Hillsborough sales tax refund plan disputed

TAMPA — A government proposal to distribute more than $500 million from the voided transportation sales tax in Hillsborough County is so unworkable it would require judges to hold less than 10-second-long hearings for 10 hours a day, seven days a week for four months, according to attorneys for Commissioner Stacy White.

That theoretical work pace — considering an estimated 500,000 written refund requests by a three-judge panel in the 120 days proposed by government lawyers —- is one of the reasons why the state Department of Revenue should process refunds, according to a motion from White filed June 11 in Hillsborough Circuit Court.

White’s motion objected to an earlier filing with Hillsborough Circuit Court Judge Rex Barbas from attorneys representing Hillsborough County, the Hillsborough Area Regional Transit Authority, the cities of Tampa and Plant City, and Clerk of the Circuit Court Cindy Stuart. They asked for court guidance on how to refund collections from a penny-on-the-dollar sales tax.

Voters approved the tax for transportation in November 2018, and it produced nearly $503 million in revenue before the Florida Supreme Court ruled in February that it was unconstitutional. The court decision came in a case from White, who said elected commissioners, not a pre-determined formula in the referendum, retained the authority to allocate the proceeds. By mid-April, the unspent sales tax revenue totaled more than $521 million, according to the clerk’s office.

The government lawyers asked Barbas to appoint a panel of three retired judges to oversee the disbursement from people who completed a claim application within 120 days.

White’s motion, however, said the local governments have no legal standing in the case. It suggested their pitch is a ruse to allow much of the money to be retained for transportation because ordinary citizens won’t have sales tax records to document their refund requests. And, it noted, the government motion does not spell out what would happen with unclaimed funds.

“Their silence supports the concerns that they plan once again to try to spend this money on transportation projects on the theory that any money they can manage not to distribute to its actual owners becomes their money, which they can then spend to fulfill the “will of the people” who were misled by the ballot language. Their silence on this demonstrates precisely why the money needs to be protected by the Department of Revenue,” said the motion.

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It offered a possible alternative of asking for assistance from the state Legislature to shift the tax proceeds to the Hillsborough County School District while suspending the district’s half-cent sales tax temporarily.

White, in an interview with the Tampa Bay Times, said another option is to direct the collected dollars to the accounts for Hillsborough’s Community Investment Tax and for indigent health care. With legislative approval, it would allow the county to declare a tax holiday on those two half-cent sales taxes until the transportation proceeds are depleted, he said.

Using Internal Revenue Service sales tax charts, the state also could cut checks to individual taxpayers based on their income tax records, he said.

His motion asked Barbas to order Stuart’s office to send the money to the Department of Revenue, which was named as a defendant in a separate lawsuit, seeking class action status, in Leon County Circuit Court from Robert Emerson of Apollo Beach.

But immediately after the Florida Supreme Court’s February ruling, the Department of Revenue told local governments it would not be involved in refunds, lawyers said.

Sending the money to the state raises the specter that Tallahassee would be entitled to the unclaimed refunds. “If money is not returned to the taxpayers, in due course it will eventually escheat to the state,” according to White’s motion.

“My first reaction, honestly, when I heard that was, ‘Stop the steal,’ " Hillsborough Commission Chairwoman Pat Kemp said about the state retaining the money.

Letting Emerson’s case supersede court action in Hillsborough County also raises the potential for the proceeds from a voter-approved sales tax for transportation, to instead enrich private-sector attorneys administering a class-action refund, some commissioners and All for Transportation, which advocated for the tax, have said.

White’s motion, however, said the public is entitled to legal aid.

The refund “needs to be distributed in a process where there is a lawyer representing them,” it said.

Barbas is scheduled to hear arguments in the case next week.