Mercer County Sheriff Ernie Kelty said he and his staff are working to resolve an issue pointed out in the latest state audit.
In the audit of the sheriff’s tax settlement for the period of April 17, 2018 through April 15, 2019, the state auditor’s office found the sheriff did not maintain adequate controls and oversight over tax collection procedures, specifically the franchise tax.
In the report, the state auditor’s office found that banks paid the face value of the franchise tax when they should have paid a discounted rate, the amounts owed to the school district and the soil conservation district for one franchise bill was not recorded or paid, the amount collected for one franchise tax bill was not accurately recorded in the monthly reports or paid to the taxing districts, the number for tangible taxes were transposed, the wrong commission rate was used for several months for the taxes owed to the school districts, the commission amount was not included when paying the monthly taxes owed to the school district for May 2018 and the total amount disbursed for taxes was recorded incorrectly in the monthly tax reports.
State Auditor Mike Harmon made a number of recommendations.
The report suggested that the sheriff’s office change the date printed on the bills to the date that the banks will receive a discount, ensure accurate monthly franchise tax reports are maintained in order to ensure all franchise taxes collected are accounted for accurately and posted in accurate line item categories.
Harmon also recommended that the taxes be reconciled monthly and that the sheriff’s office take steps to “ensure that accurate financial reporting is maintained through adequate oversight.”
The audit found that the sheriff’s office has to collect $21,973 already paid to the county. They must also distribute funds to the banks and taxing districts, including $63,717 to the school districts.
In his official response, Sheriff Kelty said until recently the bookkeeper maintained franchise tax records by hand. Kelty said “GUTS, the company that provides the regular tax collection computer program, has provided us with a computer franchise tax collection program. This should eliminate some mistakes that were being made and ensure more accurate monthly franchise tax reports are being made and taxes collected are accounted for and disbursed more accurately.”
Reached for comment on Monday, Sheriff Kelty said the new software will make it easier for his staff and more accurate for taxpayers.
Kelty said his staff are taking the steps recommended by the auditor’s office to resolve the situation.
“We’re doing the best we can with what we got,” Kelty said.
For the full report, visit auditor.ky.gov.