Queen Creek faces losing more than $1 million in future sales tax revenue during difficult economic times because a developer made mistakes paying construction sales tax.
Town officials, along with the Arizona Department of Revenue, say Pulte Homes paid construction sales tax to Queen Creek while developing in unincorporated Pinal County, which does not charge construction sales tax.
A town e-mail states Pulte Homes has filed with the state amended tax returns back to 2004. During that time, Queen Creek was paid between $1 million and $1.5 million in construction sales tax, said Yolanda Bracamonte, Queen Creek controller.
"They were doing some internal reviews and noticed they had been paying things to Queen Creek that potentially belonged to Pinal County," Assistant Town Manager Patrick Flynn said. "They contacted the state."
Pulte Homes spokeswoman Jacque Petroulakis said a lot of the company's tax work is done out of its corporate offices, but the company always tries to pay what is equitable to the right entity.
"It appears to us that we inappropriately paid Queen Creek, and we're making that adjustment," she said.
Flynn said the state is auditing Pulte's amended reports, but some of the company's development was within town boundaries so they are unsure on the exact amount the company paid to the town.
"The state mentioned that it's possibly a million-dollar hit to us, but we don't really know the number." he said. "We're going to be auditing this ourselves to make sure."
No matter the amount, the Arizona Department of Revenue would not allow the town to pay it back with town reserves, but rather the amount would be deducted from future disbursements of sales tax owed to the town, Bracamonte said.
Queen Creek has forecast town sales tax income of about $13.5 million for the current fiscal year, and the projected $1 million loss would make a dent, town officials said.
Pulte Homes is developing Remington Heights in town, and two developments in Pinal County at Ironwood and Ocotillo roads: Lantana at Taylor Ranch and Copperleaf at Taylor Ranch.
Petroulakis said she was unsure of which developments are related to the construction sales tax issue but speculated it could be the company's developments at Taylor Ranch. Town officials said they were unsure of which developments were included in the audits.
"We're waiting on an audit to determine what is actually owed," Bracamonte said.
Dan Zemke, spokesman for the Arizona Department of Revenue, could not confirm the amount owed because of confidentiality issues.
"The business would be filing their monthly return and reporting the amount of sales they have," he said. "In this particular case they would have indicated the amount of sales in Queen Creek and paid the tax they said they owned to Queen Creek."
The town has long struggled with educating area residents and developers about town limits because unincorporated areas of Pinal and Maricopa counties share a Queen Creek mailing address.
"Boundaries are not always the easiest to define," Flynn said. "With all of these different boundaries and islands, it's difficult."
Town officials said town maps are available by calling (480) 358-3000 or visiting www.queencreek.org.
"This Pulte case is another example of the challenge we have as a town to try and define where our jurisdictional limits are," Town Manager John Kross said.