City of Marion bank account temporarily frozen over tax debt

MARION, Ala. (WBRC) - The city of Marion’s bank account was temporarily frozen by the IRS for a few hours Tuesday because of an outstanding tax debt, according to the Marion city clerk/treasurer.

The city clerk said the city administration in place from 2008-2011 didn’t pay the employer portion of federal income taxes, creating a $694,000 tax bill.

The city said the IRS deemed that “Not Collectible” and believed it was resolved, but the clerk said the IRS changed that debt to an active one and said the city didn’t receive notice of that until finding out its bank accounts were frozen Tuesday because of an IRS levy.

The mayor says the account was frozen around 4:00 p.m. on Monday and they were unable to get in touch with the IRS because it was so close to the end of the business day.

“We had a city council meeting last night to notify the governing body on some procedures put in place to kind of counteract what’s going on, to see if we could kind of jump on it early in the morning,” Mayor Dexter Hinton told WSFA 12 News.

“We have contacted the IRS and got our accounts released to go back to day-to-day operations. I don’t want to say it was a minor misunderstanding, but it was a minor misunderstanding. But now we want to go back to the drawing board and see how we can get rid of this old debt that was collected under a previous administration that we were dealing with right now. So, we’re going to try to get all this resolved and continue to move in the right direction.”

Marion’s city clerk said after talking with the IRS, they’re scheduled to work out a compromise on the outstanding debt after the holiday. Meanwhile, the city’s bank account is unfrozen and city employees will be paid tomorrow as scheduled.

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