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Report Released on City of Creedmoor’s $1.2M Tax Blunder

Posted December 28, 2007

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— Several years of mistakes could cost Creedmoor taxpayers hundreds of thousands of dollars.

"Every single budget within this city government will have to be reduced to pay this debt," Mayor Pro-tem Tim Karan said.

The city of Creedmoor owed at least $1.2 million to the IRS, one-fifth their total budget. The IRS report reveals that for four years, formal finance director Eleanor Fowler did not properly fill out federal tax forms.

"This just shines a light that unfortunately there are some things that don't get fully disclosed," Karan said.

Karan said Mayor Daryl Moss and City Manager Bob Schaumleffel knew about IRS inquiries into tax filing problems in 2006, months before other commissioners found out. The mayor admits he is partially to blame for the tax blunder.

"The report really speaks to my failure as a leader in this community for not doing all that I needed to do," Moss said.

The report shows the IRS did not receive W-2 forms for several years and the former finance director blamed the mail.

The report also indicates the IRS found Fowler's response unreasonable and warned the city could face substantial penalties. Fowler retired in June and the city has since been getting its finances back in order.

"For many, many years Creedmoor has kind of been a mom and pop organization and we kind of grew up overnight," Moss said.

Karan said part of his frustration is that he has heard this all before. In 2004, the IRS told the city that payments were not being made on time. The city then parted ways with city manager Charles Hammond.

Karan said Fowler assured him then that IRS irregularities would be fixed. Years later, city leaders have found out that wasn't the case.

The city is currently negotiating with the IRS to lower its penalties.

The mayor said he hopes to only pay back about $200,000. Creedmoor also has a new finance team in place to be sure this doesn't happen again.

WRAL tried to speak with former Finance Director Eleanor Fowler, but she did not return our phone call.

22 Comments

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  • gvmntcheese Dec 29, 2007

    jowilker, Thanks for your opinion, of the show and tradesman. I am not sure he frequents the blogs here but are more than welcome to engage him on tradencheese.com. I am sure anything you need clarified will be. Personally, I know tradesman researches hours on end to understand where your county is headed. Just because you did not recognize his voice and attend meetings regularly really does not prove you know anything to the contrary of what was broadcasted. I am interested in hearing your hours of research on the matter...
    As far as your comment about everything being a conspiracy, well, one has to admit this situation demands further investigation.

  • jowilker Dec 29, 2007

    osx, A municipality is pretty much a business that has employees, buys and sell things, enters in contracts, like other business do, with somewhat of a different twist. It represents a group of people instead of being privately owned. If you work for a municipality you want your pay, time off, and retirement benefits just like if you were working in private enterprise.

    I think one of the reasons that the fines have been reduced is because there were loopholes that didn't catch the problem. I do know that the issue with Creedmoor has caused the government to look nation wide at small towns that haven't keep up with modern payment and double check book keeping systems.

    There is a lot to be said of Jacks post too.

  • jackadoo Dec 29, 2007

    Obviously the former finance director was incompetent, and in over her head. The town grew, and did not upgrade personnel. I am betting this lady was with the town 30 years, probably starting out as a clerk in the finance dept. No one had the heart (or wisdom), to address the issue. It sounds like she basically lied by blaming the mail, ignored the IRS, and then quit when the quitting was good. She should suffer some type of penalty. Maybe she can be demoted, post retirement, which would lesson her retirement pay benefits.

  • OSX Dec 29, 2007

    jowilker... I have herd of this stuff going on in small businesses but never a local government. There is absolutely no excuse for that. I'd love to know how much Miss Fowler's salary was working for Creedmore.

  • jowilker Dec 29, 2007

    osx, The money owed to the IRS is fines and penalties for late file of employee withholdings and other report issues according to the copy of the report that I obtained. The fine has been negotiated down to $200,000.00 from the $1.2 mil that it started out at.

    As stated in the piece, the leadership of Creedmoor let the citizens down.

    Bring the bbq on, I will take a couple o plates.

  • OSX Dec 29, 2007

    How does a Town owe money to the IRS? We all pay taxes and then the town that we pay tax to pays taxes? Hmmm...

  • OSX Dec 29, 2007

    What if they don't pay it? Really, what would the IRS do? Come and and make everybody move. Force the mighty empire of Creedmore to surender. Then the noble citizens would only have to pay county taxes. I wonder how much that would save them.

  • theendoftheroad Dec 28, 2007

    Those of us in northern Granville Co are going to have to do a bb-q fund raiser for you folks or something...that's crucial!!!

  • yruatwit Dec 28, 2007

    Eleanor Fowl-up has known for a long time there was a problem ..................... her!

  • jowilker Dec 28, 2007

    gvmntcheese, I listened to your broadcast, and don't know who tradesman is nor was I able to recognize his voice. He doesn't attend any of the open public meetings in Creedmoor. I didn't hear a recognizable fact in anything that he said. Everything is a conspiracy to him. I must presume the recent elections were aranged by the govement as well.

    Let's here some believable facts.

    Sorry folks, opinion exchange is one thing and welcome, but that kind of hooey is not.

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