Several accounting issues have been discovered in the Union County tax collector’s office, including that roughly $58,000 in unpaid tax dollars were exempted from collection.
At the regular Quorum Court meeting Thursday, Union County Tax Collector Karen Scott informed the Justices of the Peace that she’d discovered roughly $58,000 in tax dollars unpaid due to exemptions given during former Tax Collector Paula Beard’s most recent term.
Many of the exemptions were of delinquent taxes (unpaid taxes) going back as far as 1991, Scott said; some were also delinquent penalty fees that were waived. A tax collector in Arkansas does not have the authority to exempt people from taxes or penalty fees.
“For example, [a] customer had a ‘92 personal tax that was $61.40 and it was exempted in the Apprentice system (tax collection software system), so whenever I get my records (in the new tax collection software system, AS400) … I’m showing the taxes aren’t paid,” Scott said. “So when a customer comes to me and says ‘I’ve already taken care of this,’ I say ‘I’ll need to see the paid receipt for it because I’m not showing it to be paid. I’m trying to clean up my records.’ She doesn’t have a receipt; she says it was taken care of by the previous administration.”
Scott also revealed that one of the people whose delinquent taxes were exempted is a JP on the Quorum Court, though she declined to specify who it was.
“This is terrible,” one of the JPs said after the revelation.
She said delinquent taxes were exempted for three parcels of land owned by the JP; two have since been paid. She said the JP asked whether she would waive the penalties and interest that have been added to his account, to which she answered ‘no.’
The exemptions were discovered during an internal audit conducted by Scott and Jim Monk, who has overseen technical updates in Union County since the 1980s. When Scott’s term began on Jan. 1, she and Monk began the process of switching the tax collection software from Apprentice Information Systems (AIS) back to a previously used software, IBM AS400, part of Scott’s campaign platform when she ran for tax collector last year.
“We started the process and everything when Jim (Monk) was getting the paperwork and everything from Apprentice. It just kind of came to light so we just did it ourselves because we know what we’re looking for, what you can and what you can’t do,” Scott said. “And you can’t exempt taxes just to exempt them.”
Scott wanted to change back to the AS400 after several problems with the Apprentice system. Taxes in 2017 were down $1.2 million from 2016 and loopholes in the system allowed taxpayers to ignore delinquencies.
“Bringing the collection system back in-house, we are actually collecting more taxes in-house than we were on AIS,” Monk said. “In the AIS application, the operator had the discretion as to which [years’ taxes] that they wanted to receive and as a result, things fell through the cracks.”
District 4 JP Dean Storey quickly made a motion for the collector to try to collect all the delinquent taxes, interest and penalty fees. Scott cut in to tell him that it was unnecessary, as she is already collecting all the taxes that were previously exempted without reason.
“Oh, I’m collecting it. They’re not going to get by without collecting unless they give me a paper receipt,” Scott said.
Beard said she would not comment on the issue without seeing documentation.
“The only thing I’m going to say is my office, when I was collector, was audited and those findings, those reportable findings, were addressed and issued to the state Legislative Audit office in Little Rock,” Beard said. “I think it could have probably been a number of issues when they’re talking about that much money.”
Several months ago, the Quorum Court approved $10,000 for an internal audit of the tax collector’s office by an outside, private accounting firm; Scott said that audit had not been conducted yet because the auditor asked for specific inconsistencies that Scott first had to locate in the records herself.
The auditor is reconciling the tax collector’s bankruptcy account. Monk said that account had not been reconciled in years, which, according to state law, is not permitted. District 7 JP Johnny Burson asked if a legislative audit might be a better route for the Quorum Court to take, rather than a private audit.
“If she tells (state auditors) ‘hey, this is an issue we’ve got, you really need to look at this issue,’ then they can kind of hone in on that,” said John Thomas Shepherd, legal counsel for the Quorum Court. “The only issue with that is it’s going to take probably more time; if you paid someone, they could get in there and maybe get you an answer in a month, two months.”
Monk also told the Quorum Court about several issues encountered when the tax collector’s office switched from AS400 to Apprentice and then back again. Monk said he and Scott Hollis, information services manager for Union County, did a site survey of the computer equipment in the tax collector’s office at the start of Scott’s term in January, discovering a lot of computer equipment had been thrown out without authorization.
“The thing that we found was that all of the computer wiring that was in the collector’s office, effective of January of 2016, had been ripped out and replaced. It was perfectly good wiring but it was replaced,” Monk said. “I can’t tell you the exact expense but I will assure you that it was definitely a measurable expense. Computer equipment thrown in the trash that had residual value is a crying shame.”
When data was converted from the AS400 system to Apprentice, equipment including computer wiring, printers and other miscellaneous office things were thrown out, Monk said. No data was lost. District 3 JP Greg Harrison noted that county departments must ask for authorization before throwing out equipment of value.
Monk encouraged the Quorum Court to consult with Hollis before making any further major system changes. In addition to the lost equipment, Monk said Hollis could have warned the JPs that switching to the Apprentice system was not a good financial decision.
“The county got the shaft and AIS got the gold. They charged us a ridiculous amount for the hardware and equipment they brought in, from laser printers to computers, you name it. We paid a premium,” Monk said. “We lost thousands of dollars because Scott Hollis was not involved to say ‘this isn’t a good buying decision.’”
Monk said representatives from Apprentice acted inappropriately when informed that Union County would be switching back to the AS400 system. He said he requested information from the company about maintaining their equipment, since some of it will continue to be used. As part of the contract when Union County switched to Apprentice, hardware and software maintenance was supposed to be their responsibility, Scott said. The switch occurred in April 2017.
Since then, the tax collector’s office has only been able to use the Apprentice system in ‘view-only’ mode, meaning Scott is unable to print reports or see detailed reports and analyses on the software.
“They would not provide us with the information that we had requested in order to maintain that equipment,” Monk said. “The end result was that we stopped paying [and] they cut back the functionality of the code.”
Harrison then moved to seek legal counsel to rectify the situation with Apprentice, since it is preventing Scott from fulfilling her duties in the most efficient way. The Quorum Court unanimously approved the motion, except for District 8 JP William Crowder, who was absent Thursday.
Caitlan Butler can be reached at 870-862-6611 or [email protected].