The Department of Revenue remains consistently silent, while Dent County officials ask for answers to the nearly $1 million in sales tax being withheld.
“We’re operating a little bit blind because we still have never gotten anything hard and fast in writing from the Department of Revenue, saying this is exactly what it’ll be,” said Presiding Commissioner Darrell Skiles. However, Skiles did say that they spoke on the phone with Karen Woody from DOR, who told them that DOR would be going back three years and withholding a sum equal to the additional revenue Dent County erroneously received during that period of time “to recoup all the sales tax that basically Doe Run had paid in the wrong code to Dent County.”
This is sales taxes that had been coded incorrectly at the state level, meaning that Dent County has been receiving additional sales tax funds, while Iron and Reynolds counties were erroneously receiving less sales tax. DOR did not speak to Dent County officials until Dent County contacted them, Skiles said.
“It actually began, evidently decades ago,” said Skiles.
Dent County only discovered that fact when its anticipated February revenue did not come in. This withholding meant no Sales Tax revenue until April.
At the April 12 commission meeting, treasurer Denita Williams reported that some sales tax money has come in from the Department of Revenue, which is what Skiles had estimated would be the case back in February when the county first learned of the problem. Williams reported that General Revenue received $17,855.87 and Law Enforcement received $17,853.22.
According to Skiles, other funds should be seeing revenue again, but no money has come into any other fund. He said it doesn’t make any sense for only two of the funds to receive revenue because each of them have the same one-cent sales tax, so if money is coming in to one of those funds, then there should be money coming in to all of them. Skiles conceded that DOR may be able to account for that, but they have yet to do so.
Williams said that she emailed Karen Woody at the Department of Revenue on April 8 to inquire about the details. Williams did not hear back from Woody. Williams called Woody again March 12 before the commission meeting and was told that Woody was not in the office.
According to Skiles, this is the trend of how DOR has dealt with them, simply not providing any information to Dent County despite the importance of being able to prepare an accurate budget for 2021.
“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.” said Skiles during the March 16 commission meeting.
“If we had been informed, we’d have been able to make adjustments to our budget to include the decreased revenue,” he said.
This leaves Dent County to deal with the budgetary fallout.
“We’re going to need to amend these budgets,” Skiles said. A combination of sales tax being withheld by DOR and other unknown factors have precipitated the necessity to draw up a new budget. The Budget Hearing for the new 2021 budget is scheduled for May 17.
“That budget will be made available 10 days prior,” which is required by statute, said County Clerk Angie Curley.
This new budget will have to be based on the new numbers. According to Skiles it could have been a lot worse.
“Luckily we were sitting on a good enough balance that we’re able to absorb it without having to start making drastic cuts,” he said. That said, it’s certainly not without impact on county finances.
“The biggest impact it has on us is for GR (general revenue).”
The sales tax withheld from the county by DOR totals around $1 million, and on top of that each half-cent sales tax that the county has (for example, General Revenue, Law Enforcement, Jail Fund, Road and Bridge) is anticipated to pull in an average of around $6,500 per month less than originally expected.
One major part of the budget that was hit was the sheriff’s department. A Dent County Sheriff’s Deputy was laid off thanks in part to DOR’s apparent hesitation to inform Dent County that their sales tax revenue would be withheld. According to Sheriff Bob Wells, that deputy was fortunately able to find employment with the Salem Police Department. According to both Wells and Skiles, they felt pretty comfortable with the budget that they had put together, but with the change in revenue on top of the money withheld by DOR, that would have made their part of the budget come out in the red.
Skiles explained that they were able to move some money over from General Revenue to bring the sheriff’s department back into the green; however, Wells said, “There’s a few things that we do need that were appropriated for in the old budget that probably won’t be possible. There were some new squad carsbut that’s probably not going to happen.”
Also, according to Skiles, the Dent County Courthouse is in need of several updates and repairs.
“We’re probably going to have to put off some of those,” he said. “But some of those repairs will still need to be done.”
Skiles said he believes DOR has a responsibility to inform the county of that statute.
“I wanted to know what statute specifically, the department of revenue is using as the basis to withhold what amounts to almost a million dollars in revenue,” he said. “(DOR) told me that they would get that and forward that to me.”
DOR did provide Skiles with state statute 144.220, which Skiles said 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. As of Monday, Dent County still had not received any such official statement or written explanation of what gives DOR the authority to withhold county revenue.
With DOR dragging its feet in getting Dent County a written explanation, Skiles indicated that leaves them with little choice but to seek legal counsel. Skiles said that he spoke with Missouri Association of Counties attorney on retainer Travis Elliott.
“I’m not sharing anything privileged,” said Skiles. “He has been in contact with their (DOR’s) general council. They indicated that they knew nothing about the whole thing, but that they would dig into it and find out and get some answers for us.” Skiles said that Elliott indicated that it is not unreasonable for Dent County to ask that DOR provide some sort of written explanation of what they are doing and by what authority.
Skiles said he is glad that Iron and Reynolds are getting the money they should have received, but that he has some concerns about if the money is all being returned to the correct place.
“It’s my understanding that all of the money that’s being withheld from Dent County is being sent directly to Iron and Reynolds,” said Skiles. But according to Skiles that doesn’t make any sense. For example Skiles said, “Iron doesn’t have the same half-cent sales taxes that we do.”
Meaning that in theory, the amount that Iron and Reynolds are owed collectively would not be the same sum as the amount Dent erroneously received. According to Skiles, Doe Run might have not only had its sales taxes coded to the wrong county, but may have also been overpaying as well. If that’s the case, then Doe Run should also be receiving some of the money withheld from Dent.
Skiles said he would caution Iron and Reynolds to hold off on spending any of that money received until a written explanation comes from DOR accounting for how that money was distributed. Otherwise, says Skiles, DOR might be coming back to get that money.
