Mercer County repeatedly failed to file payroll taxes on time and lacked a properly credentialed CFO. That cost taxpayers nearly $4.5 million

The tax man came for Mercer County several times between 2018 and 2021. That’s because it didn’t pay taxes on time.

During that period, the county paid nearly $4.5 million in fines and penalties for not making timely payroll tax payments to both the IRS and the state Division of Taxation, according to a report from the New Jersey Office of the State Comptroller.

The investigation also found that David Miller, the county’s chief financial officer, “did not hold, or even apply for” a required certification during his entire tenure. As a result, Mercer County was left without “a properly credentialed CFO for over a decade.”

The report, released Tuesday, found that in 2018, the county filed its fourth quarter payroll tax return with the IRS nine months late. The county did not file one timely return for 2020. On average, quarterly returns were filed five months late. Third-quarter returns were filed seven months late, on average, and the fourth-quarter returns nine months late.

Finance department employees could not explain why the tax deposits and returns weren’t filed on time. One person told investigators that Miller described the penalties and interest as “the cost of doing business.”

It wasn’t only the feds who hit Mercer County’s wallet.

The comptroller’s office found the county paid $599,889 in penalties and interest between 2018 and 2021 to the taxation division.

Other findings in the report detail a lack of organization and standards within the county finance department. This includes no written policies or procedures “governing the filing and payment of payroll taxes,” no internal controls or the segregation of duties outlined, and no organization chart clearly defining a reporting structure.

The county could not provide a complete list of all of its bank accounts, the names of those who had access to them, or documents detailing how the penalties and interest were paid, “despite several requests.”

Investigators interviewed county employees about the department’s payroll tax processes, upon being informed no written rules were maintained.

One staffer told investigators that Miller “regularly instructed” the payroll clerk to void paper checks generated by the county’s accounting software to pay the taxes and to submit deposits through the IRS’s automated phone system.

“[Department] employees also reported that Mr. Miller would take the voided state payroll tax checks and wire the payments to the taxing authority himself,” the report states.

Miller was the county CFO starting in January 2004, when County Executive Brian Hughes began his first term. He wasplaced on unpaid leave last August once problems were uncovered. He was subsequently terminated. The Trentonian reported at the time that law firm Genova Burns was contacted to conduct an investigation into his credentials.

County spokeswoman Julie Willmot said in a statement that the findings of their investigation led to a referral to “the appropriate law enforcement agencies.”

“We are fully cooperating fully with those agencies and have been for months since the Administration first uncovered the problems with its CFO in August 2022,” she said.

The county questioned the comptroller’s office issuing its own report “knowing that the matter is safely in the hands of law enforcement and that the Administration conducted its own prompt investigation and self-reported its outcome to law enforcement.”

Willmot added that while the report admonishes the Hughes administration for poor oversight of Miller and the finance department, “does not dispute that the Administration and the County are themselves victims of Mr. Miller’s failure to maintain the proper credentials and licenses for his job.”

“There is [also] no claim in the [comptroller’s] report that the county and its administration had any knowledge of these infirmities before its own investigation revealed them for the first time,” she said.

The comptroller’s office made six recommendations to the county finance department. Among them: adopt an organization chart, develop an accounting procedures manual, and provide more oversight of the department and the county CFO.

Those recommendations are in addition to filing and paying federal and state taxes on time and making sure their employees have the required job certifications.