Leachville tax liability totals $368,197.55

Wednesday, March 23, 2005

The Leachville City Council met in regular session March 7 forming a special task force to comprise an offer for partial payment of the $368,197.55 owed by the city in back taxes.

"Ruth Ann Keith (city clerk), Mike Bearden (city attorney) and I met today and talked about the tax problem," Mayor Ralph Wells said. "We can pay federal tax to settle our account, if arrangements are made. We need four volunteers to meet with Mike, and serve as a task force. The task force will present a proposal to the IRS on how we plan to pay and settle our account."

Task Force volunteers included Shelia Spurlock, Teresa Johnson, Bill Hetler, and Anna Beth Thomas. Other councilmen, Bobby Crites and Tommy Stone, agreed to meet also.

"This should be a joint decision and all six council members need to be involved," Spurlock said. "We need all of the minds we can get on this."

Aldermen Crites and Stone agreed to meet with the task force also.

The council discussed lack of notification from state officers concerning the tax issue.

"The auditor knew this was a problem we were having," Keith said. "It was put in a pre-exit audit, the one that I saw. We got calls from the state asking how we were handling it. Mike (Bearden) wrote them a letter on it. They don't give us a full book audit. This is a proposed agreed upon procedure, where they pull 60 items, bank statements and financial reports."

Frank Heath, of Tax Resolutions, Georgetown, TX, wrote a letter to Keith on Feb. 21, 2005, concerning the total tax liability. Keith mailed council members copies of the two page letter.

The letter stated, "As the result of the filing of delinquent employment tax returns, Forms 941, for the quarterly periods from 1-1-01 through 12-31-03, the IRS has sent the first notices demanding payment. The total tax liability, including penalties and interest computed to 2-10-05 totals $368,197.55. A second notice should be sent the week of Feb. 28, and a final notice that threatens the filing of a federal tax lien and seizure of property, the week of April 4. It will be crucial to negotiating with the IRS to make a proposal no later than April 10, 2005.

"An offer in compromise may be considered if the city could pay an amount equal to the employment taxes withheld for employees for the three year period in question. The amount is $156,207.20.

"There is a small window of opportunity, during the next 45 days, to assess the cities ability to pay, weigh options, and make proper choices in dealing with this very serious matter."

The task force agreed to meet at 5:30 p.m. Wednesday, March 9, to propose a compromise to send to Heath.

"What responsibility does she (Teresa Austin, former treasurer) hold in all this," Marilyn Looney said.

"This will be decided when this all comes out," Wells said.

Other business consisted of:

*Discussion of the Employees Handbook.

"I don't see any problem with it," councilman Anna Beth Thomas said.

"There are a few things that need to be corrected," Ruth Ann Keith, city recorder, said.

"I wish he (attorney Mike Bearden) would come and tell us what we need to do," Alderman Teresa Johnson said. "We shouldn't have to call him one on one."

"He (Bearden) couldn't come tonight, as he is teaching a class." Keith said.

No changes were made on handbook.

*The council discussed the park grant. Alderman Bob Crites voiced concerns about the skateboard ramp and the city's liability.

"We got $75,000 grant," Mayor Ralph Wells said. "We have to put up 25% of that in cash. We are trying to get donations to help."

"Marcia (Davis) was wanting permission for a mail out," Crites said. "The postage would run about $300."

A motion was made to do the mail out, but died for lack of a second.

"Perhaps we could help Marcia in another way to get the word out, but not the mail out," Alderman Sheila Spurlock said.

The council passed a motion, 5-1, to get the word out by using other means. Crites opposed the decision.

*Reports on charge cards were given by Crites.

"We have two Visa cards, and one Sam's card," Crites said. "The others have been destroyed. The word was given that the cards have to be signed out when used."

*The council discussed placement of no parking signs near corners on Highway 77, and Dr. Rodman and Main, to prevent blind spots.

The decision was tabled until the next meeting.

*The council discussed possible cutbacks in expenditures and money on hand. Discussion included reduction in amounts of city cell phones, possible reduction of employees, special accounts and listing of all C.D.'s. Financial reports were requested from the Firemen fund and LIDC account.

*The council discussed trash problem along Main Street. Mayor Wells agreed to talk to merchants aoubt keeping trash picked up.

"We can't descriminate with one or two, but need to contact everyone," said Crites said.

The next regularly scheduled council meeting will be held at 7 p.m. April 4 at city hall.

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