Posted 6/22/01 IRS denies request to waive penalties, interest By Danielle Strenke In the process of reorganizing the cityís files after an audit last year and the subsequent resignation of the city clerk, the city of Harris discovered failure to both file and pay withholding taxes from two different periods in 1998, 1999 and 2000. The city had requested that the IRS waive any penalties - which include both a late fee and interest accrued - associated with the cityís failure to file and pay, which the IRS denied. The penalties resulted from the cityís failure to file and pay withholding taxes on city payroll. While the city is in the process of paying the past due withholdings and some of the penalties, the council sent a request to waive further penalties and interest. In a letter, the IRS stated ìthe information submitted does not establish reasonable cause or show due diligence.î The city can appeal the decision, but the process would be too costly. As it stands, the city owes quarterly penalties for Mar.-June and Sept.-Dec. of all three years. The penalties range between $600-$700 for each period, with additional interest assessed anywhere from $40 to $228. The result is penalties in excess of $4,000, as the city continues to pay withholdings from the same time period as well. It is unclear whether the money for state and federal taxes, including FICA and Social Security, was withheld from city employees during those periods, and if so, what happened to the funds. Preliminary plats approved As it still awaits the final draft of its new zoning ordinance, the council moved forward with approval of several preliminary land concept approvals at its meeting. The council received recommendations for approval from the planning commission on several developments. Laura Bowen received preliminary plat approval for subdividing her land into four additional parcels for possible development. Denny Gustafson also received approval on a land use concept for dividing his land into 10 parcels. None of the proposed parcels from Bowen or Gustafson would be less than five acres, as is required in the cityís new subdivision ordinance. The council approved a final plat from G & K, subdividing its land, and approved a proposed concept from Leonard Smykalski for a commercial office building on Co. Rd. 30. During the meeting, a public hearing was held to discuss the completion of the cityís new well project. No public comments were received on the $199,000 project; city engineer Steve Thatcher recommended final payment on the project, which the council approved. The council reviewed a revised fire contract with Sunrise Township, but tabled it until exact figures could be put into the equation calculating fees and costs. ìHow difficult is it to see numbers, Iím sure Sunrise residents would want to see numbers,î Mayor Richard Hanson said. ìOther than that I think it looks fine.î Thatcher discussed an update on the cityís lagoon system, telling the council the existing pond could still take on additional residential or commercial properties. ìWhat is the I-35 expansion going to do,î councilor Wayne Buisman asked. ìOne business out there could take it to capacity, if it were the right business,î councilor Lyle Holmstrom said. Thatcher said that was probably true, and the city would have to consider the possibility of building another pond, with costs being attributed to the new developments. ìHow many additional hookups would that provide,î councilor David Christianson asked. Thatcher said the new pond would have the potential to more than double the existing water capacity, to roughly 52,000 gallons a day, computing to about 250 more homes. In other business, the council: -Received the May financial report from Treasurer Brenda Isaman, and accepted her resignation from the position due to personal reasons. -Discussed costs to individuals and developers associated with extended city water and sewer to the area surrounding I-35. -Accepted Mayor Hansonís recommendation of Marlys Cleveland to fill the vacancy on the planning commission. ©Post Review