Missing a $26,234 tax refund?

October 13, 2011 

Los Angeles County is $2.32 million richer this week, thanks to more than 6,000 unclaimed property tax refunds that have nowhere to go but the county’s general fund.

State law authorizes counties to keep excess tax payments if no one claims them for four years. So every year about this time—as tax bills go out to millions of Southern Californians—the Treasurer and Tax Collector’s Office reluctantly deposits another pile of money from over-payers who couldn’t be located.

This year’s unclaimed refunds, from 2005-06, were only a tiny fraction of the more than $11 billion collected in the county that tax year. Many were for modest amounts ($1.59 was the smallest), but someone out there also failed to claim a refund worth $26,234.

Los Angeles County Assistant Treasurer and Tax Collector Nai-len W. Ishikawa says the county tries hard to track down recipients of refunds, and gets better at it every year; unclaimed overpayments have steadily declined for the past three years, even though collections rose during the tax periods involved.

But sometimes, the trail just goes cold, she says.

“Sometimes the property owner has passed away,” says Ishikawa. “Sometimes there’s been a change in ownership and we don’t have the person’s address.”

Typically, she says, overpayments occur when a tax bill has been inadvertently double-paid by spouses or a mortgage company and the county lacks sufficient information to generate an automatic refund. This, she added, can happen when the overpayment has been made via cash, a money order or an unaddressed check.

In other cases, the county gets a payment, but can’t apply it because the taxpayer forgot to include the bill stub or to write the parcel number on the check or wrote an invalid number, she says.

Although the vast majority of unclaimed refunds this year—about 5,500 items totaling about $1.43 million—were for overpayments, checks with missing parcel numbers or bill stubs hardly amounted to pocket change. In all, there were 942 of them, totaling about $880,000. The largest was $17,412.

Ishikawa says the county cannot issue a refund without documentation of an overpayment. But, she added, taxpayers can claim their money even after the 4-year deadline if the documentation shows that the county has made a mistake.

Donna Doss, the assistant treasurer and tax collector whose staff processes payments, says unclaimed refunds automatically go into a special file. Staffers in her office then begin the arduous process of finding and notifying the recipient before the 4-year deadline.

“We check our records to see if they own additional property in the county,” Doss says. “We look for any address on file within the county and send letters. We contact the title company.”

About 99% of the overpayments are cleared up, she says: “Often, we are able to locate people and they’re happy to receive their refund.”

But, she adds, staff is limited and searches can’t last forever. Each year, the county generates and processes about 2.3 million property tax bills. Less than one-hundredth of one percent of payments end up with unclaimed refunds.

“Our main mission is to collect taxes, after all,” Doss says. “At some point, you hit diminishing returns.”

Posted 10/13/11

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