Leachville Council hires tax consultant

Thursday, August 5, 2004

The Leachville city council held a special called meeting July 28 to discuss taxes and liabilities with city attorney Mike Bearden.

Bearden distributed packets of information to the councilmen present.

Bearden stated that it had been found that for several years there had not been any withholding taxes paid into the Federal Government nor to the State Government. The figure had been stated anywhere from $250,000 to $500,000.Documents had been found showing some penalties and fines were also outstanding.

Bearden proposed that a tax consultant be hired by the city.

He referred to information on Frank A. Hurst, an enrolled agent of the IRS. Bearden said, if hired, Hurst would be able to find out the last time anything had been filed and also work out a compromise with the government. Hurst's retainer would be $2,500, non-refundable and $300, per hour if more time was needed. Bearden would give Hurst the starting and stopping points.

Bearden said Hurst could find out needed information and that he would handle the state problems. This would be a way to start out and see where the city stands and then work forward resolving the problem.

Hurst will require a contact person or a go-between with the city, and it could either be Bearden, the city clerk, or Mayor Ralph Wells. Hurst would need to be given power of attorney to do this work and speak to the IRS.

Stan Whitlow, accountant, said he felt that neither 941 nor 940 forms had been filed with the IRS. Bearden questioned who filed these and it was reported that in the past the city clerk had been responsible. Bearden emphasized that this was a very serious problem because these payroll taxes are a trust fund.

Whitlow said that most of the penalties were civil penalties for failure to report and send in the yearly W-2 forms. After failure to return, a fine of 10 percent of total payroll would be accessed.

Bearden expressed concern that the tax money had been spent on purchases such as heavy equipment that the city really could not afford. He also expressed concern over potential criminal repercussions toward the city or city officials, as municipalities are handled differently than individuals.

The council voted to hire Hurst at the cost stated earlier. Bearden was chosen as the go-between and Mayor Wells would sign a POA for Hurst. Wells will sign a contract and a check will be issued for the fee.

The next regularly scheduled council meeting will be at 7 p.m. Aug. 2 at Leachville city hall.

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