The Arkansas State Police said Friday morning that it is considering a request to open an investigation to determine what happened to $2 million that the city of Blytheville should have used to pay to the Internal Revenue Service but didn’t.
"No case file has been opened at this time, but it’s under consideration," State Police spokesman Bill Sadler told Arkansas Business.
Scott Ellington, the prosecuting attorney whose jurisdiction covers Blytheville, made the request for the investigation.
"With the size of this deficit and the failure to pay more than $2 million, which was in part withheld from city employees’ paychecks, there are concerns this deficit is more than just poor management on the city government’s part," Ellington said in a Feb. 16 letter to State Police Major Cleve Barfield.
"Because of the outrageous amount of unpaid taxes and penalties, I am asking the Arkansas State Police to open an investigation into this matter to determine whether the failure to pay proper withholding taxes is the result of criminal wrongdoing."
Earlier this month, the Legislative Joint Auditing Committee released an audit that said the city used money that should have gone to the IRS.
"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 recently.
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 IRS has attached liens to nearly all property owned by the city of Blytheville in an attempt to collect the money.
The city is hoping its citizens will bail it out by approving a 1 percent sales tax to pay the bill. The vote is scheduled for March 13, and if approved the tax would last 15 months.
(The Associated Press contributed to this report.)
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