Grand Traverse County commissioners invoked state law to require County Treasurer Jamie Callahan to provide a board report under oath Wednesday.

Commissioners – who have pressed Callahan for a year on a range of issues, including late state audit filings and bank reconciliations – grilled the treasurer over delayed IRS payroll tax payments. Following the meeting, Callahan’s written report and the commission meeting video were taken down for an extended period after it was discovered that tax ID and banking information – including an electronic PIN – had been publicly shared.

Following a closed session discussion on August 19, commissioners voted to require Callahan to give a report under oath at their September 2 meeting “regarding all IRS notices for penalties and interest concerning the county treasurer’s office untimely payment of payroll tax deposits.” State law allows commissioners to require any officer whose salary is paid by the county to make a report under oath. Refusal to do so can result in the officer being removed.

Callahan reported Wednesday that Grand Traverse County has three open cases with the IRS related to late payments on payroll taxes. A fourth case was recently resolved, resulting in the IRS waiving roughly $52,000 in penalties. That made Callahan optimistic the three other cases, which collectively represent nearly $140,000 in penalties, will also be waived, he said.

Callahan said late payments sometimes arise because of bank holds that delay immediate processing, with his department now exploring same-day filings and procedures with the county’s bank to avoid such holds. However, in other notable cases, the treasurer’s office didn’t realize for months that an IRS payment was supposed to go through and did not. In those cases, finance department staff finally caught the issue – not the treasurer’s office. When payments are late to the IRS, they continue to accrue interest daily until the payment is made.

Vice Chair TJ Andrews said the treasurer’s office likely overlooked the missing payments because of ongoing delays in bank reconciliations. Comparing that process to balancing a checkbook, she said that “by getting behind on reconciliation, you’re not able to see” when transactions don’t line up as they should. She said it was Callahan’s elected responsibility to “safeguard county funds” and pressed him on why the county still hasn’t paid its outstanding IRS penalties. Callahan said the “consensus” from his staff was that responding to the IRS in writing to challenge the penalties was the best path forward.

Callahan said issues with the IRS are nothing new, holding up a binder of correspondence dating back to 2017. IRS back-and-forth is “not something that’s isolated to the last year-and-a-half,” he said, referring to his start as treasurer in January 2025. Callahan said his office was working diligently to resolve the cases but that the IRS is difficult to reach, providing logs documenting numerous failed attempts.

When Commissioner Fern Spence asked why Callahan hadn’t visited the local Traverse City IRS office if he was having trouble reaching the department, he said he only recently learned that was an option. His office will meet with them soon, he said. Callahan said staff were “burning the candle at both ends” to get caught up and developing standard operating procedures and departmental cross-training to reduce errors. Staffing shortages have been a challenge, he said, as were recent Governmental Center renovations that disrupted operations.

Callahan acknowledged his office made mistakes, however. County Finance Director Dean Bott told The Ticker the treasurer’s office did indeed miss payments, so he was skeptical the IRS would waive all penalties. “I’m not going to sugarcoat it, we didn’t make the payments,” he said. “There’s no way we’re going to get out from them completely. Hopefully they will reduce some of them or offer some grace.” Bott said the county has historically “always paid our bills” and that his department is now double-checking IRS payments for the treasurer’s office to ensure they’re made on time.

While commissioners worried the unpaid penalties would continue accruing interest, Bott said the payroll tax payments themselves have all been made. Therefore, they are no longer late and shouldn’t still be accruing interest. Regardless, commissioners directed administration to review any unpaid penalties and work toward paying them. County Administrator Nate Alger told The Ticker those penalties will be paid soon, which Bott said would be a “good-faith gesture” that could help the county’s standing with the IRS. The IRS could later refund some of that back if it agrees to reductions, he said.

Andrews said Callahan’s report appeared to be incomplete, pointing out that several pages were missing in sections. However, after the meeting, a more pressing issue became not what was missing but what was included. A constituent flagged that the county’s tax employer identification number, bank routing information, and an electronic IRS pin had been published in Callahan’s report.

That prompted the county to reach out to Traverse Area Community Media, which broadcasts county meetings, to keep Wednesday’s meeting video offline. Staff are working to blur sections where the slides are seen on screen, Alger said. The meeting video still wasn’t available as of end of day Thursday. Staff also removed Callahan’s report from the commission’s online meeting packet while they worked to redact those details. A redacted report was republished to the county website late Thursday.

Alger said that while most details were only removed “out of an abundance of caution,” they shouldn’t have been included regardless. The PIN was the most sensitive, he said, and shouldn’t have been shared. Callahan could not be immediately reached for comment Thursday.

Several action items are still coming related to the treasurer’s office. After Commissioner Rob Hentschel asked about errors and omissions (E&O) insurance and Callahan said he didn’t have information, the board voted to have staff and legal counsel explore the possibility of a performance bond for the department. Alger and Bott also told The Ticker they’re looking at moving some non-statutory responsibilities from the treasurer’s office to the finance department to help alleviate staff’s workload. That could include the IRS payments, they said.

Callahan told commissioners he’ll continue to provide them with regular updates. Commissioners are likely to have more discussions in the coming weeks; upcoming meetings include a study session on September 9 and a regular commission meeting on September 16. Andrews said after Wednesday’s meeting that while she doesn’t believe the treasurer is intentionally committing any wrongdoing, the persistent department issues are a significant concern.

“This is public money, and a situation where the entity that’s supposed to be the final stopgap is the problem,” she said. “That’s really serious.”