Sales Tax Proposal to Help Solve IRS Woes in Blytheville, Arkansas
- Sep 12, 2011 | Susan McLain
The IRS is wondering where some back payroll taxes are in Blytheville, Arkansas. So is the mayor. According to the Associated Press release “Officials were notified in March that taxes for 2009 and 2010 were overdue. They’re trying to determine why they weren’t paid.”
While trying to determine why the taxes weren’t paid, the city has to figure out how to collect enough additional revenue to pay the penalties as well as the taxes. Mayor James Sanders says that the IRS “…wants the city to pay $10,000 a month beginning in October, sell its approximately 700 acres of farmland and close Thunder Bayou Golf Links” in order to begin to cover the debt.
The sales will not cover the debt owed with penalties, so the city is striving to show the IRS due diligence in resolving the matter. As a result, the mayor has proposed a 14-month, 1-cent sales tax to pay the estimated $3.2 million bill.
Should the IRS not view their efforts as diligent enough, they “…can place liens on city property, which would reduce Blytheville’s credit rating, eliminate its ability to borrow money, possibly prevent grants and stifle economic development.” Other options to deal with the debt could include layoffs and reductions in services to remediate the tax owed.
The original audit showed deficiencies were human error (those persons are no longer in their positions) and that the taxes were withheld from paychecks, but not properly submitted to the IRS. Sanders would rather not go “…back to our employees even in the sense of layoffs, because these folks did what they were supposed to do” and emphasized that the “1-cent sales tax would assist us in taking care of this as quickly as we possibly can so we can move forward.”
Residents of the city may not agree. One resident expressed that officials were “delusional if they believe patrons will pass a 1-cent sales tax with the state of the current economy.” Of course, the results of not paying the debt back can be extreme—funds and accounts can be frozen, employees laid off, government shut down.