The Lake Stevens City Council voted March 25 to hold businesses to the gambling-tax amounts reflected on the quarterly forms they were sent, after staff acknowledged the city had been distributing a form with incorrect pull-tab and punch-board rates.

The action follows a department report from Barb (Finance staff) that letters were sent to nine businesses notifying them of an internal review and of amounts owed related to the form error. Barb said two businesses have paid the amounts requested, two have contacted the city, and one has submitted a formal request to waive back taxes in addition to penalties. She told the council Finance Manager Matthew Heist will compile requests and prepare materials for council action on April 8.

At the meeting, Council member (motion-maker) moved “that we hold true to the information that was sent out on the form as to the taxes due,” and a second motion followed. The motion passed; the council directed staff to notify affected businesses that the city will waive penalties tied to the form error, refund any payments made based on the incorrect higher amount, and return with additional payment-plan or waiver requests as needed.

Barb told the council the error produced roughly $50,000 in additional assessed tax due to the form mistake and another about $30,000 from unfiled returns. She said the city did not include the unexpected revenue in budget forecasts. Council members described the $19,000–$20,000 charges facing some individual businesses as a significant burden and discussed options including payment plans of up to six months or extending collection through the end of the year.

Council discussion also focused on ownership of the error and on clearer communications to avoid similar problems in the future. Barb said staff will send letters notifying affected businesses of the council’s direction, prepare refund processing for those who already paid, and bring any additional waiver or payment-plan requests back to council on April 8.

The meeting record shows no statutory requirement preventing the council from extending payment timelines or waiving amounts; Barb said she would confirm statutory limits with legal staff if needed. The council then moved on to other agenda items.