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Kern County grand jury finds City of Arvin improperly collected taxes from Outlets at Tejon

Businesses were not in Arvin city limits
Tejon Outlets
Posted at 1:19 PM, Jun 03, 2021
and last updated 2021-06-03 19:28:58-04

ARVIN, Calif. (KERO) — 23ABC is learning more about a Kern County grand jury report that said the City of Arvin is improperly collecting its Measure L funds from the Outlets at Tejon.

Measure L first appeared on the ballot back in 2008. The City of Arvin voted to pass the tax hike with about 71 percent of residents voting "Yes."

Measure L is an additional sales tax imposed on businesses within the city limits. It is collected from retail purchases like these at the Tejon Outlets and is used to fund programs in the city.

The city then designates those funds for things like expanding anti-gang and drug programs, as well as expanding emergency response and fire prevention. It also goes toward removing trash and litter from the city, paving roads, fixing potholes, and correcting sidewalks.

The grand jury found the City of Arvin is collecting those funds from businesses improperly. Some of the stores on the outlet's property are not in Arvin city limits. That means the city should not have gotten any of that money.

The City of Arvin issued a statement saying it is now aware of the issue and that officials are working to rectify the situation.

23ABC spoke with Arvin's acting City Manager Jeff Jones, about how it plans to repay that money.

"So no, the money has not been used for any purposes. It is currently sitting, waiting for a proper, valid claim to be refunded," said Jones.

Jones explained that the error happened on a corporate level with the stores and the tax software they use not the city. The issue is that the software can't differentiate between businesses in the city and businesses outside the city which led to the overtaxing.

Business owners can now submit claims to the city if they believe they were improperly taxed. Jones says they have about 6 months to do that.

FULL TEXT OF FINDINGS:

SUMMARY: The 2020-2021 Kern County Grand Jury (Grand Jury) found that Measure L funds collected by the Outlets at Tejon (Outlets) were remitted to the State of California (State). The State sent the funds to the City of Arvin (City). However, the Outlets are not within the City limits and the City should not have received the funds. A newly elected City Council, with little or no experience, needs to be educated and trained on their duties and obligations.

The letter the City of Arvin had to send the outlets explaining the situation

It has come to the City of Arvin's attention that your business may be voluntarily remitting a 1% "Measure L" sales tax based on the business' location in the 93203 zip code. If so, then the City of Arvin would like to make you aware that it believes that payment of this tax is not required for businesses located in the Outlets at Tejon or at other locations outside of City limits. By way of background, the City of Arvin passed a 1% sales tax known as "Measure L." This tax only applies to transactions within the jurisdiction of the City, and is remitted by businesses to the State, who then disburses it to the City. The State provides limited information to the City regarding the specific sources of payments for taxes. However, the City has tentatively identified that it appears that a small portion of the businesses located outside of City limits, primarily at the Outlets at Tejon, may have been voluntarily paying Measure L sales tax even though they are not within City limits. This may be a potential corporate accounting issue, and the City had no role in collecting or charging the sales tax for any business located at the Outlets in Tejon or at any other location outside of City limits. The City is providing you this notice so your business is aware of this issue and can stop the process of remitting, or collecting and remitting, sales tax under Measure L as appropriate. Additionally, if you believe your business has paid the sales tax in error, you can submit a claim with supporting documentation to the City using the attached form.

A copy of the Measure L claim form can also be found on the City's website at https://www.arvin.org/212/Claims-Complaints-Requests. The claim form must be completed in full and the original form must be submitted to the City. A copy of the claim form, including claim forms submitted via email, will not be accepted. The claim form will be processed once an original form has been submitted.

Copies of photos, if any, related to the claim may be included with the original claim form.

APPENDIX A 2020-2021 Kern County Grand Jury Report Phone (661) 854-3134 Fax (661) 854-0817 200 Campus Drive PO Box 548 Arvin, California 93203 New York and Company— Measure L Tax March 24, 2021 Page 2 of 2 Claims can be mailed or delivered to: City of Arvin Attn: City Clerk 200 Campus Drive Arvin, CA 93203 The City is providing a half a year to submit a claim, and all claims must be submitted by no later than October 1, 2021. If you have general questions regarding the claims process, please contact Ms. Cecilia Vela at (661) 854-3134. Note that the City is unable to discuss or disclose taxpayer information.

FINDINGS from the grand jury:

F1. The projected cost increases in KCFD services will have a major impact on the budget in FY 2022-2023 and for six years thereafter.
F2. The bus routes have been reinstated as of May 10, 2021. Transportation is now available to the general public.
F3. The City has notified the parent companies of the stores remitting the incorrect sales tax of the mistake (Appendix A) and the procedure for any claims for refunds (Appendix B).
F4. During the 2008 vote on Measure L, the community was led to believe the funds were to be used primarily for roads and public safety. F5. The current Council, because of their lack of experience, need additional education and training. F6. City officials have stated that revenue for FY 2020-2021 will be higher than anticipated and expenditures lower thus creating a more balanced budget.

Grand jury recommendations

RECOMMENDATIONS: R1. The Grand Jury recommends the City institute a funding source by July 1, 2022, to provide for the projected seven-year fire cost increases. (Finding 1) R2. The Grand Jury recommends the City utilize unclaimed Measure L funds for road maintenance. (Finding 3) R3. The Grand Jury recommends additional education and training for the City Council, provided by resources such as the League of California Cities, by August 30, 2021. (Finding 5)