LIHUE — A Kapaa resident recently found out she had overpaid on her property taxes by thousands of dollars over the past seven years due to a clerical error at the county finance department, whose officials have admitted they made a mistake but declined to refund about half of the money.
Rachel Davis discovered the error after she posted a rant on Facebook in September, complaining about the transformation of a Princeville community, where she owns a condo she bought in 2001 as a future retirement home for her parents.
Near the end of the post, Davis mentioned that despite renting the condo only to permanent residents, she was being taxed at the transient vacation rental rate, which cost her over $4,000 a year.
“What am I to do?” she asked. “We DO NOT vacation rent! Never have. Never will. Our maintenance fees are $700 a month! We make nothing!”
By the following day, two county councilmembers, Luke Evslin and KipuKai Kualii, had responded to her post to confirm that her condo had been stuck in the wrong tax category and instructed her to inform the county’s Real Property Assessment Division.
Within days, Davis got a letter in the mail from the Department of Finance, notifying her that she would be receiving refunds on her 2017, 2018 and 2019 property taxes, due to “clerical error.”
In the past three years, she said she paid $4,062 in excess property tax.
Davis was glad to get the refund so promptly but knew she had been paying vacation rental rate since 2013, despite notifying the property assessment division on two separate occasions that her condo was being rented exclusively to tenants who stayed at least a year.
She has a copy of the tax assessors survey she completed in May 2012, with an X on the box marked “Long-Term Rental.”
She also kept a copy of her application to the county’s tax relief program for owners of long-term, affordable rental units, dated Sept. 30, 2013.
“They should have caught then that I was renting it long term,” she said.
According to the Real Property Assessment Division’s online records, Davis paid over $10,000 in taxes on her Princeville condo from 2013 to 2016, roughly $3,500 more than the amount she was required to under the correct residential rates for those four years.
In an attempt to get the rest of her money back, she visited the finance department near the end of September and brought her complaint to a tax assessor.
Several months passed. Davis heard nothing further from county officials. So, she called The Garden Island.
In response to TGI’s inquiries about the matter, Finance Director Reiko Matsuyama sent two sentences via email Friday: “Miss. Davis’s refund has been processed, which is due to her as a result of a clerical error on the part of the County of Kauai. Her refund will be sent out sometime next week.”
In the email below Matsuyama’s statement, a county spokesperson copied all of Section 5A-1.20 of the Kauai County Code. Subsection (a)(4) begins, “No such adjustment shall be entered on the records nor refund made except within two years after the end of the tax year in which the amount to be refunded was due and payable.”