The Blytheville City Council's Finance and Purchasing Committee took no action Thursday night on former Blytheville Mayor Barrett Harrison's request that the city reimburse his family's $8,381.30 joint federal tax refund that he claims was applied to the city's $3.2 million IRS debt.
Committee members mostly listened to Harrison, who did the bulk of the talking, and city attorney Mike Bearden, who is recommending the city reimburse the former mayor for any tax refund money credited to the city's debt.
The only Council member to offer an opinion was Councilman R.L. Jones, who sided with Harrison.
Though there was a discussion of the 5-minute limit comment period allowed by the Council's rules and regulations, the board allotted Harrison about 9 minutes to read a prepared statement, then spent about 30 minutes on the issue.
Harrison also invited Council members to hear "the rest of the story" at any time.
"I've spent the last three years and a lot of money trying to find out just what happened during and after my time as mayor," Harrison said. "I think I've learned some things that would be of great interest to each of you as council members. I would like to tell each of you all I know. It might even prevent a future problem for the city you are now responsible for. Talking to me might very well prevent you and your families, even your children, from having to go through hell just because you decided to make yourselves available for public service and run for office."
Harrison contends his family's 2011 refund was applied to the city's IRS bill and he asked the Council to take the advice of the city attorney.
Bearden noted a recently concluded investigation revealed no criminal liability, and to his knowledge, there is no civil action against Harrison or his wife.
"Is there a legal basis for paying him back? I don't know," Bearden said. "Probably. But I'm not an advocate for him in this case. I simply passed along the information I got with the recommendation. The way I look at it, the perception might be there by lots of different people that Barry did something wrong. Well, that's not what's been determined by I suppose a thorough investigation that has been going on for two years. I do strongly believe that had there been some possible criminal liability it would have been pursued simply because of how upset people were, and I understand that. How it happened, I don't know how it happened. It's not my job to find out how it's happened. That's why the prosecutor was involved and I believe the FBI and the State Police, although I wasn't privy to the investigation."
Bearden noted Harrison and his family have paid sales taxes like everyone else.
"There has been a double whammy here on him and his family because they paid the taxes to help pay it back," the city attorney said. "They had their income tax refund kept when there was no legal liability that I'm aware of."
The city's tax attorney, William Fones of Baker Donelson, has a differing opinion, saying via email that the refund was applied to a civil penalty assessed to Harrison, personally, as a responsible party for failing to remit withheld payroll taxes to the Internal Revenue Service.
Harrison told the Finance Committee that an IRS agent pointed him to a section in the IRS manual that shows how his money was applied and "would clear up the confusion."
He was miffed by the email from Fones to Sanders dated Monday, Oct. 28.
"About halfway down the first page, I'm quoting your tax attorney," Harrison said. "It says, 'based on the city's IRS transcript, the city's liabilities for various taxes, penalties and interest was abated for trust fund penalty collected as follows,' and there was a list of all those things abated that he was referring to. After that, it goes on to say, 'The third and fifth entry above match to Mr. Harrison's transcript by date and amount. There are some differences in date and amount with remaining payments that I cannot account for, but Mr. Harrison's remaining amount was credited to the city in some fashion.'"
Harrison said an IRS agent told him that there is one bill, belonging to the city, and the agency doesn't care who pays it.
He noted in most cases, that type of debt involves bankrupt businesses that are closed down so the IRS looks for someone to deem a responsible party.
According to Harrison, the three people able to sign checks -- the mayor, city clerk and city treasurer -- are considered responsible parties.
He added the city's delay in settling with the IRS caused the agency to apply his tax refund to the city's debt.
"Had I not received a tax refund that year, none of my money would have ever been applied to any bill, any IRS debt -- ever," Harrison said. "There's one bill that we're all responsible for and they don't care who pays it."
He said the last three years have been frustrating for him and, with three children in college, he needs the tax refund money.
"I know it would have been a whole lot simpler if I had stolen something, if they had found something, if the prosecuting attorney's office could have proved that I had done something wrong," Harrison said. "I know there's a whole lot of people in town that wish that y'all had found that money buried in my backyard. It would have made a few people, maybe even in here today, happier, and it certainly would have sold more newspapers. But that isn't what happened. I never, ever, ever had any idea that the payroll taxes hadn't been paid from the period in question here, from 2006 on."
The former mayor cautioned that the current administration could be in a similar position someday.
"You know, there's an ongoing investigation right now across the street," Harrison said, referring to a probe by the Arkansas State Police and Legislative Audit involving a former employee of the mayor's office. "According to the people on the street, there has been a theft in mayor's office. Now I don't know if anything has been stolen or not. And I certainly don't believe Mayor Sanders knows or had anything to do with it, if it has. But just months after he got in office, he told us over and over and over again about all these new safeguards that were going to be put in place so nothing could ever happen or go wrong again, and apparently right there, in that end of the building, something has. Now if it's proven that something was stolen, and if it's also proven like I believe it will be that he had nothing to do with it, would you expect Mayor Sanders to reimburse the city for the amount, if it's $5,000 or $20,000 for whatever's been stolen?"
Citing the Municipal handbook, Harrison added the Council is "100 percent" responsible for the finances of the city.
"What if this investigation that's going on right now drags out for three years and none of you are even on the City Council anymore and someone calls and says, 'You know what, we found out they stole $23,000, you were 100 percent responsible for the finances of the city, we want you to pay the money back,'" Harrison said. "Should you have to do that when you know absolutely nothing about it and a clean, thorough investigation said you knew nothing about it and didn't take a dime? Of course not. It's the exact same thing."
All along, Harrison has maintained he didn't know the payroll taxes weren't paid until March 2011 -- several weeks after he left office.
"Not one letter did I receive from the IRS from 2006-2010," he said. "Not one piece of registered mail, regular mail, text message, fax message. Nothing. Everything that went to the city of Blytheville went to (former finance director) Faye Griggs. You all need to do your own investigation of what happened here. This could happen again."
He added, "It's frightening," everything he has learned.
"And it continued to go on after I was no longer mayor," Harrison said.
Meanwhile, Harrison claims, though the IRS has released the liens, the city still owes $600 on the IRS debt because of some glitch. Sanders said this morning he contacted the IRS tax advocacy office, which informed him the account has a $0 balance.
According to Councilman Tommy Abbott, chairman of the Finance committee, there is $342,675.41 in the IRS payment account -- excess monies from the 1-cent IRS tax that ended Oct. 1.
He noted there is one turnback check remaining and, if it meets the $235,037 average, the total payover would be $597,032.72. The October turnback for the August collection was $236,263.57.
The total projected payover less the $290,644.80 payments made prior to the tax, from the General Fund, would be $306,367.92, according to Abbott.
In other business, the committee:
-- Heard from Sanders that there is no additional information on his finance director appointment. Contingent on a clean background check, Sanders has appointed Albert Barnhart to the position, which is currently held by LaVera Kuykendall.
-- Received financial summary sheets showing the city is on pace to spend about 14 percent less than it budget, but also on track to collect 11 percent less revenue than it anticipated. According to Abbott's figures, the city is on pace to spend $2,302,341 less than the budgeted $16,491,213, and collect $1,942,347 less than the $17,039,600 projected in the budget.
-- Tabled a request by the sewer department to hire an employee.
-- Briefly looked over the city's account balances. Along with the IRS Payment account, others and their balances as of Oct. 31 included: Capital Improvement ($8,895.41); Street ($4,283.40); Jail Fee ($3,248.45); Fire Department Sales Tax ($195,627.71); Administration of Justice ($10,252.12); Fine and Forfeiture ($105,740.54); Automation Fund ($140,119.53); Police and Fire ($75,992.99); Infrastructure ($414,198.63); Building Maintenance Museum ($26,914.77); Thunder Bayou operating fund ($8,152.69); Parks and Recreation Sales Tax operating fund ($20,550.34); and General Fund ($162,311.19).
-- Heard a reminder from Abbott about funds committed to repay the Infrastructure fund $621,166.37; pay the Greater Blytheville Area Chamber of Commerce, $13,5000 plus $30,000 arrears; Main Street Blytheville, the remaining $24,000; the Mississippi County Union Mission, $4,000; and the Great River Charitable Clinic, $2,500. "We just haven't had the money in the General Fund up to this point," Abbott said. "Hopefully, in the process of us cleaning up all this stuff here at the end of the year, we'll be able to honor those commitments and take of those things for those individuals."
mbrasfield@blythevillecourier.com