When new fire chief Paul Petersen took over as the head of the Sunsites Pearce Fire District, he knew he had a can of worms to deal with, thanks to a previously untrained administration staff member.
The Internal Revenue Service was breathing down the back of the Fire District and threatening to freeze the district’s financial account and put a lien on the building due to unpaid payroll taxes from 2010 and 2011, explained Petersen in an interview. He made sure those back taxes were paid in February and thought that would resolve the problem. Then he got the notice that the district was being hit with huge sums in fines and penalties, now at $55,491, and that a lien had been placed on the fire district property.
"The problem was that the district’s share of employee payroll taxes had not been paid on time or to the right place. I don’t think the previous staff knew how to handle this. I don’t see any evidence of foul play," explained the 20-year firefighter veteran. "When I came on as chief, we were working with an IRS agent who told us that since the tax had actually been paid and that we were trying to get all this straightened out, he said he wouldn’t freeze the account or put a lien on the property. He said it would be an amicable resolution."
That was good news until Petersen found out that the IRS agent they had been working with had no authority to work on the district’s case, let alone make those statements when another IRS agent from Phoenix showed up.
"He came in iron-fisted," said Petersen. "But when he saw that we had been trying to get it all straightened out, he said he would freeze our account, but wouldn’t place a lien on us."
Again, he and fire district board members thought that was good news. That feeling was erased when another agent came in, reversed everything and slapped the lien on the property with a due bill of $55,491 for penalties, interest and fines.
"We’ve had multiple IRS agents over the last 10 months, so finally we decided we needed help. We’re still accruing interest and penalties and that was supposed to have been stopped. The amount just keeps rising," he continued.
The district hired Phoenix Financial Group to help them sort through the mess and get the problem resolved once and for all. Now, they have some hope.
The firm will look into $24,000 that shows up in the district books as being paid, but is not recorded anywhere at the IRS. However, that does not surprise Petersen. All the IRS forms the districts has filed to clear up all the tax problems since last February have still not been recorded or accounted for by the IRS.
He and the board are counting on Phoenix Financial to track down all the payments and get the penalties, interest and fines dropped along with the lien on the property.
"It’s been an adventure," said Petersen. "Since I took over in January, the books are balanced and our payments are going out like they should. Our employee morale is higher than it has been in months and we continue to move in a positive direction."