L-W faces IRS woes
Published 12:00 am Friday, January 26, 2007
WINDSOR – Lewiston-Woodville has financial troubles that might require the help of Bertie County officials.
Unfortunately, that proposition doesn’t look promising.
On Monday, Lewiston-Woodville Mayor Carl Lee and several members of the Town Board addressed the Bertie County Commissioners to request a loan from the county to repay a debt owed to the I.R.S.
The debt stems from the fact that from 2002-03 the town had not filed any I.R.S. Form 941’s or made any monthly federal tax deposits.
The town had collected taxes from its employees on behalf of the I.R.S. but had not forwarded those funds to the proper federal accounts.
Bertie County Manager Zee Lamb said there were a couple of scenarios that could have played out in this situation.
&uot;It appears the money may have sat in the town’s fund balance,&uot; Lamb said. &uot;The town may have decided to not raise taxes operating under the assumption they had positive cash flow.&uot;
The I.R.S. did in fact uncover the non-payments in January 2005 and informed the town that they were several hundred thousand dollars in arrears.
&uot;Since January 2005 all deposits have been made monthly and all 941 forms have been filed on time.&uot; Lee said in a letter submitted to the board.
The town is currently repaying the I.R.S. $1,000 per month to resolve the debt.
The I.R.S. has requested the monthly payment be increased to $2,000, prompting the town to request a loan from the county.
&uot;The Lewiston-Woodville Board of Commissioners respectfully requests that the Bertie County Board of Commissioners make a loan to the town of $85,000 at a five percent rate of interest,&uot; Lee said. &uot;The loan would be repaid to the county in monthly payments of $2548.30 over a three year period.&uot;
The town determined that an $85,000 loan plus an additional $2,000 dollars from the town’s current fund balance would clear the current I.R.S. debt and make the town eligible for grants.
While the commissioners appeared to be empathetic toward Lewiston-Woodville’s plight, the legality of such a request was not lost on County Attorney Lloyd Smith.
&uot;I’m not even sure that Lewiston Woodville has the authority to request this loan,&uot; Smith said. &uot;We would have to look for a statute that would allow the county to make this loan.&uot;
Smith added that he was surprised to see the I.R.S. being so stringent on the town.
&uot;It’s unusual for the I.R.S. to not waive the penalty when collecting an old debt,&uot; Smith said. &uot;It appears that the biggest hurdle to repaying this debt is in fact the penalties.&uot;
Lee explained to the board that his council had been advised by the Local Government Commission (LGC) to request the loan.
Commissioner Norman Cherry Sr. thought the LGC should be able to assist Lewiston in the navigation of this situation.
&uot;If the LGC suggested this course of action, they should be able to provide you with the necessary documentation to accomplish it,&uot; Cherry said, &uot;instead of us trying to figure out the legality of it all.&uot;
Lamb agreed there was no way the county could move forward without legal precedent.
&uot;The LGC is usually conservative in its policies concerning loaning money,&uot; Lamb said. &uot;We would not be able to go forward without some sort of literature from them.&uot;
On Friday, Lamb received a call from Sharon Edwards of the LGC confirming what he thought all along.
&uot;Lewiston does not have the authority to borrow this money,&uot; Edwards said. &uot;If they attempt a referendum to raise the money, that could get even more expensive.&uot;
Edwards suggested there might be a method by which the I.R.S. could secure a promise on some of the town’s future tax revenue.
The county could then pick up that promissory note.
Lamb said the county would do whatever it could to help the town manage this debt.
&uot;We will continue to help Lewiston-Woodville come up with a solution to this problem,&uot; Lamb said. &uot;I’m sure that we will work something out as we continue to research this matter.&uot;