Telecom giant’s flawed report to Revenue could mean big tax shifts in Douglas County

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OLYMPIA — A paperwork error by a large telecommunications company may mean a major drop in Douglas County’s property value, and a corresponding tax increase for landowners.

That’s the warning from state legislators and the Department of Revenue, after the telecom for years over-reported the value of assets at its major datacenter outside East Wenatchee.

“The company’s reporting error caused Douglas County to receive a larger percentage of the company’s total assessed value than the county was eligible for,” the Department of Revenue said in a briefing document to local taxing authorities. “The extra property tax collected from the company in error lowered the need for Douglas County to collect additional property taxes from other property owners, thus shifting the tax burden and lowering property tax bills.”

The error occurred on the company’s annual apportionment report to the state, which the state then uses to distribute the company’s appraised value across Washington’s 39 counties. On their apportionment, the company listed the cost of custom software used on servers at its Douglas County datacenter.

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State Sen. Brad Hawkins, R-12th District

But the cost of the software is exempt from property taxation under Washington law, meaning the reported value of the company’s assets in Douglas County was inflated. The revenue agency did not disclose the dollar amount of the reporting error, but State Sen. Brad Hawkins, who was briefed on the matter, said it could account for nearly $500 million in property value being wiped off Douglas County’s books next year.

“… No matter how one analyzes this, a major high-valued property will be exiting the county tax rolls,” Hawkins said this week. “That’s bad for us.”

Revenue estimated there may be an 8.6% reduction in the county’s overall assessed value starting in 2021. Hawkins said the tax shift could mean an extra $400 a year in taxes on a half-million-dollar home in the county, starting.

Douglas County Assessor Jim Ruud and Department of Revenue communications manager Mikhail Carpenter say there’s no way to know the true impact until property values are formally calculated next month. Neither Ruud nor the state agency would identify the telecom company.

“Typically in situations like this we also wouldn’t name the taxpayer in question until that information becomes public record, which would also be when the assessed values are certified in November,” Carpenter said.

Hawkins said he fears the change in taxation “could present some real hardships for property taxpayers next year, including families.”