Austin Energy Overcharges Williamson County Customers by Some $300,000

by | Sep 12, 2016

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An investigation by NBC-TV affiliate KXAN has prompted Austin Energy to review, and most likely, to refund, a 1 percent metropolitan transit authority (Metro) sales tax levied on thousands of residential customers in Williamson County, according to a memo sent September 8 to Austin Mayor Steve Adler (D) and the members of the City Council.

The publicly-owned electric utility provides electricity to more than 448,000 customers; including a population of almost one million in the city of Austin, several neighboring towns, unincorporated areas of Travis County – and 6,000 residential customers in part of Williamson County.

A spokesperson for Austin Energy told KXAN that the utility’s customer service office applied the tax incorrectly. “We’ve been collecting a Metro sales tax we shouldn’t have been collecting,” said Robert Cullick, who estimated that, within the past four years the utility may have collected over $300,000 in taxes that will need to be refunded. Cullick said that the utility had stopped levying the tax on September 8 and is now working with the Texas Comptroller to find customers eligible for a refund. The refund would apply to residential customers – not commercial customers.

As part of the reimbursement, the utility will have to find former customers, to whom it will issue a refund by check. It appears the taxes were sent to Capital Metropolitan Transportation Authority (Metro) according to the memo.

Austin Energy generates City of Austin Utilities combined bills for utility services and related fees. Included on these bills are taxes for numerous taxing entities, including library district, metropolitan transit authorities, and emergency service districts. In total Austin Energy collects the taxes from residential customers one behalf of nine separate taxing entities. The funds are forwarded to the Texas Comptroller of Public Accounts, which then distributes the funds to the appropriate taxing entity – in this particular instance, Capital Metropolitan Transportation Authority. Austin Energy and the city of Austin do not receive any revenues from the tax collection on behalf of these entities.

KXAN spoke with Rep. Tony Dale (R-Cedar Park), who said he would be making sure the taxes are accounted for and refunded. Dale’s district includes the area where the customers were incorrectly taxed. We are going to continue to monitor this … and make sure everyone who is due a refund receives a refund,” Dale stated.

Austin Energy is now conducting an “extensive review” of its tax collection practices for external taxing entities. The review will include hiring an outside firm to conduct an external audit, according to the memo.

A series of KXAN requests, submitted under the Texas Public Information Act, as well as numerous phone and email inquiries about the metro sales tax spurred the utility to investigate and reverse the tax in a part of Williamson County, the news outlet reported. KXAN reviewed state and local tax codes and found no taxing authority that allowed Austin Energy to apply the sales tax to residential electricity customers in the unincorporated area of South Williamson County.

It is not clear yet whether there are other pockets of Williamson or Travis counties that have been taxed incorrectly.

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