The Evergreen Fire District has fired its bookkeeper and is in the process of paying the federal and state governments about $178,700 in delinquent payroll taxes.

Jack Fallon, president of the Fire District Board of Trustees, said the board discovered the oversight in late November 2013 when it came to light that bookkeeper Tara Chapman had not paid the payroll taxes for Evergreen Fire Rescue’s 21 employees in 2012 and 2013.

Payroll taxes are taxes employers must pay on behalf of their employees when they pay their employees. They include income withholding tax, Social Security and Medicare taxes.

Chapman’s last day of work was Dec. 3 and the board immediately began taking corrective action, Fallon said.

“We jumped on it right away,” he said. “We hope to have it resolved in the next three to six months.”

The district paid $75,900 to the Internal Revenue Service and $10,800 to the Montana Department of Revenue in December. The district still owes another $70,000 to the IRS and $22,000 to the state.

Cash reserves and the district’s first-half tax receipts were used to pay the delinquent taxes. Fallon said the district will sell some used vehicles valued at about $130,000 to help pay the remainder of the delinquent payroll taxes and replenish the cash reserve fund.

Fallon said there was no theft or fraud involved.

Chapman, who had worked for the district since 2009, “may have gotten behind and then let it snowball,” Fallon said.

“It was her responsibility to bring it to our attention,” he added.

The Evergreen district brought in an outside accountant to reconcile the district’s books.

The district has two funds, one for the fire department that’s funded with tax receipts and another for the ambulance operation that’s funded largely with payments from government service programs such as Medicare and Medicaid and Veterans Affairs.

“The collection rate [on the ambulance side] is about 45 percent,” Fallon said. “Some months we run a little lean.”

When the ambulance fund cash balance was low, payroll tax payments sometimes were deferred until there was enough money available, he said.

About 85 percent of the payroll costs are on the ambulance side of the district’s operation, Fallon said.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.