Steamboat’s Education Fund Board approves hiring lawyer | SteamboatToday.com

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Steamboat’s Education Fund Board approves hiring lawyer

Christopher D. Freeman could appeal $168,700 in Inter­­nal Revenue Service penalties.

— The Education Fund Board has a tax attorney, if it needs one.

The Fund Board, which allocates the city of Steamboat Springs' half-cent sales tax for education, approved a letter of engagement Wednesday night with Christopher D. Freeman, of Rothgerber Johnson & Lyons LLP in Denver.

Freeman would appeal $168,700 in Inter­­nal Revenue Service penalties that stem from the Fund Board not filing its annual tax return for 2006, 2007, 2008 and 2009. Fund Board President Kristi Brown said the board already owes Freeman about $1,200 for completed work, which includes his review of a letter sent to the IRS asking that the penalties be rescinded.

Brown said the letter to the Internal Revenue Service, which she signed, was the first step in the process to have the penalties waived. The next would be a formal appeal, which Freeman would handle. But Brown said she hopes the situation doesn't reach that point.

"Speaking with the accountant, attorneys and a representative from the IRS, I'm very optimistic we're going to see these penalties drastically reduced or even to zero," she said. "We're too early in this process to get caught up on this giant number."

Brown said the Fund Board hoped to hear from the IRS before the January meeting, but she ac­­k­­nowledged that it could take months.

Some of the Fund Board members asked whether Paul St­­­rong, the former Fund Board accountant who didn't file the returns on time, should be held accountable for the penalties, if they're not waived, and the tax attorney's fees.

"I think if we were injured by the malfeasance of anyone, it should cover everything," Fund Board member Dean Massey said. "I don't think we should be out a nickel."

Brown said the question of whether to pursue that route is considered legal strategy that would be discussed during an executive session and not publicly.

Fund Board attorney Mike Holloran retained Freeman, Brown said. She said because of that, Freeman will be paid through Holloran. She also said because Holloran retained Freeman, his hiring didn't violate the Fund Board's bylaws, which requires board member approval of independent contractors.

Also at Wednesday's meeting, the Fund Board tentatively agreed to allocate $2.5 million for the 2011-12 budget cycle, which would leave about $500,000 in reserves. Board members didn't take action but discussed the allocation amount based on forecast sales-tax collections and projected reserves.

Brown reiterated that the allocation amount wasn't final and would be considered by Fund Board members on first and second reading in February and March.

The $2.5 million would include other fund board expenses, such as $80,000 for the Fund Board's grant writer, which serves all districts, and $30,000 for administrative costs. It also would include $50,000 for an innovation grant, which the Fund Board approved Wednesday night to allow districts and community groups to request funding from the Technology/Capital and Educational Excellence commissions for innovative projects and programs.

The Fund Board's 2010-11 budget was $2.31 million, which included $110,000 to pay its grant writer and administrative costs.