Vidalia mayor: No law was broken in unpaid tax issue

Published 12:06am Wednesday, October 3, 2012

Mayor Hyram Copeland said Tuesday nothing illegal occurred within City Hall regarding $635,412 in unpaid federal taxes the city owed, but it’s still something he’s looking into.

The city’s tax troubles were something Copeland said he was not aware of until a representative with the Internal Revenue Service arrived at Vidalia City Hall Thursday to collect the unpaid balances.

“I didn’t receive any notices,” Copeland said. “There’s nothing illegal that’s been done or anything like that, it’s just that some people didn’t do their jobs.”

The entire unpaid balance, Copeland said, was paid Friday to the IRS representative — contradicting City Attorney Jack McLemore’s statement Monday night that a check was sent after a notice was filed on Sept. 18.

“We paid the total amount immediately as soon as we found out about it,” Copeland said. “But I’m sitting down with my staff and even the IRS this week to go over everything more in-depth.”

Former City Manager Ken Walker, whose last day was Sept. 18, said he was unaware of any situation involving the city and the IRS.

“If that’s what they’ve uncovered, I’m not aware of that at all, and that’s totally new to me,” Walker said. “There may have been errors, but no city employees have ever done anything with malice.

“It had nothing to do with my decision to leave.”

And until he’s had a chance to examine the situation closer, Copeland said he wouldn’t comment on how the notices might have gone unnoticed or how the city paid the $635,412 last week.

“I don’t want to make any statements until I have all my facts,” Copeland said. “I just don’t have all the answers right now, but I will soon.”

Dee Stepter, IRS spokeswoman for Mississippi and Louisiana, said the IRS is prohibited by federal privacy and disclosure laws from discussing the tax situation of any taxpayer or group of taxpayers. Stepter would also not answer general questions about the Vidalia situation.

The situation is something Copeland said he’s never dealt with in his time in office.

“I’ve been around a long time, but we’ve never gone through anything like this before,” Copeland said. “We’re taking appropriate measures to get everything in line with the city.”

The unpaid payroll taxes included amounts withheld from employee paychecks beginning in 2006 and continuing sporadically until 2012 for income taxes, Social Security and Medicare.

Those unpaid balances resulted in the Internal Revenue Service filing federal tax liens at the Concordia Parish Clerk of Court’s office Sept. 18 against the City of Vidalia.

Just under $200,000 of the assessed taxes were for tax periods ending in late 2011 and 2012, but approximately $450,000 were for periods between 2006 and 2010.

A federal tax lien is the government’s legal claim against an individual, business or government entity’s property when a tax debt isn’t paid.

The lien arises automatically when unpaid balances aren’t paid within 10 days after an initial notice is sent, according to the IRS website.

After the 10 days, a notice of federal tax lien is filed, which publicly notifies creditors that the IRS has a claim.

Once a lien arises, the IRS generally cannot release the lien until the taxes, penalties, interest and recording fees are paid in full or until the IRS may no longer legally collect the tax, the site stated.

The notice filed against the City of Vidalia lists nine unpaid balances, and two penalties for failure to file information returns or wage and tax statements.

• The two penalties filed are listed for tax periods ending in 2007 and 2009 but assessed in 2010 and 2012, which total $12,866.86.

• Three unpaid amounts were listed for the tax period ending on Dec. 31, 2006, and assessed in 2008 and 2009, which total $64,544.22

• Two amounts are listed for tax periods ending in 2010, and assessed this year, which total $371,209.28.

• Three amounts are listed for tax periods ending in 2011 and assessed this year, which total $178,439.51.

• The most recent unpaid balance listed on the notice is for the tax period ending on March 31, 2012, for $8,352.89.

The total for all unpaid balance of assessments does not reflect accrued interest, penalties or payments made after the notice was filed.

The IRS places a 10-year statue of limitations on lien collection. After that term expires, the notice can be refilled or released.

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  • Anonymous

    In the past when I owned a private business, I received new form 940 and 941 booklets in the mail with coupons to be included with my regular quarterly payments. While these may not be the exact forms used for municipalities, the principle is the same. If they got these booklets in the mail and all the other notices I’m sure the IRS mailed out, I guess I would start looking at the mailroom and beyond for whose desk they crossed before being round canned or filed away for eternity. As a taxpayer, I also question why the IRS took so long to collect the money when our federal deficit is in the mid teen trillions. Maybe a few more calls on New York, Chicago, Los Angeles, Houston, Dallas, Miami, etc. would solve the federal deficit. Vidalia rendered over $600K, just think of how much they could collect from those larger cities nationwide.

  • i2bdun

    This might not be the reason the city manager left, but you can bet your bottom dollar he knew about this not being paid! After all, he IS a certified CPA and he was the one responsible for all the citys monies….he was the comptroller. Keep on digging, there is more dirt he has left behind I would bet!

  • Anonymous

    Why wasn’t this caught in the annual audit? The unpaid liability had to be reflected somewhere in the city’s books.

  • Anonymous

    Failure to remit withheld payroll taxes is illegal. This sounds like a coverup.

  • Anonymous

    snakes are a crawling

  • Bob Buie Sr

    I hope that the good citizens of Vidalia fully understand
    the seriousness of its current problems relative to the manner in which the
    city government has handled, or, failed to handle their tax monies in a timely manner with the IRS.

    A sure sign that there
    are problems much deeper and wider than the failure to pay timely can be
    seen by the fact that citizens are being told things that are “south of the
    truth” and secondly, that a mayor that I have always personally admired and respected
    is putting a ”spin” on the facts of the matter.

    The biggest problem here is that is is possible and very
    likely that employees of the City of Vidalia who have retired since 2006 and
    are drawing their Social Security benefits are being short changed in their
    retirement checks. Wages from that period are posted by the IRS to each of
    those individuals retirement accounts and are used in the calculations of the
    amount of SS payments that they receive. Chances are that you are not being
    paid what you have earned and receiving. This problem could conceivably take
    several years to be resolved due to the inefficiencies of the IRS itself in the
    time it takes to be placed in their records.

    The taxes withheld from an employee’s paycheck belong to the
    employees until it is received by the IRS.

    The employers’ matching funds from the city are the taxpayers’
    money which have been entrusted to the city to ascertain that they be used specifically
    for that purpose and in a timely manner. Failure to carry out these duties by
    the city shows a total environment of incompetence in city hall, a sign that
    the city is willfully negligent, or the city’s inability to meet its financial obligations
    (bankruptcy) over a long period of time.

    Payroll taxes are carried on the books of any entity,
    private or public, as an “accrued liability” and until paid, will remain there
    and continue to build until it is paid. In this particular case, this figure
    had built to a huge figure that would have been impossible for tax persons;
    payroll related persons, city manager and the Mayor and Alderman to possibly
    not have noticed if any had ever remotely glanced at the financial status of
    the city. Walker is gone, for whatever reason, but hopefully his negligence
    will follow him wherever he goes. The Mayor‘s office is where the “buck” stops
    so it will be interesting to see how things play out from here.

    Vidalia has spent tons of money on improving their community
    but was it justifiable. Was it right to build a new recreation center using
    employee’s hard earned monies. Time will tell.

    I hope that this will be a wake up call for Vidalia’s
    neighbors, city and parish/county, that will be looked at promptly. This same
    practice is flagrantly violated by many, many businesses on all shapes and
    sizes and is not so easy for the employee’s to detect and correct. It can be a
    serious problem. Perhaps the Natchez Democrat can help the citizens here by obtaining,
    through the Freedom of Information /Sunshine Act, enough records to do some
    investigative reporting. It would be interesting?

    Bob Buie Sr

    Miss/Lou resident

  • Anonymous

    Yep, you are exactly right. The Democrat, Concordia Sentinel and Miss-Lou Magazine should file FOA requests for ALL the IRS tax notices received during the period and any and all e-mails with regard to the tax deficiencies. I would think it’s more likely the W-2 salaries were correct and it’s just that the taxes weren’t remitted off and on – mostly off – for FIVE years. Independent auditors should have caught the huge payroll liability figure on the books.

  • Anonymous

    A friend just called and said the Concordia Sentinel just reported on its website that Ken Walker took full responsibility for the shortfall and said that interest and penalties amounted to roughly $300,000.

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