Dent County has been receiving sales tax funds that should have been going to neighboring counties for years, possibly decades. Dent County discovered that fact when its anticipated February revenue did not come in.
In nearby Iron County the opposite was true, as officials received a larger deposit than expected.
“The first way I discovered it is we received more money in the bank,” said Iron County Treasurer Carol Hardy. That’s when Hardy reached out to the Missouri Department of Revenue to investigate the legitimacy of the distribution.
Hardy shared with The Salem News the content of an email she received from Karen Woody at DOR.
“This is a valid distribution,” Woody wrote. “If you look at the Financial Report you see the Doe Run Company had several older periods receive money. This was due to a registration error registered in a different county and changed to Iron. The returns amended to correct the distribution.”
Hardy indicated that to her knowledge, Reynolds County faced a similar scenario and a similar response. Dent County was also left in the dark until sales tax revenue did not arrive.
Dent County Presiding Commissioner Darrell Skiles said DOR admitted that they had known about the corrected tax revenue for a few months.
“It’s particularly galling that – they admitted to us they knew about this back in December, but didn’t bother to let us know, not a letter, not a phone call, not an email or text message, nothing.
“If we had been informed, we’d have been able to make adjustments to our budget to include the decreased revenue.”
Skiles said Dent County will be paying that money back – around a million dollars – with the sales tax that ordinarily would be collected for Dent County’s budget, meaning that it could be several months before the county actually has a sales tax income. Skiles says that it will likely be April before any sales tax will go into county coffers.
Skiles also indicated his frustration with what he describes as the Department of Revenue’s “cavalier attitude.”
Dent, Iron and Reynolds counties were not contacted despite being directly affected by the change, he said.
“We contacted the state to figure out how this happened,” he said.
Skiles said that he asked DOR to provide the statute that allows them to withhold the county’s tax revenue. He said that the person at DOR he had been in contact with is also Woody, who provided state statute 144.220, which Skiles said that he believes does not apply in this situation.
“I don’t believe that gives them the authority to withhold sales taxes for any reason,” he said.
Skiles said that he indicated his concern to Woody, who agreed to put together an official statement to send to the county.
Dent County Treasurer Denita Williams said that she had emailed DOR the morning of March 1. After having not received anything as of March 9, Williams said she contacted Woody again.
“I was told that she is working on it but will have to let her boss review it before she e-mails it to me,” Williams said.
Williams indicated that she hoped to get something in writing by the end of the week. As of Monday, Dent County is still waiting to receive that written statement.
“I feel confident that we’ll find something out, we may not really like it, but we’ll find out soon,” said Skiles.
When contacted by The Salem News, Woody declined comment, referring to Director of Strategy and Communications for DOR, Anne Marie Moy. Moy could not be reached.
Skiles described how this mistake could be made.
“An entity was paying their sales tax. When submitting it to the state, coding was wrong and it got credited to (Dent) County, and so we received that money,” said Skiles. “There’s nothing anybody in the county did wrong, and it’s a very difficult thing to track and see, but we’ve been getting this sales tax that should have been going to another county.”
The Salem News also contacted the Doe Run Company. When contacted about the issue, the Doe Run Director of Communications provided the following statement Thursday:
“The Doe Run Company does not have operations in Dent County, Missouri. We were asked to provide clarification to the Missouri Department of Revenue on the location of our Missouri operations and we have done so.”
The statement does not indicate whether or not Doe Run was the entity, however, it does confirm that DOR contacted them requesting a clarification regarding their location.
It’s unclear where or when the sales tax coding error took place. However, it does not appear to be a problem at the county level.
Ashley Bax, chief of staff for State Senator Justin Brown, explained how this kind of problem can happen. Each business is responsible for registering its sales tax, she said. The business then collects that sales tax and remits that tax to DOR, then DOR distributes back to the appropriate county based upon the way the business is coded in the system. This sort of error happens when a business is coded wrong, and DOR distributes to the incorrect county. When asked whether there was malintent, Bax answered, “Sometimes there is fraud, but that is not the case here.”
Iron County Presiding Commissioner Jim Skaggs indicated how seriously this error has affected their county’s infrastructure over the years.
“Evidently, it’s been going on for years, and we don’t know how long that is,” he said. According to him if this error has been going on for 20 years, the revenue lost could be between $500,000 and $1 million. Skaggs said that only revenue distributed in the last three years could be recovered for the county.
“It’s a shame that we can only go back three years,” he said. However, Skaggs is happy to have the sales tax revenue back in their county where he says it belongs.
“We’ll probably use some of that money to improve our infrastructure. We have a Civil War courthouse (built in 1857) and the ceiling fell in last year,” he said. Iron County also has a Civil War era jail that still houses prisoners. He said that both buildings are badly in need of updating.
