1
3
4
5
h
7
8
9
10
11
12
13
19
15
16
17
18
19
20
21
22
23
24
25
KERR COUNTY COMMISSIONERS COURT
Emergency Session
Thursday, July 14, 2005
10:00 a.m.
Commissioners' Courtroom
Kerr County Courthouse
Kerrville, Texas
Internal Revenue Service Levy on Kerr County funds
PRESENT: PAT TINLEY, Kerr County Judge
H.A. "BUSTER" BALDWIN, Commissioner Pct. 1
'WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2
JONATHAN LETZ, Commissioner Pct. 3
DAVE NICHOLSON, Commissioner Pct. 4


1
." 2
3
4
5
6
7
8
9
10
11
12
~-- 13
14
15
16
17
18
19
20
21
22
23
"" 2 4
On Thursday, July 14, 2005, at 10:00 a.m., an emergency
meeting of the Kerr County Commissioners Court was held in the
JUDGE TINLEY: Good morning, ladies and
this time and date, Tuesday, (sic) July 14th, 2005, at
10 a.m. I felt it necessary to call an emergency meeting
because of the serious nature of the subject matter of the
agenda item, that being an I.R.S. tax levy which was
effected on Kerr County funds. Yesterday morning, the
Sheriff brought to me a notice that some funds which was due
his office by the Social Security Administration, and which
belonged to Kerr County by virtue of the efforts of his
office, that those funds had been levied upon in part by the
federal government because of some outstanding obligations
that were owed by Kerr County to the federal government.
And I will turn it over to the Sheriff now and let him
explain how this thing developed, and we'll go from there.
COMMISSIONER LETZ: Judge, I have a question.
JUDGE TINLEY: Let me call the agenda item
first, if I might. Consider and discuss appropriate action
25 ~ or response to Internal Revenue Service levy on Kerr County
7-19-GS emq
3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
funds.
COMMISSIONER LETZ: Judge, I have a question.
I mean, I looked at this yesterday, and I understand -- I
mean, it's obviously an important issue. I also looked at
the response that we had from the Treasurer which explained
the issue, and that is being resolved, and based on the
facts today it has been resolved. How does this qualify as
an emergency? I ask the County Attorney. I just don't see
this as an emergency. I mean, I see it as a, I mean, issue
that needs to be dealt with. It's being dealt with. I
think it's a -- you know, a bad situation, the fact that it
happened, but the fact that it's being corrected, I don't --
it seems to me that we're spending a lot of taxpayers'
money -- wasting a lot of taxpayers' money having an
emergency meeting and having all the Commissioners come back
in today for something that's been resolved.
JUDGE TINLEY: Well --
COMMISSIONER LETZ: And so I'm deferring to
the County Attorney. Is this an emergency? Does this
qualify?
JUDGE TINLEY: Let me respond to that, if I
might.
COMMISSIONER LETZ: I asked the County
Attorney a question, please.
JUDGE TINLEY: Number one --
7-19-OS emg
4
1
2
3
4
5
5
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
COMMISSIONER LETZ: No, I asked the -- Judqe,
I asked the County Attorney a question.
DODGE TINLEY: Mr. Letz, I'm the presiding
officer of this Court. Let me respond to that, if I might.
Your question was to me.
COMMISSIONER LETZ: No, it was to the County
Attorney.
JUDGE TINLEY: I'll respond.
COMMISSIONER LETZ: Okay, Mister County
Attorney --
JUDGE TINLEY: I have not seen anything to
indicate this matter was resolved, and I would submit to the
Court that any time any taxpayer receives a levy from the
Internal Revenue Service, that it's a very serious matter
and ought to be considered an emergency, and I think we need
to know what the circumstances are.
COMMISSIONER LETZ: Okay, I don't think
you're who I asked the question to. County Attorney, is
this an emergency?
MR. EMERSON: I think, given the initial
information -- all I had was the tax lien, and if they're
seizing county funds immediately, it probably would qualify
as such. Now, I haven't -- I just received the new
information.
COMMISSIONER LETZ: All right.
~ 14-OS emg
5
1
3
4
5
6
7
8
9
10
11
12
13
14
15
lH
17
18
19
20
21
22
23
24
25
JUDGE TINLEY: Sheriff, would you like to
tell us how this originated?
SHERIFF HIERHOLZER: First, I'd like to start
out -- I was getting up this morning and read the article in
the paper where it says there was a tax lien filed against
the Kerr County Jail. That's the biggest bunch of malarkey
I've ever heard in my life. Kerr County Jail's the one that
is correcting the situation, and I don't appreciate them
getting zinged by the newspaper for an erroneous statement
in the newspaper. Kerr County Jail's the only one that
makes the county funds off of Social Security
Administration, and because we are the only department --
the jail is -- that makes funds, that's where I.R.S. went to
seize part of those funds that we get. Since it's coming
from Social Security and it's government funds, they started
taking some of those funds.
What this is, several months ago I got a
notice from I.R.S. about some kind of taxes or something
else. It didn't pertain to me, I didn't feel; it's the
County, you know, Treasurer that takes care of that. That
notice was forwarded on over to the Treasurer, and I really
didn't even keep a copy. Normally I do; I have the
secretary do it, but I didn't. On the 12th, day before
yesterday, I got another notice from I.R.S. about a -- them
taking county funds out of revenues that the jail is
7 14 OS emy
6
1
w
3
9
5
6
7
8
9
10
11
12
"° 13
14
15
16
17
18
19
20
21
22
23
24
25
earning. At that time, I was dealing with media on other
issues, so I had the r_hief deputy call I.R.S. and try and
find out what this was about, what is going on, you know,
what's happening here, and that's when we got into this. To
explain, the Kerr County Jail and all our inmates we house,
if those inmates are collecting Social Security money --
funds, when they are incarcerated, they're not entitled to
collect those Social Security funds.
Back in 2000, right when I took office -- and
it actually started before I took office; it just wasn't any
funds received from the county -- we entered into an
initiative agreement with Social Security Administration
that we would report those people that are going to jail
that should be cut off their Social Security benefits, and
we have done that ever since. And because of that, the
initiative is Social Security pays the Sheriff's Office,
okay? And that's why everything is naming the Kerr County
Sheriff in this. They pay us so much money, depending on
how many of these people we report to them, and our payments
go -- they're always in hundred dollars. They'll either go
from 400 a month to 800 a month to 1,200 a month, just
depending on how many people we report that they verify out.
So, it's a revenue-making deal that the County's made since
I took office, and I think it does help the county. Over
five years, it's added up to a pretty good chunk of money
7-19-OS emg
7
1
"~ 2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
~' 2 4
25
that we try and get back for the County.
What -- being that the jail is the only one
that makes money from Social Security, and Social -- and
I.R.S. saying that the County owes them money due to some
late payments on Social Security benefits from employees,
there's been a levy, as that statement shows. And that's
all I can -- it says purpose on it, tax levy against the
Kerr County Sheriff. And what they're doing is they're
taking a portion of that revenue money -- before we get it,
they are taking a portion of that to help satisfy this debt
that Kerr County owes.
COMMISSIONER LETZ: Sheriff, are you aware of
what the amount of the levy is?
SHERIFF HIERHOLZER: I have no idea, okay?
At the bottom of that page you got yesterday from I.R.S., it
says payment before reduction, $600. What that would have
been is, the check that we would have gotten from Social
Security in the amount of $600 for this incentive program.
That would have been proceeds to Kerr County. Well, they
took $90 out of that, and this isn't the first time.
They've done it one other time that I can pinpoint, because
it's always in hundred-dollar increments we get, and the May
deposit into the County's fund, where all that money goes --
it goes into the Out-of-County Prisoner Housing Fund,
anything that's derived in the jail. The one in May should
~-19-u5 emg
8
1
2
3
4
5
6
7
8
9
10
11
12
13
19
15
16
17
18
19
20
21
22
23
24
25
have been $300; it was $210. So, the first --
COMMISSIONER LETZ: $90.
SHERIFF HIERHOLZER: They would have taken
$90 out of that one, too. And that first notice would have
been -- was forwarded on by my secretary to the Treasurer's
office at that time, 'cause we had no idea what it was,
okay? Clay, my chief deputy, can probably e:cplain a little
bit more, because you got to -- you got a henscratch
attachment with your backup, probably. What that henscratch
attachment is, is when I told Clay to call I.R.S. and try
and find out what was going on on the 12th, Clay gets on the
phone with I.R.S. They can't talk to Clay, even though it's
naming the Kerr County Sheriff and everything else, but that
the County Treasurer -- I guess there's certain people that
I.R.S. could talk to. They could not talk to Clay about
this issue without the Treasurer's office being on the
phone. So, they set up a conference call with the Treasurer
and I.R.S., and they had to get the Treasurer's permission
to talk about it with Clay still being on the phone.
COMMISSIONER BALDWIN: Rusty?
SHERIFF HIERHOLZER: So I'm going to -- yes,
sir?
COMMISSIONER BALDWIN: I recognize
henscratching. I know what that is.
SHERIFF HIERHOLZER: Well, mine my be a

9
1
2
3
4
5
6
7
8
9
10
11
12
13
19
15
16
17
18
19
20
21
LG
23
24
25
little --
COMMISSIONER BALDWIN: But I don't see any
henscratching here in my pile. Was it henscratching, like a
conversation between --
SHERIFF HIERHOLZER: It' notes taken during
this conversation.
COMMISSIONER BALDWIN: I don't have that. Is
that -- is that notes taken from -- between Clay and the
I.R.S.?
SHERIFF HIERHOLZER: Between Clay -- during
that conference call with Clay, the I.R.S., and Barbara
Nemec.
COMMISSIONER BALDWIN: Okay.
SHERIFF HIERHOLZER: Okay? And so, at this
point, I think the best thing for me to do is let Clay
explain what was talked about on that phone conversation.
COMMISSIONER WILLIAMS: Let's see if we can
get the terminology straight here, Sheriff. The document
from I.R.S. talks about a levy.
SHERIFF HIERHOLZER: Yes.
COMMISSIONER WILLIAMS: Not a lien.
SHERIFF HIERHOLZER: Right.
COMMISSIONER WILLIAMS: There seems to be
some misinterpretation of what the letter says. It is a
levy, as you will note, taking a certain amount of money for
7-19-GS emq
10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
purposes that they think they are entitled to.
SHERIFF HIERHOLZER: Right.
COMMISSIONER WILLIAMS: As opposed to a lien.
SHERIFF HIERHOLZER: Right.
COMMISSIONER WILLIAMS: There is no lien that
I can find in any of this.
SHERIFF HIERHOLZER: That's why I said I
didn't like --
COMMISSIONER WILLIAMS: Of this facility or
its funds. Is that correct?
SHERIFF HIERHOLZER: That's why I said what I
said in the beginning. The newspaper even reported this
morning, tax lien against the jail. This is no lien.
COMMISSIONER WILLIAMS: It is a levy.
SHERIFF HIERHOLZER: It is a levy where they
are recouping a certain percentage of revenue that we're due
because of some sort of debt they think we owe.
COMMISSIONER WILLIAMS: So, the question then
is, why do they think they are entitled to these funds?
SHERIFF HIERHOLZER: That's right.
COMMISSIONER WILLIAMS: Do you have that
answer?
SHERIFF HIERHOLZER: That will come from the
chief deputy during that phone conversation. I don't want
to talk third-party about that from Barbara Nemec herself.
~-14-u5 emu
11
1
2
3
9
5
6
7
8
9
10
11
12
13
14
15
16
17
l8
19
20
21
22
23
29
25
COMMISSIONER WILLIAMS: I just wanted to get
the terminology straight.
COMMISSIONER LETZ: Commissioner, what you
said I think is an important point, 'cause I talked to -- I
don't know what paper Rusty is referring to, but I talked to
the Express News, and based on talking with Zeke MacCormack,
somebody called him and told him it was a lien.
COMMISSIONER WILLIAMS: Right.
COMMISSIONER LETZ: And so someone in the
county -- someone who was aware of this intentionally
created that impression. I have -- Zeke, being the good
reporter he is, will not reveal sources, of course.
SHERIFF HIERHOLZER: That's all I can tell
you immediately, because all my letters, every bit of mail
we get is date-stamped on when it's received. It was
received on the 12th. The next morning, immediately --
'cause we were dealing with -- Clay was dealing with this
until 5 o'clock that afternoon of the 12th. Then I even
ca112d the Judge at home -- or at his other office, really;
I tried to get him at home after 5 o'clock on the 12th to
let him know about this and demand a meeting first thing
yesterday morning. I met with the Judge first thing
yesterday morning, turned the original of the letter from
I.R.S. over to him, and it went from there. There is not a
lien. I did not appreciate what I read in the paper this
~-ie-as Amy
12
1
._ 2
3
4
5
6
7
8
9
10
11
12
--' 13
14
15
16
17
18
19
20
21
22
23
24
25
morning that there's a tax lien against Kerr County Jail.
COMMISSIONER WILLIAMS: Well, I want to make
a comment, following up on Commissioner Letz. I, too,
received a call from the Express News, Zeke MacCormack, at
5:28 yesterday afternoon at home, in which he told me he had
received an e-mail saying that Kerr County's -- that there
was a lien placed on Kerr County's funds and facilities by
the Internal Revenue Service. The individual that sent him
that e-mail is in this room today, and it's not you,
Sheriff.
SHERIFF HIERHOLZER: I know it's not me,
'cause I haven't talked to the media about any of this. But
I just was really upset when it looks like to the public the
jail was doing something wrong, okay? That's totally wrong.
The jail was doing things right. They were creating revenue
for this county. But this is a problem that evidently has
gone on and has not been resolved for almost two years, and
it's a problem that should have been resolved. The gist of
the conversation is they have already now, that I know of,
taken $180 out of revenues -- l.R.S. has -- that the jail
has earned, and through that conference call with Clay and
them, they are going to continue to do it until this thing
is resolved. And I don't like losing revenue that the
jail's trying to make for this county over somebody else's
mistake -- over I.R.S.' mistake, 'cause I seriously doubt
~-19-0~ emg
13
1
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
that we're going to get that $180 back from I.R.S. Dealing
with I.R.S., I think it's going to be hard to get it to come
back.
COMMISSIONER WILLIAMS: Well, it's a levy
against revenue to your operation based on things you do, as
opposed to a levy on tax money; is that correct?
SHERIFF HIERHOLZER: That is correct.
COMMISSIONER WILLIAMS: Is that your
understanding?
SHERIFF HIERHOLZER: We keep records. These
are the records that we send in and what we get back, okay,
from I.R.S. -- or from Social Security Administration, and
what we do at the jail, all right? And what it is -- like,
May 5th, it was $800 that they sent us. And it goes all the
way back to the year 2000, varying from 1,200, 800, 400, but
it falls in hundred-dollar increments, is what we do by the
work that -- the hard work that the jail staff does and my
secretary does keeping those records and forwarding it on to
Social Security.
COMMISSIONER LETZ: Sheriff, I guess -- you
know, I mean, I agree totally with you that this is a very
serious matter. It shouldn't be done, and the fact that it
got to this point is a bad reflection on the county. But
you said it's been done twice. Now, I was always under the
impression, whenever this happened, that the I.R.S. sent a
~-14-as eTy
1
2
3
4
5
6
7
8
9
10
11
lz
13
14
15
16
17
18
19
20
21
22
23
29
L5
14
letter. Didn't you get a letter the first time for the $90?
SHERIFF HIERHOLZER: I got a letter the first
time that, evidently, they took $90. When I opened that
letter, okay -- 'cause it's all date-stamped. When I read
it -- and it's been several months ago, all right? -- I
looked at it, and I said, "This isn't anything we do." And
I didn't realize where it -- so I immediately had Nancy, my
secretary, send that letter over to the Treasurer's office.
COMMISSIONER LETZ: Okay.
SHERIFF HIERHOLZER: That's where it went
then. And my mistake, I should have kept me a copy of it.
We normally keep copies of everything we send. But it was
just one of those, "This doesn't deal with us. It's for the
Treasurer. It's going to deal with the County." Sent it
over, and we let it go.
COMMISSIONER LETZ: Okay.
SHERIFF HIERHOLZER: But then, when I got the
second one the other day, I paid a little bit more attention
to it, you know. And especially when it names the Kerr
County Sheriff; kind of got on my wrong side real quick.
COMMISSIONER. LETZ: Okay.
SHERIFF HIERHOLZER: But I will let Clay
explain to y'all what the conversation was, 'cause evidently
they're saying the deposits for the fourth quarter of 2003,
the second, third, and fourth quarter of 2009, and the first
?- 19- OS e. m,7
15
1
2
3
4
5
6
7
8
9
10
11
l2
13
14
15
15
17
18
19
20
21
22
23
24
25
quarter of 2005 were late deposits. But there's a lot of
mixup in there, and I know Barbara should talk about this
too, about, you know, biweekly -- that the County actually
pays two times a month, not every two weeks, and it makes a
difference on dates and amounts of deposits. And somehow
the I.R.S. got that mixed up, so that may totally be an
I.R.S. problem. I haven't seen what y'all got this morning,
okay?
COMMISSIONER LETZ: They said it's an
administrative error.
SHERIFF HIERHOLZER: All I know is I've lost
some money out of revenues back to I.R.S., and I don't like
giving I.R.S, anything we don't have to give them. Clay?
MR. BAATON: And, for the record, I am not
the one that contacted the newspaper either.
COMMISSIONER WILLIAMS: I know you're not.
MR. BARYON: Now, my conversation is going to
be -- like I say, most of this was just a conversation
between Ms. Nemec, a lady named Escobel with I.R.S.
Collection -- I called the number on that -- let's see that
page, Rusty. At the top, under the I.R.S. -- it's an 800
number right there, right above the tax -- purpose, tax levy
statement. That's the number I called. I talked to a lady
named Escobel after being on hold forever. When I told her
initially that we finally got the -- I'm the one that
-19-CS emn
16
1
.._ 2
3
9
5
6
7
8
9
10
11
12
w° 13
14
15
16
17
18
19
20
21
2L
23
"~ 2 4
25
hand-wrote the EIN number on there, 'cause she kept trying
to run the TIN number, and which is generally someone's
Social Security number, but she couldn't get it to ever come
up. When she finally figured out who I was with, or that
it's an entity, she asked what our employer ID number was,
and she ran that back through. Then she finally could find
us. So, I'm the one that hand-wrote the EIN number in when
I got that from the Sheriff's secretary.
She found out what it was in reference to,
and what I told her was that we really didn't pay the bills;
all that came through the County Treasurer's office, That's
when she -- I was able to do a conference call and get --
ultimately get Ms. Nemec on the phone about this. And from
what I can just understand through what Ms. Nemec was
explaining to this lady -- and I don't know what Ms. Nemec
has prepared for y'all; it may just be the exact same thing
I'm fixing to let you know, but she had -- apparently there
had been some -- I'm assuming that maybe the Schedule B's --
and I didn't even know what a Schedule B is -- had not been
received by I.R.S., or had been -- all Ms. Nemec advised me
-- or advised this lady, she'd had to reseed photocopies of
the Schedule B's because this lady did ask, do they have the
original signatures? And she said no, I've already sent the
originals, but I've had to resend photocopies to a lady
named Mrs. Cruz in San Antonio with I.R.S. That's who she
7-19-US emq
17
1
2
3
4
5
6
7
8
9
10
11
12
-°° 13
14
15
16
17
18
19
20
21
22
23
24
25
said she was supposed to be sending these Schedule B's to.
She sent them on June 30th. They're supposed to remove a
penalty that's apparently a penalty for a late deposit, and
they were supposed to remove that once they received the
forms.
The computer did reflect that this account's
supposed to be on hold until October, if I remember right
what this lady was saying, and that we should call back
after October 15th if nothing's been heard back from I.R.S.
She did say they'll continue to do the levy until this is
disposed of properly. She did -- I know Ms. Nemec -- she
did advise Ms. Nemec that the copies of the Schedule B's
need to have original signatures, and Ms. Nemec did advise
her, well, I'll make copies again and put original
signatures and forward those again. They talked about some
941's that were due, and I don't know anything about what a
941 was. I made a notation of 941 after the 2004 fourth
quarter, 2005 first quarter, and I'm not sure what form a
941 is. Like I say, I was writing as they were talking.
That's kind of the extent of what my notes show, except my
notes did show Schedule B's have been sent on June 30th.
I've got Judy Carr's name listed at the top of that list,
'cause the conversation on the conference call originated
with -- with Judy, and then Judy transferred to it Barbara
when Barbara got off another line. So, that's why Judy
"]-14-OS emg
18
1
2
3
9
5
5
7
8
9
10
11
1L
13
14
15
16
17
18
19
20
21
22
23
24
25
Carr's name is listed on this form. I don't know if y'all
have any more questions of me, but I was just kind of
hearsaying this conversation.
COMMISSIONER WILLIAMS: I don't have any
questions, but I'd like to find out what this is all about.
JUDGE TINLEY: The -- did the I.R.S.
representative indicate what periods were in dispute or a
concern or in question?
MR. BARYON: Well, as the Sheriff said
earlier, at the very tail end of the conversation, she'd
already said earlier the second quarter of 2004, the third
quarter of 2004, the fourth quarter of X004, and the first
quarter of 2005, and at the end of the conversation, she
threw in that the fourth quarter of 2003 may have had some
errors in it. And Ms. Nemec just assured her that they'd
gotten all the paperwork sent in on the 30th to San Antonio.
And I -- at that time, I didn't even know why we received
Social Security -- in fact, I talked to Ms. Nemec about it.
I was kind of concerned as to why we had money coming to the
Sheriff's Office from Social Security. I wasn't aware that
we did that. She wasn't aware of it either, or she didn't
know why we had it. She said she would try to look into why
we're supposed to be receiving Social Security funds. And
after the conversation, I was talking with the Sheriff and
he advised me why we got Social Security funds in. So,
~-19-OS Pmu
1
2
3
9
5
6
7
8
9
10
11
12
13
]4
15
16
]7
18
19
20
21
22
23
24
25
19
that's really all.
JUDGE TINLEY: Anything else?
MR. BARYON: That's aLl I've got.
JUDGE TINLEY: Any questions for Deputy
Barton? Thank you, sir.
COMMISSIGNER BALDWIN: Thank you.
JUDGE TINLEY: Ms. Nemec do you have any
input you'd like to offer?
MS. NEMEC: Sure. A couple of months ago,
when we received the letter that the Sheriff is referring
to, I called I.R.S. and talked to them. Unfortunately,
there were several times that I called, and the person on
the other line -- I was not able to understand a word they
were saying. And this happened on several occasions. The
accent or whatever it may be, I just was not able to
understand them. And every time I called, they would tell
me something different. So I talked to Mindy Williams, the
Assistant Auditor, and I showed her all my paperwork and
explained that I really didn't know what the problem was.
Because the way our accounting system is, is everything is
supposed to zero out at the end of the pay period, and so
that -- that is the amount that should be sent to I.R.S.,
and those are the amounts that had been sent. And so I
asked Ms. Williams if she -- if I made an appointment with
the I.R.S., if she would go with me to Austin and discuss
7-19-OS emg
20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
29
25
this so that we could find out exactly what it is that they
were needing from us, because I had attempted to do that on
several occasions over the phone and was unable to. She
then suggested that we go to the San Antonio office.
So, I called Ms. Cruz last month, in June,
and asked her if -- if I could set up a meeting, and
explained to her the situation; that we had received this
letter, and that I -- you know, that all my books balanced
and that I did not know what this was about, and would like
to go in person to discuss it. She looked it up right away
and was able to tell me clearly what the problem was. She
said that in December 2003, they'd had -- we are a
semimonthly payroll, which means we pay twice a month. Our
tax deposits then are received on the 15th, if that's the
day that we pay, and at the end of the month. On the
December 2003 -- the 941 and the Schedule B are mailed in
together at the same time. She said that on the -- the
Schedule B, for some reason, they were showing that we had a
pay period on December the 8th. In fact, it was December
the 15th, and December the 15th is when our tax deposit was
made. We11, they were showing that we had our payroll on
December the 8th; therefore, showing that our tax deposit
was late. I explained to her that we've never paid on the
8th, and explained to her the date that that was paid.
She told me how to correct it; to send a
~ 19-u5 em3
21
1
__ 2
3
9
5
6
7
8
9
10
11
l2
^- 13
14
15
16
17
18
19
20
21
22
23
24
25
letter by June 30th and to go ahead and attach another
Schedule B showing the dates that we paid, and that there
would -- that there was nothing owed for that pay period.
She also then said that on the -- on the 941 that they
needed to do was send them a copy of those Schedule B's, and
-- and explained to me at that time that we may get letters
like the one that the Sheriff got, but that as soon as they
got their letters and they gave it to an adjuster, he would
input all this information and our account would show
cleared and up to date on everything.
When Clay called me and we had this three-way
conversation with the I.R.S., they started telling me again
what it was that I needed, and I explained to them at that
time that I had been in contact with Ms. Cruz and that all
had been taken care of. They went into the computer on --
all that had been notated by Ms. Cruz. So that is when, on
the 12th, Tuesday, I went ahead and wrote a letter to this
Court explaining what the situation was. I was at a
conference yesterday. I called the I.R.S. and asked them to
please update the address that they have for us, because
they just have '700 Main, and I explained to them that these
"i-19-:5 emy
zZ
1
2
3
9
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
I.R.S. notices were going to different departments and then
I was getting them at a later date, and it would be better
if they just came to me, so they went ahead and updated
that.
Then he, at that time, told me he had gotten
a call from our Auditor and that they had explained to him
everything, and I said, "Well, okay. If you go into another
screen, you'll see where I've had conversations with
Ms. Cruz and what needed to be sent in, and that has been
done." At that point, I told him that I had made copies of
my Schedule B's that I had sent in previously, and that I
had sent them to them on June the 30th. He at that point
asked me if I had sent -- if, on the copy, my signature was
on there. I said, "Well, it's a copy of my signature,
because I don't have the original. The original was sent in
when it was due." So he suggested that when I get back to
the -- got back to the office, that I send -- reseed it
again with my original signature and the date that I'm
sending it.
Well, this morning, as a result of this
meeting being called, I tried to get ahold of Ms. Cruz to
get a letter from her so that I could provide to this Court
to explain what the situation was, and the lady that I
talked to was a Ms. Moore. She told me that she could help
nie with it, that it would be hard to contact -- to get ahold
i- 1 9- n 5 e m q
23
1
2
3
4
5
5
7
8
9
10
11
12
13
19
15
16
17
18
19
20
21
22
23
24
25
of Ms. Cruz; that the calls just come in, and whoever gets
them. And I explained the situation to her. She looked it
up on her computer, and as a result, she faxed me this
letter, which she said they normally don't stop receiving
phone calls from other clients to stop and do this, but I
told her the emergency of it, and so she agreed to do it for
me this morning. And, again, on this letter, it explains
about the 2003 -- what I explained to y'all, and that was
where they had us listed as paying on the 8th for whatever
reason, I don't know. And then the notice -- notice stating
that they needed me to resubmit the copy of the Schedule B
for the other two tax periods. So, that's the explanation.
COMMISSIONER WILLIAMS: Why don't you read
the letter of the 14th into the record so everybody knows
what it says?
MS. NEMEC: Okay, be glad to. It says --
it's from the I.R.S., and it says, "Dear Ms. Nemec: Per our
conversation of July 14th, we discussed the FTD penalties
that were assessed on your 941's Eor quarters ending
December 31st, 2003; June 30th, 2004; and September 30th,
2004. The June 30th, 2004 was assessed FTD penalty because
of an administrative error, because the first liability was
not listed on the 15th, which should have -- which would
have been correct. This penalty can be corrected by
submitting me the corrected 941 and Schedule B. The other
i-19-U5 emry
24
1
2
3
4
5
6
7
8
9
10
11
1L
13
14
15
l6
17
18
19
20
21
22
23
29
LS
two tax periods were missing their Schedule B's. The
computer averaged the liability to incorrect dates. These
two other tax periods can be corrected by submitting the
Schedule B for each so that it can be correctly input in our
system. Barbara has promised i_o fax all three of these
Schedule B's to me post the court hearing today."
She suggested -- I explained to her that I
had already mailed this information and that I was getting
ready to certified mail the -- the -- another copy of the
information with my original signature. She said because of
the urgency that I was telling her that was taking place
today, that if I would just fax this to her today, which
they -- that is -- that is not something that they normally
do, but that they would make an exception; that if I would
fax this information to her today, they would get right on
it. Because if I mail it, they're going to assign it to an
adjuster. By the time the adjuster gets to it and corrects
all the information on their computer, it could be months
down the line. And so she assured me that if I fax this
over to her today, that she would get right on it and get it
corrected for us.
JUDGE TINLEY: Anything further?
MS. NEMEC: Not unless someone has any
questions.
JUDGE TINLEY: Any member of the Court have
7-19-U5 emq
25
1
2
3
9
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
4 4
25
anything? Any questions from anybody?
SHERIFF HIERHOLZER: Judge, I have one
question.
JUDGE TINLEY: Yes, sir?
SHERIFF HIERHnLZEF.: In your conversations
with her -- and my department will tell everybody I'm a
penny pincher. My other main concern is, are we going to
get back the revenue money that I.R,S. took in either a
credit against the -- the Social Security payments or
whatever? Because they took money, you know, because of
this, and if it's their administrative error or whatever, I
think we need to at least attempt to get that money back to
Kerr County.
MR. BARYON: It was my understanding on our
phone conversation with Ms. Escobel that they would refund
the money. Is that your understanding?
MS. NEMEC: Yes, absolutely. They said we
don't owe any money. We -- we will be refunded all the
money once they update their records. And first -- what
happened was, because for some reason they were missing the
Schedule B's, they averaged out, as the letter says, and
threw us into a biweekly employer to whereas they were
figuring they should have been receiving tax payments every
two weeks versus twice a month.
JUDGE TINLEY: Okay. Any questions by any
~-14-05 emg
26
1
L
3
4
5
6
7
8
9
10
11
1L
13
14
15
16
17
18
19
20
21
22
23
24
?5
member of the Court?
MR. BARYON: I11 say this. I didn't go in
verbatim on the -- my presentation, but everything that she
has said that happened during that phone conversation, I
concur with.
DODGE TINLEY: Okay.
MR. BARYON: There was nothing disputed on
that.
JUDGE TINLEY: What was the approximate date
that you first became aware of this difficulty with regard
to this particular problem?
MS. NEMEC: I believe the letter was sent
over in May? Does that sound right?
SHERIFF HIERHOLZER: That was the first time
they took $90, apparently. I have -- I went back and pulled
the deposits, 'cause they are automatic deposits going into
the County's fund on our accounts. And the first deposit
that would have been short $90 was deposited on May the
12th.
DODGE TINLEY: Okay. Prior to that date, you
didn't receive any letters or notices or communications of
any kind from I.R.S. --
MS. NEMEC: No, sir.
JUDGE TINLEY: -- indicating this sort of a
problem?
~- is vs envy
1
L
3
4
5
6
7
8
9
10
l1
12
13
14
15
16
17
18
19
20
21
22
23
24
25
27
MS. NEMEC: No, sir.
JUDGE TINLEY: Okay.
COMMISSIONER WILLIAMS: Just a comment,
Judge. I just want to be sure I understand. Ms. Nemec,
this letter from the Internal Revenue Service dated the
14th, today --
MS. NEMEC: Mm-hmm.
COMMISSIONER WILLIAMS: -- indicates that
there was an administrative error, and it's on their
stationary, and I guess they're acknowledging they made the
error; is that correct?
MS. NEMEC: I asked them to please
acknowledge that, because that was the conversation I had
with Ms. Cruz, yes.
COMMISSIONER WILLIAMS: And that the penalty
can be corrected by submitting whatever it is you're going
to submit, and that the levy occurred because the computer
-- their computer's sophisticated computer programming did
whatever it did based on an erroneous date, classifying us
as a --
MS. NEMEC: Biweekly.
COMMISSIONER WILLIAMS: -- biweekly payroll
as opposed to a semimonthly payroll; is that correct?
MS. NEMEC: That's correct.
COMMISSIONER WILLIAMS: Is that your
~-19-OS emq
1
3
4
5
6
7
8
9
l0
11
12
13
14
15
16
17
18
19
20
21
~2
23
2Y
25
~8
understanding?
MS. NEMEC: Yes, sir.
COMMISSIONER WILLIAMS: I just wanted to be
sure I understand it.
COMMISSIONER LETZ: I think it's to be noted
also that that was informed to this Court on the 12th of
this month, two days ago.
COMMISSIONER WILLIAMS: It was.
COMMISSIONER LETZ: Exact same situation.
JUDGE TINLEY: The --
MS. NEMEC: And also, we have several
situations -- throughout the year, we get tax levies on our
employees, and our -- when we levy the -- their payroll
funds, they'll come to our office and say, "This has been
taken care of now. This is not -- you`re not supposed to
levy this." And I explain to them that I have to levy -- I
have to take the money out of their payroll. Well, you
know, we'll get on the phone, and sure enough, the I.R.S.
ends up sending me a notice lifting the levy because they've
made an error. So this has even happened with our
employees' paychecks.
JUDGE TINLEY: Anything further? Mr. Bullock
had -- had filed a participation form. Do you wish to have
any input on this, Mr. Bullock?
MR. BOLLOCK: Later on in the court meeting
~-19-OS cmg
1
3
4
5
6
7
8
9
10
11
]2
13
19
15
16
17
18
19
20
21
22
23
24
25
?g
is fine.
COMMISSIONER LETZ: I think we're about done.
JUDGE TINLEY; Yeah. This is the only agenda
item that we've got, Mr. Bullock.
MR. BULLOCK: This is it?
JUDGE TINLEY: Yes, sir. Does it relate to
the subject we've been discussing?
MR. BULLOCK: Not really. It relates to the
newspaper articles.
JUDGE TINLEY: I'm not sure we can take your
comments, then, if it doesn't relate to this particular
agenda item. I apologize.
MR. BULLOCK: I'll send them to the
newspaper, then.
JUDGE TINLEY: Okay, thank you. Is there
anything further? Any member of the Court wish to offer any
motion or any response, course of action in connection with
the agenda item?
COMMISSIONER LETZ: I'll go back -- I'll make
a comment back to my original comment when we started. I
think it's been a waste of time. There's 17 County
employees in here; we've wasted the better part of an hour
on something that we knew the same information on two days
ago.
COMMISSIONER WILLIAMS: Based on the letter
~-ia-os envy
30
1
2
3
4
5
6
7
8
9
10
11
12
13
19
15
16
17
18
19
20
21
~2
23
24
25
that Ms. Nemec provided the Court today, it seems to me it's
much ado about nothing.
JUDGE TINLEY: The letter came this morning,
and I appreciate her providing that. Sir, you had -- does
it relate to the agenda item?
MR. SCOTT: Yes.
JUDGE TINLEY: Come forward, please. Give
your name and address to the reporter.
MR. SCOTT: I'm Harrison Scott from
Kerrville, and I think that it's kind of mandatory that we
get something like this out in a timely fashion, rather than
waiting and getting the appearance that we're putting
something over. So, I appreciate y'all having this meeting
today.
JODGE TINLEY: Thank you, sir. Anyone else?
Any other thing to be offered by any member of the Court?
We'll stand adjourned. Thank you.
(Commissioners Court adjourned at 10:3'7 a.m.)
~-14-u5 em<~
31
1
2
3
9
5
6
7
8
9
10
11
12
13
14
15
15
17
18
19
20
21
22
23
29
25
STATE OF TEXAS
COUNTY OF KERR
The above and foregoing is a true and complete
transcription of my stenotype notes taken in my capacity as
County Clerk of the Commissioners Court of Kerr County,
Texas, at the time and place heretofore set forth.
DATED at Kerrville, Texas, this 15th day of July, 2005.
JANNETT PIE PER, Kerr County Clerk
BY: ___ __ ~~~ _ ___ ___ _
Kathy nik, Deputy County Clerk
Certified Shorthand Reporter
~-14-US emg