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

"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.