JELLICO, Tenn. (WVLT) -- The IRS is in Jellico. Agents showed up about two weeks ago, wanting a check for more than $161,000.
"It didn't suprise me none - they're behind on everything," said Matt Hurst, who lives in Jellico.
Mayor Les Stiers said the city found out that it owed $125,000 in back federal payroll taxes in December, around the same time the city recorder, Linda Douglas - who handled payroll - resigned. With fines and fees, the amount has ballooned to more than $161,000. The state comptroller's office broke the news to the city after investigating why Jellico couldn't meet payroll in October.
"So when they got to looking, and looking at our expenses, we found out that we owed that much," said Stiers.
Stiers said the back taxes are from October 2011 all the way through 2012.
"I can't figure out why nobody - why somebody in charge didn't know that they weren't paying their taxes," said Danny Thomas, who lives in Jellico.
Stiers said he didn't know the city wasn't paying them, and neither did council members. In February, the city began making weekly $2,000 payments to the IRS, but those stopped about two weeks ago, when the city's general fund ran dry. That's when the IRS showed up, demanding its money.
If the city can't pay what it owes, the IRS could seize its property and sell it off.
Stiers is hopeful that won't happen. He's appealed the IRS's late fees and fines. He's also hopeful the city can make at least $150,000 to pay off the debt by selling around 50 acres of city-owned land behind the hospital. The only problem? The hospital is leasing the land and must give its approval.
"We're tyring to work with them,to keep enough land for future expansion, and then sell the rest that's not being used," said Stiers.
The city will meet with the IRS again in three weeks to discuss its options.
Mayor Stiers said the city is also missing drug raid money. He couldn't say how much, but said the Attorney General's Office, the state comptroller, state auditor and the TBI are investigating.