Board members resign
Board members resign
By JOHN PEPIN Journal Staff Writer
GRAND MARAIS — Two Burt Township Board members resigned this week following a final report from a township ad hoc investigatory committee into township payroll tax payment problems over the past five years.
Township Supervisor Lee Durrwachter and Treasurer James Siebert resigned Tuesday night at a township meeting. The terms of both men were set to expire in 2008.
The report from the Ad Hoc Committee on the Management and Accounting of Township Finances was dated June 24 and is posted on the township’s Web site.
In it, the three-member panel of Karen Brzys, Kay Wampler and George Curtis primarily blamed numerous problems involving late or under-payment of withheld federal payroll taxes on former township Clerk Lori Savage, who resigned in March.
But the committee also said board members did not pay close enough attention to the township’s fiscal situation, which ultimately resulted in the township facing a nearly $90,000 debt to the Internal Revenue Service.
“The facts indicate that the clerk did not properly carry out her responsibilities to pay payroll taxes and file payroll forms,” the report summary stated. “It also appears that the other board members did not properly oversee the township’s finances.”
Durrwachter’s resignation is effective immediately and the township plans to appoint a replacement within the next month who will serve until the next election.
Siebert’s last day on the job will be Aug. 31. A board member for the past 14 years, Siebert said he had previously planned to resign at the end of the year, but decided on an earlier date.
He said he hoped his departure would help satisfy a Grand Marais community demanding resolution and perhaps better the debt and penalty negotiation stance of the township board with the IRS.
“I felt I should move it up because of the problems,” Siebert said. “Everybody in town is rightfully upset.”
Durrwachter did not link his resignation to the fiscal difficulties, but according to Siebert, Durrwachter’s decision was related. Durrwachter read a brief statement to the board before he left Tuesday’s meeting.
In part, the statement read: “I am resigning as Burt Township supervisor. Over the past seven-and-a-half years I have tried to carry out the duties of supervisor to the best of my ability. I know I’ve made mistakes, but I have always tried to do what was in the best interest of all of the citizens of Burt Township.”
Some citizens had circulated a petition seeking Durrwachter’s resignation, condemning him for allowing a loan without voter approval used to pay part of the IRS debt.
“The community put together a petition asking for his resignation,” Wampler said. “He beat them to it.”
Savage said the report is “somewhat misleading” in fixing the blame for the problems on her. She said the IRS and auditors from Anderson, Tackman and Co. never alerted the township about accruing fines.
“The report makes it look like I was aware there was a problem and I wasn’t,” Savage said. “Payments were made late, but we were never told we were being fined or assessed. We never knew we were racking up huge penalties.”
Each month, employers, including Burt Township, withhold state and federal payroll taxes from employees. State taxes are mailed in, while federal taxes are deposited in banks, which forward the money to the Internal Revenue Service.
According to the report, of 64 monthly deposit deadlines since December 2000, Burt Township was late 56 times. In addition, the clerk prepares “bill sheets” for the board outlining expenses, including federal and state taxes.
The committee said of 55 meeting minute packets presented to the board, only 14 had the correct amount of federal tax deposited listed.
Savage said the township routinely paid bills late, because of limited funds, with a policy in place of paying “when funds become available.” She said she has notes from the auditor dating into the IRS investigation, stating things were “fine.”
The report said that some or most of the board members were unaware the township had received delinquency notices from the IRS.
“The warnings and the letters from the IRS went directly to the clerk and she didn’t share it with anybody,” Siebert said. “When it hit, it shocked me as much as anybody else.”
As a result of the IRS investigation, the township has had to pay delinquent taxes of more than $50,000, plus penalties and interest of just less than $38,000, the report said.
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