Missed IRS tax payments, unfiled financial reports, and un-reconciled bank statements were just a few of the issues Alna interim Treasurer Honora Perkins discovered following former Treasurer Aaron Miller’s resignation.
Perkins updated selectmen about her efforts to decipher Alna’s financial records at the selectmen’s meeting May 20. The true amount owed to the IRS in penalties and fines for payments not made during Miller’s tenure has yet to be determined.
Miller assumed the role of treasurer following Perkins’ resignation in 2014. He won the election for the position in March 2015, however, resigned shortly afterward following the surfacing of IRS tax payment errors and the selectmen’s decision to not purchase TRIO financial software, which Miller had lobbied for.
Miller previously stated IRS tax payment errors were made due to his unfamiliarity with the QuickBooks financial software used at Alna’s town office and his impression IRS tax payments were made on a quarterly basis, not monthly as required.
Upon examination, Perkins discovered Alna’s only payment to the IRS in 2014 was the one she made prior to her resignation. Miller did not make a payment to the IRS for 2014 until January 2015 and also did not file quarterly reports to the IRS until January 2015.
“I wish, at the time, I had a strong handle on the complexities of tax compliance,” Miller said. “Unfortunately, I did not.” According to Miller, the IRS reports and payments are generated automatically by the TRIO software he recommended.
Payments for January, February, and March 2015 were not made until Perkins resumed her role as treasurer in April. Payments made by Miller to the IRS were calculated and recorded by hand, throwing off the data in QuickBooks, which no longer accurately reflects Alna’s financial statements.
The payment Miller made to the IRS in January 2015 was a lump sum. Perkins expressed concern the IRS would not know which quarter to apply the payment to, due to the manner in which they were paid.
According to documents from the IRS, Alna was charged approximately $2,627.47 in penalties and interest for missed payments and unfiled financial reports in 2014. Miller negotiated an abatement of $886.68, which was applied to the first quarter of 2014, leaving Alna with approximately $1,740.79 in penalties and interest for 2014.
Prior to his resignation, Miller requested an additional abatement of $1,306.66 for the second quarter of 2014, and any additional fees and interest accrued for the remainder of the year.
The penalties and interest for missed payments for January and February 2015 have not been assessed yet.
Payments to Maine Revenue Services were made in a timely manner. Perkins discovered, however, Miller may have been making payments on unemployment tax, which municipalities are not responsible for.
According to Perkins, a monthly payment to the IRS was put on the warrant but was not processed before she left her post and moved in 2014. “I take full responsibility for that,” Perkins said. “There was no excuse.”
Miller did try to process a payment to the IRS through QuickBooks for the second quarter of 2014, Perkins said. However, payments to the IRS cannot be made through QuickBooks, which only calculates the amount owed.
Due to Miller not filing quarterly financial reports with the IRS, the missed payments and amount owed to the IRS were not recognized. Perkins also discovered Alna’s bank statements had not been reconciled during Miller’s tenure as treasurer.
According to Perkins, part of the duties of a treasurer is to reconcile monthly bank statements with checks written and deposits received. That had not been done since Perkins was hired on a part-time basis to help Miller prepare Alna’s financial records for the 2013-2014 audit.
If the bank statements were reconciled and quarterly reports were filed, the IRS tax payment errors would have been discovered, Perkins said. “This is where I don’t know what to say,” Perkins said. “He doesn’t have a malicious bone in his body. He obviously didn’t know what he was doing in QuickBooks.”
According to Miller, there are no policies or guidelines in Alna as to when bank statements should be reconciled. The person responsible for reconciling bank statements should not be the same person writing checks, Miller said.
According to Miller, the treasurer in Alna is asked to complete incompatible duties by being solely responsible for signing checks, recording entries, and reconciling bank statements. Miller previously expressed concern to the board of selectmen about the lack of internal controls at the town office, which would enable fraudulent activity to take place.
According to Second Selectman Melissa Spinney, Alna has made approximately $20,000 in back payments to the IRS. The penalties and interest for the additional missed IRS payments are still unknown.
Selectmen authorized Perkins to speak with the IRS to determine the amount, if any, still owed to the IRS and the total amount of penalties and interest charged to the town.
