Even Cities Aren’t Immune to IRS Disputes

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If the IRS will come after big businesses and celebrities, there’s no question that they will come after individuals like you and I. We’ve discussed many of the celebrity run-ins with the IRS in this space, but today we’ve got something new. The city of Brighton, Alabama, recently had a levy placed on their bank account due to their tax dispute. As AL.com reports:

The Internal Revenue Service has given the city of Brighton 30 days to come up with a plan to pay back about $800,000 in unpaid federal payroll taxes, interest and penalties.

The agency will also allow the city to operate normally and pay its employees during that 30-day period.

These were the primary outcomes of a meeting held December 19 in Birmingham between the IRS and Brighton city officials, according to Mayor Barbara Watkins.

The meeting was held to discuss a way forward for the cash-poor West Jefferson community after the agency placed a levy, or hold, on its bank account Monday.

“We have 30 days to come up with a definite plan, so if we renege on this plan, we will be right back where we started,” said Watkins, who took office in November and inherited significant financial problems. “(The IRS) said, ‘We understand your situation, and we want to work with you, but you must work with us and do exactly what we tell you to do.’”

Beginning January 1, the city will also be expected to promptly pay new taxes owed, in addition to making good on the old debt.

Watkins described the IRS hold on Brighton’s account as “a one-time levy” and said she was told that the city will be allowed to use any additional revenues that continue to come in.

“The money that we collect and put in the bank, that is not part of the levy unless we renege on our payment plan we finalize in 30 days,” Watkins said.

In addition, the agency will release enough of the city’s money already in the account for them to make payrolls, including one this week, according to the mayor.

“We are going to continue to operate,” Watkins said.

Attending the meeting today with Watkins were Councilwoman Annie Woods, chair of the city’s finance committee; Councilwoman Rhonda Bean; City Clerk Hazel Williams; and the city’s accountant.

In addition to the IRS debt, Brighton in 2011 defaulted on $1.12 million in warrants issued in 2003 to buy police cars and a garbage truck.

Here’s one thing you can certainly say for the IRS: they are consistent—at least in their willingness to take on anyone or anything that owes them money. The IRS has made life miserable for millions of taxpayers over the years, subjecting them to phone calls, threatening letters, and even in-person visits from aggressive IRS agents. And now, they’re employing the same tactics against an entire town.

If you’re facing a similar situation, we can help. Let us get the IRS off your back so that you can enjoy the rest of the holiday season… and a pleasant, stress free 2013! Give us a call today.

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