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FORT SCOTT, Kan. — The IRS has rejected the city's initial request to release the federal tax liens clouding the historic Moody Building's title, but City Attorney Bob Farmer said the agency expressed openness to another path that could cost the city a fraction of the nearly $240,000 the liens represent.
The condemned downtown building has been the subject of a private restoration offer from developer Al Niece, who told commissioners he would stabilize the structure at his own expense if the city can deliver a clean title. Public records show five federal tax liens against the property totaling nearly $240,000, though some may have expired due to age.
Farmer told the Monitor that after repeated attempts to reach someone at various IRS offices, the city mailed a form requesting that the agency release the liens. Several weeks later, an IRS employee called Farmer and told him the request would be rejected because the city had used the wrong form.
Farmer said the employee sent him the correct form, which he described as not materially different from the one the city had submitted. The employee also told Farmer the IRS was unlikely to release the liens without payment, prompting Farmer to suggest using the property's appraised value as a payment to resolve them.
Farmer told commissioners at the Aug. 4 meeting that a formal rejection letter arrived about a month after the phone call. The letter gave the city the option to appeal or submit another request using a different form.
"They said, 'Why don't you just pay us?' And I said, 'We're not going to pay you a couple hundred thousand dollars,'" Farmer told commissioners at the Aug. 4 meeting, recounting his initial phone conversation with the IRS employee.
Farmer said he countered by pointing the agency to the county's tax appraisal records. He said the IRS employee told him that while he could not guarantee anything, paying the appraised value would be a rational basis for resolving the liens.
If accepted, the city would pay the IRS rather than the building's owner, with the payment used to clear the federal tax liens from the title.
Bourbon County appraisal records listed the property's value at $4,450 as of Tuesday morning. The figure drew a quick reaction from the commission when Farmer shared it.
"Well, my manager and good friend Brad says, 'Can I write the check today?'" Farmer said.
"So that's the direction where all that's been submitted, and we're waiting for a paper to come back," Farmer said.
Farmer told the Monitor that the IRS employee has remained in contact with him since the initial phone call, but the city has had less success reaching the building's owners.
City Manager Brad Matkin told the Monitor on Tuesday morning that the California-based ownership group, represented by Juan Banos, president of Legacy Healthcare Foundation, and attorney Troy Schell, the foundation's chairman, has not been returning the city's calls. Security 1st Title, which is handling the title work, is also waiting to hear from the group.
Any transfer of the building would require the owners' cooperation. Farmer has previously told commissioners the most likely short-term path is for the city to obtain a quitclaim deed from the current owners and resolve the liens itself.
The commission took no formal action on the building at its Aug. 4 meeting.
