In front of a group of church and business leaders Thursday morning, Sanders announced that the Internal Revenue Service approved an installment agreement to repay the city's multimillion payroll tax debt, which is currently at $3,817,603.05, though that figure could be lowered in the coming weeks.
The city's tax attorney, Baker Donelson of Memphis, informed Sanders of the agreement Wednesday.
The mayor said because of the agreement, the debt is no longer accruing penalties and interest.
Sanders added the city is negotiating with the IRS branch that handles penalties abatement, lobbying that some of that part of the $3.8 million debt be decreased. The mayor is hopeful that a decision on the penalties will be made within three months.
Along with stopping penalties and interest, the agreement suspends levy action against Thunder Bayou Golf Links, the selling of farm property, the $1.1 million parks and recreation funds that came to the city in March and minimum cash payments of city revenue.
Sanders said the 15-month, 1-cent IRS sales tax that patrons passed in March made it possible to come to a resolution on the issue that has lingered since March of 2011, three months after he entered office. The city will use the revenue source -- projected to generate $3.5 million over the 15 months -- to pay the debt. The tax began in July and the city has made three payments from the tax, totaling $705,084.26.
Specifically, to repay the $2.4 million unpaid payroll taxes from 2009 and 2010 and the $1.4 million in interest and penalties, the installment agreement says the city will pay the IRS 44.44 percent of local sales tax revenue remitted by the state.
"They looked at it as a percentage rate because the federal government has to plug in numbers, and either they will plug in $200,000 or $500,000 or whatever, but the tax fluctuates," Sanders explained. "So in order to make sure that they were taking just the 1 cent, they devised a formula that identified it as being 44.44 percent."
The city will continue to remit the same percentage of local tax revenue on a monthly basis until the IRS debt is paid in full; the amount of the tax will vary each month. The agreement says the city will send the IRS collection division a summary statement each month indicating the amount of sales tax distribution. The state has agreed to send the payments directly to the IRS, electronically, by the 15th of each month, the agreement says.
Sanders said the agreement is a milestone.
"I want to publicly thank you," Sanders told the group of church and business leaders. "I want to publicly thank God for being involved in this and for Him having His hand on our city, for helping us move forward. To thank you, as business people, for your support. Without the support of our businesses, we wouldn't have been able to campaign for this (the temporary 1-cent tax). The prayers of the righteous have come in, even to the point that we prayed up another million dollars. It was all a united effort. Most importantly, I want to thank the people of Blytheville. The governor said it best just last week when he was here, when he kept saying that Blytheville is nothing more than a bunch of comeback kids. When everybody thinks that we're down, we come back and we're on the way right now. What this has done is given this administration an opportunity to help move this city forward. This is not a Mayor James Sanders milestone. I had one vote."
He said folks' financial support, prayers and God's blessings have allowed the city to move forward on the IRS matter.
The mayor noted in November 2011, city officials were meeting with the IRS, trying to avoid liens that would cripple the city.
Now, thanks to the temporary, 1-cent tax the city avoided the IRS levying on liens they placed on city property early this year. Sanders thanked those who campaigned for the tax and patrons who approved it.
"I can't stress how humbling it is when I see the people of this community continue to do things to allow a city to progress itself," the mayor said. "It's humbling to sit in this seat of mayor and watch the community as a sense, heal itself."
Sanders said his office is charged with following the law, working to provide better services and "setting an atmosphere for growth."
"The actual growth in itself and the actual healing comes from the community and the people," he added. "I go to the churches and discuss those things with them because they're all about healing. Our business community -- they have the minds of business and they understand those types of things. Our legal advisers, they look at everything legally. And we bring all of those things together to grow our city."