There is no easy way for South Tucson property owners to get back money they paid toward a secondary property tax enacted without voter approval.
That’s despite widespread agreement that such a tax in Arizona requires voter assent.
The City Council moved to end the tax last month after getting a legal opinion from Phoenix bond attorney Michael Cafiso that the tax was improper because it was never on the ballot and because the type of debt the city intended to pay off with the tax receipts was not voter-approved.
South Tucson collected about $1.8 million over three years, but it has balked at voluntarily refunding taxpayer money due to budget constraints.
Taxpayers must now navigate murky legal terrain on their own if they want a refund, and Pima County officials aren’t helping to clear a path.
Officials are distancing themselves from earlier comments that taxpayers could submit a notice of claim to the Board of Supervisors for case-by-case decisions.
“Until the legal status of the tax has been resolved, the filing of notices of claim with the board is premature,” said Robin Brigode, clerk of the board.
Although the county did not levy the tax, its officials approved the tax roll, collected payments and passed on the money.
Pima County would be a defendant in any administrative appeals or lawsuits taxpayers might file to try to recoup their money, said Paul Moore, an attorney with the Phoenix tax law firm Mooney, Wright & Moore.
Filing a notice of claim with Pima County is one of two of the most common forms of relief available to taxpayers in this position, Moore said.
The other is filing a lawsuit challenging the tax in Arizona Tax Court.
Property owners might get more money back if they file a notice of claim with the county, taking the administrative appeal route, Moore said, because they could be eligible for payments going back three years.
Taxpayers who sue in tax court have only have a chance of getting back what they paid toward the tax since the fall of 2013, he said.
Administrative appeals would be heard by the State Board of Equalization and could be appealed to the Arizona Tax Court, Moore said. He declined to comment on the county’s position.
With no easy way to apply for a refund and confusing directions from county officials, some taxpayers feel discouraged.
Manny Valenzuela, a South Tucson resident who has repeatedly questioned the tax, said he recently called the Pima County Treasurer’s Office to figure out how to file a claim, but was told to call back “in the near future” as there was no relevant appeal process in place.
Other taxpayers got a similar response and called the newspaper for suggestions. Some were concerned about the cost of filing a lawsuit.
The median household income in South Tucson was about $22,500 in 2012, U.S. census data show. Fewer than a third of homes in the area were owner-occupied.
Neither Southern Arizona Legal Aid nor Ramon Valadez, the member of the Board of Supervisors whose district includes South Tucson, said they had received calls about the tax. Valadez described the situation as “clear as concrete” and deferred to county attorneys on legal details.
Deputy County Attorney Daniel Jurkowitz said the board has limited ability to review illegal tax rates, but the clearest legal remedy is through the courts.
“I think we need a judicial determination that a tax was legal or illegal,” he said. “South Tucson would need to have an opportunity to defend the legality of the tax they imposed.”
South Tucson has not had a city attorney since mid-June, and City Manager Luis Gonzales has said he believes the tax was enacted even though the previous city management knew it was illegal.
Some taxpayer advocates have called for the Legislature to get involved.
“State policymakers should consider a mechanism to ensure proper oversight of levies for secondary taxes similar to the oversight of primary taxes,” Jennifer Stielow wrote in the most recent Arizona Tax Research Association newsletter.
Rep. John Kavanagh, a Republican from Fountain Hills, said he would to introduce a bill facilitating repayment if South Tucson does not plan a voluntary refund.