The town of Swayzee is currently in a holding pattern awaiting action from the Indiana Attorney General’s Office (IAGO) as it seeks to recover more than $64,000 after a former clerk-treasurer allegedly mishandled tax payments.
A Sept. 16, 2019 State Board of Accounts (SBOA) special investigation report states Swayzee filed various Internal Revenue Service (IRS) forms late and also was late on paying payroll taxes for the tax periods of June 30, 2016 through Dec. 31, 2017. SBOA requested former clerk-treasurer James Brian Hall reimburse a total of $55,511.07 to the town and State of Indiana, which included penalties for the late payments and the $10,728.71 cost of the SBOA investigation.
Hall was the clerk-treasurer of Swayzee effective Jan. 1, 2016 and resigned from his position effective Jan. 6, 2019, according to the report.
SBOA filed an additional special compliance report March 6 after the town alerted SBOA to an additional IRS penalty of $20,123.21 for failure to file IRS W-2 forms for the tax period ending Dec. 31, 2016, the report states.
Town attorney Jason McVicker requested the IRS waive the penalties, but the IRS denied the request, according to the report, so the town paid the penalties on Oct. 25, 2019.
As a result of the additional penalties, SBOA is requesting Hall additionally reimburse the town $20,123.21.
“...officials and employees have a responsibility to perform duties in a manner which would not result in any unreasonable fees being assessed against the governmental unit,” the report states. “Any penalties, interest or other charges paid by the governmental unit may be the personal obligation of the responsible official or employee.”
In an official response included in the SBOA report, Hall’s attorney Charles J. Maiers claims the $20,123.21 penalties are not consistent with the penalties in the September 2019 report.
“In light of this discrepancy, Mr. Hall’s confidence in the amounts due and owing is understandably lacking, and he is concerned that, to the degree he is personally liable for such amounts, he may be subjected to overlapping, repeating, or otherwise redundant obligations,” Maiers states.
Maiers also claims in the response that neither the SBOA investigators or the town have provided evidence that Hall’s alleged acts “constituted gross negligence or an intentional disregard of the requirements of the clerk-treasurer position,” the standard of Indiana Code which would make him liable to pay back the penalties.
Current Swayzee Clerk-Treasurer Desiree Arenas said the town has not received any reimbursement payments from Hall for either of the requested amounts from the two SBOA audits.
While the town awaits further response from Hall, it is also pursuing another avenue to receive reimbursement for the penalty payments. The town took out a bond for the length of Hall’s term as clerk-treasurer as required by statute, and McVicker said the IAGO must approve and trigger the release of the bond to the town. McVicker said it was originally thought the IAGO took the position that the bond was for $30,000 total for the four-year term, but the IAGO recently communicated to him the opinion that the bond was for $30,000 for each year of the term.
McVicker said the town was hoping the IAGO would take the $30,000-per-year interpretation of the bond, which puts the town in a more favorable position to recover all of its losses through the bond.
“We are seeking to recover the total amount of loss, and the Attorney General’s position is per year and that’s going to allow the town of Swayzee to pursue the bond to pay off the total amount of loss which has been our position all along,” McVicker said.
McVicker said he asked for a proposed timeline of when the bond would be released but did not receive a solid date from the IAGO.
“They’re working on it, and I believe that they’re working very hard on it,” he said. “I would like to know the date, but I think things are to the point where there’s not a firm date that the bond’s going to be triggered to the town of Swayzee, but certainly the sooner the better.”
Swayzee Town Council President Aaron Travis said as of now the town is waiting while the IAGO takes its next steps.
“The situation is in the hands of the Attorney General’s Office,” Travis said. “We are waiting for the bond to be recovered and the Attorney General’s pursuit of repayment from Mr. Hall.”
The Office of the Attorney General stated in an email that it received the SBOA reports regarding Swayzee and Hall and is currently reviewing the matter.
The SBOA report states “failure to pay claims or remit taxes in a timely manner could be an indicator of serious financial problems,” but Travis said the town is in good shape financially.
“The Town is in a very stable financial position and the second round (of penalties) which were smaller were able to be paid without creating problems with any accounts,” he said. “We have been able to weather this well due to being very sound with our financial footing.”
Maiers, Hall’s attorney, did not respond to the Chronicle-Tribune’s request for further comment.