MADISON — A discussion by the Madison City Council regarding whether they should make a payment in February on their Federal tax debt resulted in a motion by Councilman Buddy Hudson to pay a $13,000 installment payment that was immediately seconded by Councilman PJ Johnson during their regular session on Feb. 3.
According to the council, the total amount owed has not yet been determined. Included in the tax debt is approximately $346,000 in federal income withholding and another estimated $200,000 in FICA deductions, The funds were supposed to have been withheld from the paychecks of the city’s 18 employees and forwarded to the IRS. The debt dates back to at least 2016 and city officials have told the CVN that with interest and fees, the debt may exceed $1.3 million.
City of Madison properties had IRS liens placed on them in January, and the city made a $230,000 payment toward the debt at that time.
“We’ve got $142,000 right here,” Johnson said. “Is there money we can spend? I’m not talking a large amount, just something to show them that we’re (inaudible).”
City Recorder Randy Foxx did not show support for making any payments without an agreement in place with the IRS.
“My fear is that three months down the road, we’ll be hurting,” Foxx said. “My personal opinion on what we need to do is work with the attorneys and the IRS and three months from now, when the next go round of the B&O taxes come in, see where we’re at and what we’ve been able to salvage and if we don’t have an agreement in place with the IRS, we approach them from the standpoint that we’ve been able to put back $16,000 or $20,000, whatever that number may be, and offer it as a payment. I’m concerned that if we drain our checking accounts every month without an agreement, that three months from now we’ll be hurting.”
Johnson responded, “It was my understanding at the last meeting we had that we had $13,000 per month that we could spend, so how about $13,000? I think we need to send something.”
Councilman Artie Barker told Foxx that he wants to be more informed and updated from the attorneys representing the city.
“So you can’t call every day and find out something? They are bound to know something, they gave them $230,000,” Barker said.
Foxx replied, “And if they….well…. shut up, Randy,” he said. “It is $350 every time you pick up a phone and ask them a question.”
Councilwoman Carolyn Mullins replied, “That doesn’t matter,” she said. “We’ve paid our retainer fee and we’re going to spend that money and we’re protecting ourselves. We as a council need to protect ourselves as well as the citizens of this city. We have a right to know what took place in that meeting and we’ve waited too long. Those penalties and fees are adding up every day.”
Councilwoman Kathy Cash suggested that after the blessings of the attorneys to make the payment that the council proceed.
It was at that time that the motion was made and carried to make the $13,000 payment immediately to the IRS.
The Madison City Council meets for their regular session at 7 p.m. on the first Monday of each month in their chambers above Madison City Hall.