Does mistake in legal briefings blow hole in Sound Transit’s car-tab case?

An admission by the Attorney General’s office to the state Supreme Court that it used an “inaccurate factual statement” in legal briefings could be a major blow to Sound Transit’s legal argument in the car-tab tax case, according to a nonprofit free market group.

Taxpayers angry about paying higher car-tab taxes are challenging the 2015 law that enabled Sound Transit to seek voter approval to increase the car-tab tax rate. They argue the law is unconstitutional because of how it was drafted, the result being that taxpayers can’t calculate their tax bills.

In defending the law, Sound Transit attorneys wrote that a 2006 Supreme Court ruling required it to use a 1996 schedule to value vehicles when it levies the car-tab tax. That schedule inflates the value of a new vehicle over its first 10 years compared to the Kelley Blue Book, pumping more money into Sound Transit’s coffers.

The 2015 law that lawmakers approved did not use a valuation schedule that the Legislature approved in 2006, which set lower values for nearly all ages of vehicle than the 1996 schedule. That would have meant less tax revenue for Sound Transit.

In its legal briefings, the attorney general’s office echoed Sound Transit’s statement in its filings that the 1996 schedule dictates the value of vehicles when it levies the car-tab tax.

But a day before the Supreme Court held oral arguments in the case, an attorney representing the plaintiffs said he learned late last week that Sound Transit and the state Department of Licensing — which calculates and collects the car-tab tax revenue on behalf of the agency — have used a 1999 schedule that statewide voters approved a year earlier.

That blows a hole in the transit agency’s legal argument, said Mariya Frost, transportation director for the Washington Policy Center, a nonprofit free market group.

“Sound Transit’s argument to the Legislature and to the public for why they will not change to the 2006 depreciation schedule, which is more in line with market value, is that they are compelled by law to collect on the 1996 schedule, which is obviously not true,” Frost said.

The Attorney General’s Office informed the Supreme Court about the new information shortly before oral arguments began Tuesday.

“We write to notify the Court immediately of this error. The State will not be presenting at oral argument, which will be handled by Respondent Sound Transit, and the State takes no immediate position on the implications of this issue,” wrote Dionne Padilla-Huddleston, an assistant attorney general.

Sound Transit said use of the 1999 schedule — which is nearly identical to the 1996 one with the exception of being more favorable to taxpayers who own two and three-year-old vehicles — should have no bearing on the case.

“As a matter of fact, it would not have mattered what year was put into the statute,” transit agency attorney Desmond Brown told the justices. “You can’t determine or calculate your car tab tax unless you contact the Department of Licensing.”

Plaintiffs say the transit agency should be ordered to return hundreds of millions of dollars collected from taxpayers since Puget Sound area voters approved the car-tab tax rate increase in 2016. Sound Transit also must be prohibited from collecting that tax in the future, unless the Legislature votes again on the matter, they say.

The Supreme Court is expected to release an opinion on the case within months.

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James Drew covers the state Legislature and state government for McClatchy’s Washington papers: The News Tribune, The Olympian, The Bellingham Herald and The Tri-City Herald.