More information about the controversy over the city’s possible debt to Washington has come to light.
We now know that Deltona has retained Smith & Downey, a Baltimore law firm, to help city officials work through their million-dollar morass with the U.S. Treasury’s Internal Revenue Service. The firm is billing the city $485 per hour, according to an April 4, 2024, letter obtained by The Beacon, with a promise that “initial responses will not exceed $5,000.”
Other expenses for travel, “computer research, messenger service and other direct charges reasonably incurred” may follow later.
Days after the matter first became public, confusion regarding the Internal Revenue Service’s possible demand for Deltona to pay for a bureaucratic misstep remains.
As he had promised, Vice Mayor Jody Lee Storozuk used his privilege to speak more about the tempest in the City Hall teapot at the City Commission’s May 6 meeting. Storozuk sounded more restrained in tone, but no less insistent on finding out how the failure to comply with federal health-insurance-accounting mandates happened and heading off similar problems in the future.
“I apologize to the rest of the commission. I apologize to the residents for speaking out and being a little hasty last week in a meeting,” he began. “This is something that caught us all by surprise.”
“We need to have something in place so that this not happen,” Storozuk continued, “or somebody gets held accountable, because —”
At that point, the audience reacted with hearty applause, as all attention remained fixed on Storozuk. He presided over the City Commission’s proceedings in the absence of Mayor Santiago Avila Jr., who was absent because of illness.
Storozuk called upon City Attorney Marsha Segal-George to draft a policy to prevent a repetition of the problem now confronting Deltona.
“We all live here. We’re no different than anybody else. We were just the ones that were insane for a moment and decided to run for office. We’re all residents, too, so it’s our money, too,” he said. “We need something so that this does not take place. I mean, there’s no ifs, ands or buts about it. This shouldn’t have taken place. Not for one year, two years, three years, four years or five years — never.“
The failure to comply with IRS reporting requirements began in 2016, based upon a letter from now-former Deltona Finance Director Mari Leisen. The letter dated Sept. 14, 2022, informed the IRS branch office in Ogden, Utah, that the city’s “electronic file was uploaded; however, the transmission was rejected [by the IRS].”
“We are working to correct the issue,” the letter noted.
Storozuk added Deltona’s newly hired city manager, Dale Dougherty, will deal further with the matter when he reports for work in June.
City Commissioner Dana McCool said the IRS’s attempt to collect from the city does not involve taxes withheld from municipal employees.
“First of all — this isn’t back taxes. Please take it out of there. This has to do with hospitals,” she noted.
“Forgive me for not jumping out at news or the media or declining requests to speak on something that I don’t have full knowledge of, but … right now we don’t comment on pending litigation,” McCool said May 6.
Because of the legal ramifications of the issue, city officials are withholding the release of documents that would normally be public records and readily available. The Beacon’s request for documents has been rejected, for now at least. Documents that may be part of a pending legal dispute are exempt from public-records mandates under state law.
