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According to the West Virginia State Auditor’s Office, City of Madison officials have responded to their requests during a forensic audit and investigation.

MADISON — A forensic audit by the West Virginia State Auditor’s Office that includes the accounting practices of the City of Madison has increased in scope by three years.

The audit was originally thought to reach back to 2015; it is now stretching back to and including 2012.

In January, the Coal Valley News reported that the city owed up to $622,000 in federal taxes dating back to 2016. Included in the tax debt is approximately $346,000 in federal income withholding and another estimated $200,000 in FICA deductions that were never paid. The funds were supposed to have been withheld from the paychecks of the city’s 18 employees and forwarded to the IRS.

The auditor’s office’s General Council and Director of the Public and Integrity Fraud Unit Steve Connolly said on Thursday that the investigation has been extended.

“We are continuing to investigate the case with the cooperation with the City of Madison and we have communicated our preliminary findings to the Boone County Prosecuting Attorney (Keith Randolph), and he has requested that we continue on with our investigation until it results in holding accountable the responsible party or parties who perpetrated criminal acts against the City of Madison.”

Connolly added that the investigation includes all cash payments made to the city between 2012 and 2020, and investigators are evaluating all payroll and leave balances for that entire scope.

The director said the Madison investigation has not been hindered by the COVID-19 pandemic, which has presented challenges around the state in terms of audits.

“That scope has broadened, which has caused that delay in our findings,” he said. “The courts in West Virginia not holding hearings have prevented challenges in other cases, but not in this particular case.”

Connolly said City of Madison officials have been transparent and responsive to the auditor’s requests.

“The City Attorney Chip Shaffer and the city leadership has been an open book with us,” he said. “This includes Mayor (Buddy) Hudson and (City Manager and Police Chief Chet) Burgess. They’ve been responsive to everything we’ve needed throughout all of this, and that is noteworthy.”

Burgess added that the city would continue to cooperate with the state agency.

“We’re going to give them everything they need, and we’re going to do it in a timely manner,” he said. “We look forward to a conclusion and realize that we have a few more months to go before we get there. We’re making good progress, and that pleases me.”

With penalties and fees resulting from unpaid federal withholdings from city employees, including FICA, the city could owe up to $1.3 million, including interest and late fees, as the IRS has placed an $804,000 lien on city-owned property.

The city has made multiple $5,000 monthly payments to the IRS and hopes to have those property liens lifted in the coming months.

Reporter Phil Perry can be reached at pperry@ or at 304-307-2401.