Correction of State School Overlevy Errors

Intended audience: County assessors and treasurers.

This notice explains the steps to take when the amount levied for state school levy purposes differs from the amount certified to the county assessor.

What happens when the amount levied for the State School levies does not match the amount certified to the assessor by the Department of Revenue (Department)?

It depends on the amount of the overlevy or underlevy.

• Underlevy: The Department will include all amounts not remitted to the Office of the State Treasurer (OST) as part of that county’s fifth preceding year adjustment (RCW 84.48.110).

• Overlevy: If the overlevy amount is less than 5% over the certified amount, the additional amount is an authorized surplus and by law, must be remitted to OST (RCW 84.48.120). Any overlevy amount greater than the 5% surplus is considered a payment in error and must be returned to the taxpayers.

Who should be notified when an error occurs?

County assessors must notify the Property Tax Division of the Department, in writing, as soon as an overlevy greater than the 5% surplus is discovered. 

The Department needs reasonable notice of the overlevy. This is because if the overlevy error exceeds 5% then the Department will need to authorize an adjustment to reduce future property tax remittances to OST by the amount of the refund, ensuring the overlevy amount is not unintentionally included in the fifth-preceding year adjustment (RCW 84.69.050)

Can an overlevy for the state school levies exceeding five percent of the certified amount be refunded and how are overpaid property taxes returned to taxpayers?

Yes, the refund statute, RCW 84.69.020, authorizes a refund of taxes for many reasons such as the correction of incorrect tax amounts included in the tax roll. 

Refunds for the state school levies must be made by checks drawn from the appropriate fund or if the refund is applied on a levy code or tax code basis, the county treasurer may adjust the subsequent year’s property tax payments by the amounts to be refunded (RCW 84.69.060). Adjusting subsequent year tax statements can be a more cost-effective alternative to issuing individual refund checks.

Are errors in the state school levy correctable under the levy error correction statute, RCW 84.52.085?

No. State school levies are explicitly excluded from the correction methods under this statute.

How are individual parcel adjustments determined?

To calculate the adjustment for each taxable parcel, a corrected levy rate is determined using the total levy amount which includes the Department’s original certified amount and the authorized surplus. The adjustment rate is the difference between the new rate and the original certified rate and is then applied to the county’s taxable value for the state school levy.

For example, last year County A had a taxable value of $25,700,000,000. They levied $40,000,000 for the State School levy resulting in a levy rate of $1.55642023. However, this did not match the amount certified to the assessor by the Department, which was $37,000,000. The levied amount exceeds 5% leading to an authorized surplus of $1,850,000 and $1,150,000 collected in error.

• The following examples demonstrate how to calculate the authorized surplus of 5%, the total allowable levy, and the amount in error:
  • $37,000,000 * 5% = $1,850,000 (5% surplus).
  • $37,000,000 + $1,850,000 = $38,850,000 (total allowable levy).
  • $40,000,000 - $38,850,000 = $1,150,000 (amount collected in error).
• The levy amount, including the authorized surplus, is divided by the county’s taxable value for the state school levy to arrive at the corrected rate:
  • $38,850,000 / $25,700,000,000 * 1,000 = $1.51167315
• The corrected rate is subtracted from the original certified rate to determine the adjustment rate:
  • $1.55642023 - $1.51167315 = $0.04474708
  • The per parcel adjustment is determined by multiplying the adjustment rate of $0.04474708 by the taxable value of the parcel for the year the overlevy occurred.

Are there special considerations when making a refund or tax statement credit adjustment?

Yes, the treasurer should consider the following: 

• The credit adjustment is a refund under RCW 84.69.020 and must be included in the notice to the county legislative authority, which must be completed no later than the first Monday in February. 
• Property taxes for the year of the overlevy must be paid before an adjustment to a subsequent year’s statement can be made or a refund check issued.
• The credit adjustment must be calculated using the taxable value for the tax year in which the error occurred when determining the adjustment for each parcel. If there was a significant change in taxable value after the certification of the tax roll, a refund check may need to be issued instead of an adjustment to the tax statement.
• Refund checks must be issued, rather than adjustments, for parcels where the taxpayer who originally paid the property tax is no longer the owner or taxpayer of the parcel(RCW 84.69.090).

Questions? 

Please visit our property tax page or call 360-534-1400.