Audit Finds IRS Money Went for City of Blytheville’s Services

The city of Blytheville used money that should have gone to the Internal Revenue Service to pay for other city services, according to an audit released this month by the Legislative Joint Auditing Committee.

“The report doesn’t say anything about any kind of missing funds because we could not determine that any funds were missing,” June Barron, deputy legislative auditor, told Arkansas Business last week.

The audit found the city failed to file employment taxes in 2009 and 2010, which resulted in a bill of $3.77 million to the IRS for back taxes, penalties and interest.

The audit found that city managers “should implement procedures to ensure federal withholdings are properly remitted and reported.”

The city reported that it was current on its 2011 taxes and a plan was being worked out to repay the taxes, the audit said.

Part of the plan calls for asking Blytheville voters on March 13 to approve a 1 percent sales tax to pay the bill. If the tax is approved, it would last for 15 months.

“These unremitted federal payroll taxes will have a significant impact on the operations of the City until resolved,” the audit said.

The audit also showed that every year between 2006 and 2010 the city spent more than it generated in revenue.

In 2010, it spent $10.2 million but generated only $9.8 million in revenue.

Blytheville Mayor James Sanders, who became mayor in 2011, said the city was working to solve its financial problems. Barrett Harrison was Blytheville’s previous mayor.

Sanders said several options were being discussed to pay the taxes, including selling the city’s property.