Excise tax debt is forgiven

Saturday, August 12, 2017

Mayor James Sanders presented to the Blytheville City Council’s Finance Committee a packet that contained two letters from the Arkansas Department of Finance and Administration dated July 14 and July 24 and a “release deed” filed on July 20 in the Chickasawba District Circuit Court that states that all of Blytheville’s past excise tax debt has either been paid off by the city or forgiven by the state.

“The top letter…is the letter that we received from the Department of Finance and Administration...they stated to us that they had received our check number 22246 in the amount of $36,436.59 …for the August payment. This is with regards to the gross receipts for the excise taxes from 2008 through August of 2014. And in the first paragraph it clearly states again that with regards to our agreement that we had done and with the authorization of the Arkansas law department, that they have waived the remainder of the penalties for that period, as of the date on this letter on the 14th [of July] and that the city’s sales tax balance is now zero,” Sanders told the committee.

Sanders continued, “In the second letter that I gave you…the Department of Finance and Administration, their attorney, Mr. Bill Keadle, explained the procedures that we have gone through after discovering this and to present to you what process that they actually went through to settle this agreement and what the agreement was.”

“It’s good to have that behind us,” Finance Committee Chairman Stan Parks said.

“I want to commend our CFO [John Callens] for keeping up with all of that and making sure that all payments and everything was going in on timely basis plus ensuring that our taxes that were not remitted in the past were in agreement with our agreement that we made with the state,” Sanders said.

According to the letter dated July 24, “the audit assessment resulted from the failure of the City to remit tax on charges for trash and sanitation services and to collect tax on charges for mosquito spraying services. The assessment totaled $1,647,000.87, which was comprised of tax in the amount of $976,002.92; penalty in the amount of $340,725.69; and interest in the amount of $330,272.26.”

The letter further states that when the city found the oversight, they contacted the DFA, requesting that the city be allowed to work out a payment plan. The agency agreed “to allow the city to pay this remaining liability in monthly installments of $36,436.59 over a thirty-month term, to begin on March 1, 2015, with interest to be assessed at 2.5%” according to the letter.”

Back in January 2015, the DFA agreed to eliminate $588,429.88 in penalties and interest on the city of Blytheville's excise tax debt. That was done by abating all penalties and 75 percent of the interest, as well as by lowing the interest rate from the original 10 percent to only 2.5 percent.