The city of Blytheville's temporary 1-cent sales tax generated $218,156.79 in July, and the city cut a check to the IRS for that amount last week as a good-faith, voluntary payment on its multimillion payroll tax debt.
Blytheville Mayor James Sanders and the city's tax attorney, William Fones of Baker Donelson, have an appeal meeting with the IRS Wednesday via a telephone conference, hoping the outcome is an installment agreement.
To date, the IRS has not accepted the temporary 1-cent tax passed in March as the payment method.
Sanders said until the agreement is reached, the city intends to make good-faith payments based on what the 1-cent tax generates.
"The funding has come in," the mayor said. "We're moving those funds and directing them to the IRS through the same portal that we were directing the $10,000 a month through."
Since last October, the city has been paying the IRS $10,000 a month on the delinquent payroll taxes, while also meeting its payroll tax obligations for 2011 and thus far in 2012.
The city had hoped to have an installment agreement in place at this point.
Sanders said he is unsure if the IRS will make a decision during the appeal conference Wednesday, noting the agency has shown a tendency to submit its answer at a later date.
"It's still not definite that we would know something on the third," he said.
In a letter to the IRS concerning Wednesday's appeal, Fones wrote that the 1-cent sales tax is expected to generate more on average monthly than the $218,000 produced the first month, noting the back-to-school sales tax holiday had collections "slightly off for the month."
Another portion of Wednesday's hearing will address the IRS' liens on the city, the letter indicates.
Fones said the city remains willing to set up a direct payment so that funds go from the Arkansas State Treasurer directly to the IRS; the IRS currently can't accept direct payments because there is no installment agreement in place.
"I'm pleased that the voters voted for the 1-cent sales tax that would even provide us an opportunity to be able to enter into this agreement with the IRS," Sanders said.
Sanders noted that later there will be an appeal for abatement of penalties that would be heard in Oklahoma; Wednesday's appeal is being heard in Texas.
mbrasfield@blythevillecourier.com