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IBM Wants $11 Million Tax Refund

August 3, 1999

SAN JOSE, Calif. (AP) _ City schools would be hit hard if IBM wins a lawsuit that could mean a property tax refund of as much as $11 million.

The New York-based electronics giant claims Santa Clara County over-assessed three of the company’s properties in San Jose by more than $1 billion between 1990 and 1994.

``The CEO of IBM ... has given a lot of speeches about the poor state of public education, but through a technicality, IBM is now attempting to get a tax refund that would directly impact in a big way schools,″ county tax assessor Larry Stone said Monday.

``Our commitment to education is indisputable,″ countered IBM spokesman Kevin McKee.

In the lawsuit, filed Friday in Santa Clara County Superior Court, the company argues the county overvalued its main San Jose campus and two other locations during the early-’90s recession.

The county said IBM isn’t entitled to money back because it didn’t appeal the assessment within the legal time limit _ between July 2 and Sept. 15 of the year in question. IBM did not ask for a specific dollar amount to be refunded.

Stone also said the county was worried that if IBM prevails, other companies will file similar suits.

``There have to be time frames and limits,″ said Stone, who estimated the impact at $11 million based on similar cases. ``We can’t leave ourselves open forever for tax refunds.″

IBM asked for a reassessment of its land holdings after a recent query from county auditors about the company’s estimate of the value of equipment and non-real estate assets.

The county turned the company down, prompting the suit, in which IBM asks that the value of the property for the years at issue be cut from about $2.8 billion to about $1.7 billion, on which it paid approximately $28 million in property taxes.

Schools, which get about 65 percent of local property taxes, would be most seriously impacted, and two districts _ the 12,000-student Oak Grove School District and the 23,000-student East Side Union High School District _ would take the hardest hits.

Hardy Childers, deputy superintendent of the Oak Grove district, is worried that a $1 billion loss in local property valuations could force small taxpayers to carry more of the cost of a modernization program at his district in south San Jose.

``We are very concerned,″ Childers said, pointing out that IBM is one of the companies complaining about education in California at the same time it’s seeking the refund.

``They can’t have it both ways,″ Stone said. ``This really is a double standard.″

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