refuse to return illegally obtained and illegally withheld tax money,” stated the organization.
The organization also noted that both the PRTA and ADOR repeatedly neglected to set up a system for efficient returns of the funds should they fail to defend the tax in court.
In a press release, Goldwater Institute Vice President of Legal Affairs Timothy Sandefur stated that the taxpayers were long overdue for their refund.
“The department blames the county, but whoever is at fault, the bottom line is clear: taxpayers are legally entitled to refunds — and the state and county government are refusing to give the money back,” said Sandefur. “[This is] money they have no right to keep, because they had no right to take it.”
The PRTA and ADOR ignored their warnings to postpone collection of the tax in order to avoid administrative difficulties in returning the funds. PRTA also assured the court and the Goldwater Institute in 2018 that it would have a returns system in place.
“[A]t the end of the day if we are not successful, but we have but all this money in escrow by agreement, there will be — the system will play out as it should, through refund claims and the like, and no one will essentially be harmed in that anyone who overpaid will be entitled to a refund, plus interest,” stated PRTA’s counsel.
ADOR told AZ Free News in an emailed statement in February that taxpayers who paid the invalidated tax are able to file claims for what they paid with interest until April 9, 2026.