Lewisburg staff warn state audit deadline change could trigger large sales-tax withholding

City Treasurer Alan Owens told the council that a recent amendment to Tennessee Code Section 6-56-105(e) creates a new financial penalty for repeated late municipal audits.

"If the entity has two or more audits that are late, they will start withholding state sales tax money, not to exceed 15% of our annual sales tax, which is about $232,000," Owens said. He described the update as informational and said the city needs to coordinate its schedules with utility departments and external auditors.

Owens said the water department’s delayed OPEB (other post-employment benefit) report was the primary cause of last year’s late filing and that, even if utility audits meet the December 31 deadline, the city’s auditors may not have enough time to complete the city audit by that date. "Even if you all meet the December 31 deadline, that's not going to be in time for our auditors to get the city's audit done by December 31," he said.

Owens said he will consult with the city’s auditor to establish a timeline for the fiscal-year-2026 audit and said he will share that timeline with utility departments and council members. He suggested a cross-departmental plan to avoid the state penalty.

Council members expressed concern. One member observed that on-time filings have been the exception rather than the rule in recent years: "Maybe 2 out of the last 10 or 12 years the city's report was filed timely," Owens said, noting a pattern of late filings.

This item was presented for discussion; no final council action was taken. Owens said he would forward correspondence and a recommended schedule to the council and to utility administrators so everyone can work toward meeting the statutory deadline.