Blytheville on better financial footing with IRS - KAIT-Jonesboro, AR-News, weather, sports

Blytheville on better financial footing with IRS

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BLYTHEVILLE, AR (KAIT) - The Internal Revenue Service has approved a repayment agreement with the City of Blytheville to pay a multimillion dollar debt owed by the city.

Blytheville voters approved a 15-month, one-cent sales tax in March 2012 to pay off the $3.8 million debt, which took effect July 2012.

Blytheville Mayor James Sanders said the IRS notified the city's Memphis-based tax attorneys at Baker Donelson Law Offices on December 5, 2012, that the city's installment plan submitted to the IRS in November 2012 was approved.

"We were already paying them $10,000 a month," Mayor Sanders said. "Instead of us holding on to these funds, (the funds were submitted) to the IRS, and once we did that, then the IRS saw that we were serious about trying to get this debt taken care of."

The IRS collected the first payment from the one-cent sales tax October 2012. The installment agreement, solely based on the sales tax revenue, offers the repayment of $3,817,603.05 in unremitted payroll taxes for 2009 and 2010, including penalties and interest.

Mayor Sanders said the city's plan does not include the recommendations from the IRS to close and sell Thunder Bayou Golf Links and farm property, or to turn over $1.1 million in excess parks and recreation funding that was discovered after the sales tax vote. 

"(The debt repayment) is going to allow us to have a future in our parks and recreation, and to look to a future growth in parks and recreation, and to eliminate a debt that has been able to hold us back from even maintaining our own obligations that we've had to have through the county and just with the city."

The administration is working on plans to make sure the city never finds itself in a similar situation.

"We've also done corrective action. We're just trying to show them what we've done in order to correct the problem, to put safeguards in place not just for this administration, but for future administrations to follow."

Other terms of the installment agreement include: paying the IRS the same 44.44 percent of the local sales tax revenue from the City of Blytheville on a monthly basis until the debt is paid in full, sending the IRS a monthly summary statement indicating the amount of sales tax distribution, and the Arkansas State Treasury remitting the funds electronically to the IRS by the 15th of each month.

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