DeFUNIAK SPRINGS – The DeFuniak Springs City Council voted unanimously Monday to approve a request for assistance from an accounting firm that has agreed to help get answers to questions surrounding a recently arrived federal tax bill of $95,196.22.
One of the questions will be whether there actually is a debt. Another centers around why a previous finance director had received three other letters from the IRS demanding money and chose to inform no one.
The latest bill arrived May 28 and, though addressed to the city clerk, wound up in the hands of Morgan Hulion, who is working under the title of finance supervisor while the city searches for someone to replace former Finance Director Joe Brown, who left in April of 2017.
Hulion contacted the IRS and was told agents couldn’t speak to her unless she agreed to acknowledge and accept the debt owed on behalf of the city, City Attorney Clay Adkinson told council members. Hulion wisely declined, he said.
The request to place the IRS item on the city’s consent agenda was made by Hulion to City Clerk Loretta Laird. Laird said she had not seen the letter prior to late last week.
“They just handed it to me, and I just put it on there,” Laird said.
On the consent agenda, however, the item could have been voted on without discussion. A motion by Council Member Ron Kelley pushed it onto the agenda for discussion.
Adkinson told the council that a search of the city’s finance department found a file with three other letters, one from 2016 and two from 2017, also demanding the tax bill be resolved. Brown, apparently was the only one who knew of these letters.
Mayor Bob Campbell said he had spoken personally to Brown, who acknowledged receiving the previous letters. He told Campbell the tax matter had been resolved.
Brown apparently sent an email to Campbell on Sunday evening saying the IRS problem had begun with “a 2013 payroll tax issue.” City Marshall Weeks addressed the council to tell members he recalled in 2013 employees noticing social security payment discrepancies on their paychecks.
No one could say whether the issues were related, and Adkinson said it was not immediately clear from paper work discovered whether the IRS problem had, as Brown contended, been resolved.
Council members agreed to engage the firm of Saltmarsh Cleaveland and Gund to engage the IRS and see what answers can be found. Council member Kermit Wright asked about the possibility of prosecuting if the investigation leads to findings of criminal mischief.
The discussion of the bill came on the same night Adkinson reviewed a report he filed in response to grand jury findings released in February following an investigation into city finances.
The investigation followed the revelation that the city lost just under $221,000 in state funding because it had failed to turn in annual audit reports for fiscal years 2013-14 and 2014-15.
Jurors found much wrong with DeFuniak Springs’ policies and procedures, and were critical of the failure of county officials to respond to letters from the state warning them of the potential consequences for not completing the audits.
Much of Adkinson’s Monday rebuttal pinned the blame for the city’s financial woes not so much on policies and procedures, but on the failings of those employed as public servants.
Brown in particular, received heavy criticism in the Adkinson report. Adkinson later recommended that at some point the council consider taking action that would allow “remedial” action taken against former employees who had engaged in wrongdoing.
“Mr. Brown, who was the director of finance during key time periods when responses to the state of Florida related to untimely audit filings may have been able to avoid or reduce the sanctions imposed,” the report states. “Mr. Brown’s dereliction of duty, by failing to properly respond or even notify the City Council of the nature of the state’s communication in a sufficient manner, prevented the city from being able to mitigate or avoid the imposed financial penalty.”
Brown stepped down from the finance director’s job in April 2017 to accept a job with the city of Callaway.
In the report Atkinson also faults Mayor Bob Campbell for not acting when letters from the state arrived.
“It appears to be grossly inadequate to report on the failings of the city without directly addressing individuals eschewing their public duty,” his report states.