Jessamine County

Auditor recommends Jessamine sheriff implement controls over tax collection

NICHOLASVILLE — Jessamine County Sheriff Kevin Corman granted a total of $70,869 in penalty waivers on 211 tax bills during the 2009 tax collections, which resulted in some taxing districts "receiving less than they otherwise would have," according to an audit released Thursday.

In addition, 59 tax bills, involving 41 taxpayers and totaling $21,996 in penalties waived, were missing or unavailable, according to the audit released by state Auditor Crit Luallen. In some cases, penalties were waived without proper authorization, and there was a lack of documentation stating the reason for the waiver, the audit said.

"Because the sheriff lacked controls over the tax collection process in his office and did not provide appropriate oversight in this area, this situation was allowed to occur," the audit said.

In the sheriff's response included in the audit, Corman said his office handled more than $31.6 million in taxes collected, disbursed and accounted for properly in the 2009 tax year. In addition, Corman said he has already implemented internal controls to ensure proper documentation. And he said if any request for a penalty waiver is questionable in any way, "then a documented review by the Revenue Cabinet staff will be obtained before the waiver is granted."

"To ensure that taxpayers do not take advantage of the sheriff's discretionary powers regarding forgiveness of property tax interest and penalties, we will immediately institute a system to annually track the granting of such forgiveness," Corman said.

The auditor's office found no criminal activity but referred its findings to the state Department of Revenue and the state Attorney General's Office for a second look, said Bob McBeath, general counsel for the auditor's office.

The number and amount of penalty waivers granted is what attracted the attention of auditors, McBeath said.

Sheriff's offices in Kentucky collect property and other taxes and forward the money to schools, libraries, health departments and other local government offices and services.

A sheriff may waive penalties whenever reasonable cause is demonstrated, such as illness or the tax bill was sent to the wrong address, McBeath said.

The audit recommended that Corman immediately implement controls over tax collection.

In his response, Corman said the auditor's allegation that taxing districts received less money because of penalty waivers is not true "because the essential reason for granting a waiver of penalties and fees is that the taxpayer, while unable to pay the entire amount, is able and willing to pay the actual taxes due."

"Therefore," Corman continued, "the taxing districts receive 100 percent of the actual tax bill rather than nothing. We believe it is good business to collect 100 percent of the actual bill" as opposed to not collecting any because of fees and penalties.

"Waiving penalties in order to collect the actual tax due follows the same philosophy of providing for a 2 percent discount to encourage early payment of property taxes," Corman concluded.

The auditors also noted an eight-day delay in the deposit of eight daily deposits in 2009 totaling $192,493.72. The audit said the sheriff's office should make daily deposits, or else it "could result in the loss of receipts or misplaced monies."

Corman responded that the delay in deposits was due to the absence of a bookkeeper. In the future, he said the deposit of public funds will be adhered to as required.