Home > FAQs Regarding the City of Lynnwood Retroactive Tax Payment
In 2025, an internal audit performed by the City of Lynnwood revealed that a utility tax was not being billed or collected from AWWD. As a result, AWWD and the City worked together to develop a plan to collect the unpaid taxes from the approximately 650 affected AWWD customers living in the footprint of the City of Lynnwood.
AWWD, who is required to collect that tax and pass it to the City of Lynnwood, has provided residents with up to 24 months to pay in order to lessen the burden. While the City states that the utility tax ordinance was passed in 2010, due to a legal challenge going to the State Supreme Court, the tax wasn’t able to be applied until 2020.
AWWD is a public utility working under state code; even when a tax is initially uncollected or missed, AWWD is obligated to pay taxes due to the City of Lynnwood. Since AWWD is a publicly owned utility that operates entirely as a cost-for-service agency, we must collect taxes imposed by the City of Lynnwood from our Lynnwood customers or they would be borne by our other ratepayer households elsewhere in the district, who are not subject to the City of Lynnwood’s increased tax rates. Washington laws explicitly require special purpose districts like AWWD to collect taxes required by cities that our district serves.
This situation is unique, and the District was notified by the City of Lynnwood formally last year of the tax and the city’s requirement to retroactively bill for 5 years. AWWD is committed to being fully transparent and operating fairly and equitably in our mission to provide clean and sustainable water service to our customers.
