Virginia Department of Taxation officials said last week that they will promptly repay Prince William County about $1.2 million in sales tax revenue that was inadvertently distributed to the City of Manassas and other localities.
For several years, the state mistakenly had been sending sales tax revenue from businesses in Prince William to five other localities, according to county Finance Director Barry Atwood.
The state agreed last week to pay Prince William the money it is owed in a lump sum, officials said, although the jurisdictions that improperly received the tax revenue can repay Virginia in smaller increments.
The solution offered by the tax department allows Prince William to quickly recover the money it is entitled to, but does not overly burden the other jurisdictions by forcing them to return on short notice a large sum that they thought had been theirs, officials said.
"It's a win-win situation," Atwood said.
Although the bulk of the wayward tax revenue was sent to Manassas, other localities to receive funds were Manassas Park, Alexandria, and Fairfax and Roanoke counties.
Of Virginia's sales tax rate of 4 1/2 cents per dollar, one cent is returned to the local government where the sale took place, one cent is returned to the local school system, and the rest goes to the state.
Atwood said the improper sales tax allocations came to light during an investigation by his staff to determine why tax revenue was fluctuating unpredictably.
Republican Del. John A. Rollison III, whose district lies in eastern Prince William, said he negotiated with state officials to devise the repayment program.