BAUXITE — Bauxite officials have five weeks to reconcile tax records with the Internal Revenue Service and complete forms that were never filed. Then the town can work out a payment plan with the IRS for unpaid payroll taxes.
Bauxite Mayor Johnny McMahan said he talked with an IRS representative Wednesday, and on Thursday, he received another notice from the IRS that the town now owes an additional $7,000 from unpaid payroll taxes, bringing the total owed to around $34,000.
Earlier, the IRS had told city officials they owed more than $32,500 in unpaid taxes but that a $5,300 overpayment last year would be credited toward the money the city owes the federal government.
“They want us to complete some forms that should have been sent in years ago before they will talk to us about a payment plan,” McMahan told the Tri-Lakes Edition. “They are going to be sending us a transcript of their records of what the city owes and what we have paid, and what reports were never sent.”
The mayor said Bauxite officials will work with the assumption that the federal records are correct and then review what records they are able to find.
“I don’t know what word to use,” McMahan said. “I guess it is ‘shambles.’ Our filing system is a shambles, and trying to find an individual entry is like reinventing the wheel.”
The mayor and Bauxite City Council have received 11 notices from the IRS in less than a week, and McMahan said city officials are confused.
In February, the IRS took $13,635 from city accounts because of unpaid payroll taxes in 2007, an action that almost emptied the town’s general fund.
“Our fund is recovering, and we are able to pay our bills, but we don’t want this to happen again,” the mayor said.
The problems that town officials are exploring come from between 2007 and 2010 when Brenda Hendrix was recorder-treasurer. McMahan said he has invited Hendrix and former Mayor Gary Duncan to attend several City Council meetings to help unravel the information on the unpaid taxes. Both have declined through e-mails.
McMahan said the city does not have the funds available to hand over the total amount demanded by the IRS.
Allison Cain, a member of the City Council, has joined with other council members in suggesting that the town borrow the amount from a bank, rather than set up a payment plan with the IRS.
“I don‘t like to owe the federal government,” Cain said during a council meeting on Monday. The IRS may set up a payment plan, but it won’t be free.”
On Wednesday, it was announced that the city of Blytheville in northeast Arkansas owes the IRS more than $2 million in unpaid payroll taxes from 2009 and 2010.
Government officials of Helena-West Helena were also notified several months ago that the city owes the IRS for back payroll taxes.