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.”
The people in the county finance department are not very well trained or knowledgeable. When I first moved here I was not familiar with the tax categories so I went to the county finance office and told the lady at the desk that I would be renting out a room in my home. I was told that I should indicate that it was a rental property. Only a year later did I realize that since I was renting long term that it was a residence, not a vacation rental. I had not been told about that category by the person in the finance office so I ended up paying a thousand dollars too much the first year. I guess that’s what happens when you live in a county that hires people because they are friends or relatives, not because they are qualified.
Ted maybe you should move to a place with taxes and residents you can tolerate and live together peacefully rather than belittle. Do your own thorough research and don’t rely on others. It’s your money.
The Kauai tax system is flawed and discriminatory. Most places tax their residents with one tax group, not a crazy fragmented system like we have here. In many states and counties you pay the same tax as anyone else regardless if you rent or not. Having five, six and seven categories is confusing and this article shows that not even our officials can keep it straight. Then when they make a mistake, they don’t own up to it. They penalize you for their mistake. Crazy! This lady should be given every cent back she has paid in excess.
Sounds like the County owes her from when she first filed a complaint, not when the County decided to act.
Unbelievable.
Sue the county.
Yes, she needs a lawyer.
I couid MAYBE see if she mis-filed something, and just noticed but this is the county’s fault and should be fully refunded. LAME way to treat a tax payer.
Shouldn’t she be owed interest on the money, too?
I am sorry that this person has to find out the truth the hard way…. but it doesn’t change the fact that humans err and then run behind a recent manmade law, usually enacted behind closed doors to blink the unsuspecting homeowners out of so called necessary taxes…
My suggestion is that everyone who thinks that they have a right to own land in Hawai’i first read Dr. Sai’s books, blogs, watch the videos on YouTube and then decide what to do! You may be running for the refund from your property payments from your title insurance when the truth hits !!!
Meanwhile the unlawful government occupation and all the players will continue to rob us blind…. even if the person who you voted for really seems like a nice person.
HAWAIIANKINGDOM.ORG
I am guessing it reads, “if you arrived by boat, the secret plans are afloat. If you arrived by plane then your title search was done in vein.”