LITTLE ROCK — Blytheville is trying to figure out why it owes the Internal Revenue Service more than $2 million in back payroll taxes, city officials said Wednesday.
“We’re still investigating the incident,” said Shirley Overman, the chairman of the City Council’s finance and purchasing committee.
“We thought that it had been paid.”
City officials were surprised in late March, when the city received a letter from the IRS saying it owed $2,007,843 for 2009 and 2010, Overman said.
The city of more than 15,000 people has an annual budget of about $16 million.
City officials do not believe that the money was misappropriated but rather that some sort of “mistake” was made in the city’s accounting office, she said.
The city has hired a tax attorney from Memphis to help resolve the issue.
If it turns out that the city does owe that much, Overman said, it will have to work out a payment plan because the city does not keep that much extra cash in its bank accounts.
The mayor of Blytheville, James Sanders, took office this year and said the taxes went unpaid during the previous administration.
He said the 2011 taxes have been paid and that safeguards have been put in place to ensure that taxes are current in the future.
Sanders added that the state Legislative Audit Division is conducting an audit related to the tax situation.
IRS spokesman David Stell said Wednesday that he’s not legally allowed toshare any information about any taxpayer or tax entity.
In general, he said, the IRS first notifies the tax entity in a letter or series of letters that taxes are delinquent. If those notices go unheeded, Stell said, his agency can file a tax lien.
Bauxite and Helena-West Helena also have been notified in the past several months that they owe backpayroll taxes. However, those amounts were much lower than what Blytheville was told it owed.
Arkansas Municipal League spokesman Whitnee Bullerwell said Wednesday that although there have been a few cities in the state with similar problems this year, she’s not seeing a trend.
“From time to time, isolated instances do pop up throughout the state, and we believe that’s what this is,” Bullerwell said.
Arkansas, Pages 9 on 05/19/2011