Md. seeks unpaid taxes

January 27, 1994|By Traci A. Johnson | Traci A. Johnson,Staff Writer

The state has decided to pursue back taxes from the developer of the Blue Ridge Manor community after learning of a town practice that allowed the New Windsor developer to buy construction materials tax-free.

Mayor Jack A. Gullo Jr. told the Town Council that the procedure, which the state agency called "suspect," must stop immediately.

"It is not the amount of the money that counts. It is the principle of the matter," Mr. Gullo said during an emergency council session that was called after last night's monthly planning commission meeting. "We do not want to continue or conceal any practice that is suspect."

Mr. Gullo said he and Town Clerk-Treasurer John Keck began questioning the town's billing system when Mr. Keck took over the clerk-treasuring duties in November and started computerizing the town's filing system.

While looking over the files, the two men discovered that the town owed money for items ordered by the New Windsor Partnership, the developer of Blue Ridge Manor.

According to the mayor, the developer ordered supplies -- such as concrete for storm water pipes and manholes, asphalt and electrical supplies -- and the town was billed and its tax-exempt number was used for the purchases.

The clerk-treasurer then -- who at the time of most of the transactions was Richard M. Warehime, now retired -- processed the bills, received payments from the developer for the amount the town was billed and made out town checks for the purchases, Mr. Gullo said.

Although all checks are supposed to be endorsed by the clerk and the mayor before they can be cashed, Councilman James C. Carlisle, who was mayor at the time of the transactions, said he knew nothing about the billing practice.

"Why was this? Why did it happen this way?" Mr. Carlisle asked partnership officials who were seated in the audience.

Bill Schneider of New Windsor Partnership said all the materials billed to the town was used for the pump station and sewer and water pipes that eventually would be turned over to the town. He said he was told by the state tax office that those items could be purchased tax-free.

But Mr. Gullo said the public works agreement -- the only binding contract between the developer and the town -- stipulates that the developer was to build the pump station and connect it to town utilities at the developer's expense.

Mr. Warehime, also present at the meeting, said he knew only what Mr. Schneider had told him about the tax laws and considered the matter "just a fine line of legality."

Mr. Gullo and Mr. Keck contacted the Sales Tax Division of the state Comptroller's Office this month about the bills and made available as many invoices from the transactions they could find.

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