$4.5 Million In Tax Fines Paid By Mercer County: State Comptroller

MERCER COUNTY, NJ — Mercer County paid nearly $4.5 million in tax penalties and interest between 2018 and 2021, the Office of the State Comptroller (OSC) said Tuesday.

During this period, the county’s Finance Department regularly failed to make timely payroll tax payments to both the IRS and the New Jersey Division of Taxation, the OSC said.

“Mercer County inexplicably wasted millions of dollars by failing to pay its state and federal taxes on time,” Kevin Walsh, Acting State Comptroller said in a statement. “When the government doesn’t pay the bills, the taxpayers pay the penalties.”

The OSC conducted an investigation into the County’s Finance Department and found that the department, led by Mercer County’s Chief Financial Officer (CFO), lacked basic internal financial controls. According to the report, the County did not have an organizational chart, written policies, or a system of checks and balances to ensure that its financial system was properly managed.

Mercer County CFO David Miller was placed on unpaid leave last year after questions surfaced about his credentials, according to a report by The Trentonian.

During the investigation, OSC found that Miller did not have the credentials to hold the position of CFO, the entire time he was employed. By law, the CFO is required to hold a county finance officer certificate.

In August 2022, Mercer County informed OSC that Miller was placed on leave without pay.

The CFO, appointed by the County Executive, operated independently with minimal oversight by his supervisor, according to the OSC report.

The County Administrator told OSC that she gave the CFO substantial discretion in handling departmental operations, the OSC said.

In the absence of effective internal controls, the deference provided to Miller allowed the waste to go undetected for years, the report said.

Mercer County failed to make timely tax payments for 13 consecutive quarters from July 2018 through September 2021, according to the report. During that time, there was only one quarter in which the County was not charged interest due to late payments. During that quarter, Mercer overpaid by more than $3 million. The IRS applied part of that overpayment to the County’s prior delinquent taxes and returned the remainder, the OSC said.

“The County didn’t take basic steps to prevent these wasteful payments and didn’t catch that its unlicensed CFO wasn’t paying the County’s bills on time,” Walsh said. “This wasn’t a one-time mistake. It was a pattern that went on for years.”

The OSC said that it made several requests, but the County did not provide a complete list of all of its bank accounts, names of the individuals who had access to accounts, or any documentation establishing how penalties and interest were paid.

Based on the investigation, the OSC recommended changes to increase financial oversight and prevent future waste. Mercer County has agreed to implement the recommendations and has formed a Finance Committee to oversee the operations of MCFD.

Administration, Taxpayers Let Down By Miller, Says County

In response to the report from the OSC, Mercer County told Patch that it investigated Miller through special counsel after questions surfaced about his credentials. The findings of that investigation were then referred to law enforcement agencies, the County said.

However, officials said they found it “curious” that the OSC would issue the report knowing the matter was begin handled by law enforcement.

“We are cooperating fully with those agencies and have been for months since the Administration first uncovered the problems with its CFO in August, 2022,” the County said in a statement.

“While we respect the role of the OSC, we do find it curious that it would issue its report knowing that the matter is safely in the hands of law enforcement and that the Administration conducted its own prompt investigation and self-reported its outcome to law enforcement.”

Although the OSC report admonishes Mercer County administrators for poor oversight of Miller and the department he managed, the report does not dispute that the County was a victim of his failure to maintain the proper credentials and licenses for his job, officials said.

“And there is no claim in the OSC report that the County and its Administration had any knowledge of these infirmities before its own investigation revealed them for the first time,” the County said in a statement.

“The Administration and the taxpayers were let down by Miller. 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 Miller’s conduct and to hold him accountable.”

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