There is a reason I practice criminal law instead of something far more lucrative, like tax law. Well, there are a lot of reasons, but the multiple calculus classes I was forced to retake in college hints at one of the big ones. When a case involves lots of math and value assessment methodologies instead of drug addicts or stabbings, it’s easy to get bored and lost in the numbers. This is why we have an accountant.
I think most people feel this way about taxes. We like to grumble about them in April, and (some of us, anyway) forget about them in November. And most people don’t spend a lot of time digging into the methodologies of how our taxes are assessed.
This is all by design. Taxes are crafted to melt into the background of our lives. Income and social security taxes come out of our paychecks automatically – too much, usually, to the point where we feel grateful to get our own money back come refund time. Sales taxes are built into the price of everything. Taxes on businesses are even more hidden, paid for by us all but hidden away in the price of the owner’s goods and services.
This is convenient, but it does create a distance between taxpayers and the people spending our money. It means both tax collectors and tax spenders are less careful and less accountable than they should be. When government bureaucrats feel unaccountable, they start to do some very stupid – and very expensive – things, like blowing multi-million dollar holes in county budgets.
Around 2003, various residents of Incline Village and Crystal Bay noticed their property tax bills inexplicably increased, or were radically different from similarly situated neighbors. It turned out that the county tax assessors were literally just making up their own rules for determining the taxable value of property.
The state Constitution requires that taxes be assessed in a uniform and consistent manner, which clearly was not happening. Individual taxpayers appealed administratively and sometimes won, but it soon became clear that the entire methodology was systemically suspect. Various homeowners got together, sued the county, and won. But because the correct taxes had to be reassessed, the matter got kicked back down to various government boards. And the state and county boards continued to be successfully sued for getting the “fixes” wrong.
For 17 years, Washoe County has been continuing to defend the indefensible tax collection, which stretched over five years in some cases, wasting time and money on a lost cause instead of issuing refunds as ordered over a decade ago. Up and down and up and down to the Supreme Court these cases went, wasting public resources and eroding public confidence in the government’s ability and willingness to treat taxpayers fairly (or use their money wisely).
The latest court order – hopefully a definitive one – was issued two weeks ago in a case that has garnered surprisingly meager local media coverage, considering just how impactful it is likely to be for all Washoe County taxpayers. Judge Kathleen Drakulich’s 57-page order details systemic failures of the tax assessors and the State Board of Equalization (which is supposed to correct such mistakes) — failures which resulted in the illegal taking of tens of millions of dollars from thousands of homeowners. The judge declared the government “acted arbitrarily and capriciously and in violation of the law.”
Just by way of comparison, when one of my clients takes cash from someone “in violation of the law,” they’re looking at a five-year prison sentence if they took more than $3,500.
Unable to put rogue tax collectors in jail, Judge Drakulich ordered the county to – once again – reassess the property values for the three tax years between 2003 and 2006, and then refund the homeowners who paid those taxes, with interest.
No one knows how much money that will cost, but given the tax rates and home values in that part of the county, it’s certain to be hundreds of millions of dollars. And all of that money (not counting the interest) was already spent years ago, which means today’s budgets are about to take a massive hit.
It is one thing for there to be a genuine dispute over a property’s value. That happens all the time. But it should have been apparent to the various government agents involved – the tax assessors, their supervisors, the county treasurer, the district attorney’s office, the county commissioners, the State Board of Equalization members – that things were not being done correctly across the board. Even if they thought they could defend it legally, it obviously wasn’t the right thing to do. The opportunities to stop the bleeding before we got to sixteen years of interest payments were legion, but not one person on the government side had the courage (or at least foresight) to call a time out and do on their own what a judge is now (once again) directing them to do.
It’s easy to see why politicians want to talk about gun control or social issues or plastic bag bans or any given Trump tweet. That stuff is exciting and easy to grasp, in spite of none of it (statistically speaking) having a particularly significant impact on our daily lives.
It is the “boring” issues which affect us day-to-day. Tax assessors have more power over us than any other government agent, and yet we rarely – if ever – think about them. And it is also easy to dismiss the wealthy people living up at the Lake as whiners who shouldn’t begrudge paying a little extra, as if rich folks deserve to have their property stolen from them.
But if agents of the government feel bold enough to illegally take money away from the rich and politically powerful, how does one think those same agents will treat people without power (or access to an army of tax lawyers)?
I, for one, am grateful for the attorneys who specialize in the “boring stuff,” and for their clients willing to spend the time, money, and effort to make sure the government is playing by its own rules. In the meantime, let’s hope government bureaucrats of all stripes take the lessons of this tax debacle to heart, and recommit themselves to stopping these types of taxpayer abuses without waiting for a judge to order them to do the right thing.
Orrin Johnson has been writing and commenting on Nevada and national politics since 2007. He started with an independent blog, First Principles, and was a regular columnist for the Reno Gazette-Journal from 2015-2016. By day, he is a criminal defense attorney in Reno. Follow him on Twitter @orrinjohnson, or contact him at [email protected]
Here is Judge Drakulich’s order: