Years of late tax payments cost Mercer County taxpayers millions, comptroller says
Watchdog says county CFO lacked credentials, oversight amid criminal probe
State watchdog points to mismanagement by and lackluster oversight of Mercer County CFO David Miller, who was suspended in August. (Dana DiFilippo | New Jersey Monitor)
Mercer County failed to timely pay state and federal payroll taxes for more than three consecutive years, costing residents millions in penalties and interest, according to acting state Comptroller Kevin Walsh.
Mercer County missed tax deadlines in almost every quarter between July 2018 and September 2021, often filing returns months after they were due. The county made a timely payment in a single quarter during that time, but even then, it overpaid by more than $3 million, the comptroller said Tuesday.
The impact of the missed payments was significant: The county racked up more than $4.9 million in federal penalties and nearly $560,000 in penalties to the state. The federal government abated just over $1 million of what Mercer owed, leaving the county to pay just under $3.9 million to federal tax authorities and $4.5 million in total.
“Mercer County inexplicably wasted millions of dollars by failing to pay its state and federal taxes on time,” Walsh said in a statement. “When the government doesn’t pay the bills, the taxpayers pay the penalties.”
Walsh indicated much of the mismanagement may have stemmed from Mercer County CFO David Miller, who declined to be interviewed by the comptroller’s office, indicating through an attorney that he would invoke his Fifth Amendment right against self-incrimination if questioned.
Miller, who led the county’s finance department for more than a decade, was placed on unpaid leave in August, reportedly over his lack of credentials. The comptroller said Miller never held or even sought a county finance officer certificate, which county CFOs are required to hold under state law.
Deputy CFO Sharon Sharp has served as Miller’s acting replacement since he was placed on leave.
The county also failed to provide investigators with a full list of its bank accounts, a list of those who had access to them, and documentation about how the tax penalties were paid, the comptroller said.
The comptroller found Mercer’s finance department failed to clearly segregate employee responsibilities and noted lax oversight of the CFO by County Administrator Lillian Nazzaro.
“When the government doesn’t pay the bills, the taxpayers pay the penalties.
– Acting State Comptroller Kevin Walsh
Walsh’s report comes as Mercer County Executive Brian Hughes is seeking his sixth term in office. Hughes is being challenged in June’s Democratic primary by Assemblyman Dan Benson.
In a statement, county officials signaled the matter had been referred to law enforcement in August and denied that county administration was aware of the late filings before then.
“Although the OSC report admonishes the administration for poor oversight of Mr. Miller and the department he managed, the report, finding nothing to the contrary, does not dispute that the administration and the county are themselves victims of Mr. Miller’s failure to maintain the proper credentials and licenses for his job,” Mercer County’s statement says.
The comptroller recommended Mercer establish a committee to oversee the finance department and give county elected officials direct oversight over the county’s chief financial officer. It also said county officials should annually verify employee credentials and licenses, draft an accounting procedures manual that clearly segregates employee duties, and develop an organizational chart that details the department’s reporting structure.
“The administration and the taxpayers were let down by Mr. Miller,” the county said in its statement. “We are doing our level best to learn from this experience and taking steps to avoid their recurrence and to recover the expenses occasioned by Mr. Miller’s conduct and to hold him accountable.”
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