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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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County Counsel
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DATE:
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September 19, 2005
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BOARD MEETING DATE:
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October 4, 2005
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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County Counsel
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SUBJECT:
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Claim for Refund by InterWave Communications, Account No. 015621-001
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RECOMMENDATION:
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Grant the claim for refund in the amount of $29,079.41, plus interest.
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VISION ALIGNMENT:
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The recommended action furthers the following commitment and goal:
Commitment Nine: Responsive, Effective, and Collaborative Government.
Goal 20: Government decisions based on careful consideration of future impact, rather than temporary relief or immediate gain.
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BACKGROUND:
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The Assessor’s Office completed an audit of InterWave Communications in 2004, resulting in a proposed agreement to reduce the valuation of InterWave’s property for tax years 2000 and 2001. However, the legal deadline passed before the matter was finalized, and the taxpayer did not request a waiver. At this point, the Assessor does not have the legal authority to grant relief to InterWave for tax years 2000 and 2001 due to the four year statute of limitations, and the appropriate avenue for relief is this claim for refund.
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DISCUSSION:
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Based on information provided by James Bates, the independent tax agent representing InterWave, and the County’s auditor, Virgilio Soto, the Assessor recommends that the assessments for 2000 and 2001 be reduced for the following reasons:
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• Non-assessable software was reported in the machinery and equipment account as well as the computer account. Reduction of the computer equipment assessment due to reporting of software is $60,310 for 2000 and $62,856 for 2001 (line 6 of the Proposed Value Adjustment page).
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• Machinery and Equipment is predominantly electronic test equipment used to test and fix wireless communication systems and should have been assessed on an 8 year life instead of a 12 year life. Reduction of the assessment of machinery and equipment due to misclassification is $1,206,857 for 2000 and $1,480,843 for 2001 (line 2 of the Proposed Value Adjustment page).
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• Construction in Progress was not reported or assessed for 2000, resulting in an increase in value of $7,026 for that year only (line 11 of the Proposed Value Adjustment page).
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The total proposed reduction in value for 2000 is $1,260,141 (from the original value of $8,833,116 to $7,572,975). Based on a tax rate of 1.039%, the refund for 2000 would be $13,092.86.
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The total proposed reduction in value for 2001 is $1,543,699 (from the original value of $11,627,874 to $10,084,175). Based on a tax rate of 1.0356%, the refund for 2001 would be $15,986.55.
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Based on these figures, it is our recommendation that you grant a refund in the amount of $29,079.41, plus interest.
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FISCAL IMPACT:
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The refund is for an overpayment of taxes.
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