Uncollected Tax Has Been an Issue for Years

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State Board of Equalization officials have been warning Orange County officials since 2006 that they were missing potentially large collections on supplemental possessory taxes, which are paid by private businesses that lease or otherwise use government land or buildings.

Last week, employees from the assessor’s office sent a powerful message to county supervisors that the practice, stretching back decades, has potentially cost taxpayers as much as $125 million.


Supervisors said they had never heard of the issue. Supervisor Bill Campbell said he was stunned by the sheer size of the numbers mentioned. Supervisors directed County CEO Tom Mauk to immediately review the matter and report back.

County Assessor Webster Guillory also said he was surprised by the potential outstanding taxes.

“I am not aware that we are missing PIs (possessory interest taxes),” Guillory said during a Wednesday interview with Voice of OC. He added that employees might be playing a bit of politics in an election year.

Yet a 2006 management audit report by the State Board of Equalization

told Guillory in fairly stark terms that it was his duty under state law to collect supplemental possessory-interest taxes.

That study concluded that the Orange County Assessor had a strange practice of charging supplemental taxes on properties that changed hands or had new construction – on the secured roll of properties registered with the office across the county.

However, for properties that were on an unsecured list of properties, no bill would be sent when it was sold or improved with new construction.

Board of Equalization officials reminded Guillory that his practice violated the state constitution and, “is contrary to the requirements of law and could result in the loss of tax revenue.”

And, as far back as 2006, county supervisors should have been informed of the oversight because assessors attending assessment appeals hearings were admitting to board officials – who are appointed by county supervisors – that the tax had been missed and that a fix was underway.

“Over the past 23 years, it’s just something we haven’t done,” said assessor representative Ron Cooper during an appeal involving Cox Communications after being asked about supplementals by an appeal board hearing officer.

“It’s not just cable companies,” Cooper told the assessment board. “It’s all possessory interest taxes that have been missed. We’re trying to fix that.”

Guillory also didn’t fight the State Board of Equalization in his response to the audit, writing “we will develop an action plan to implement this change.”



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