The Village of Caledonia is facing a Internal Revenue Service audit, said an attorney that is representing the municipality on Monday.
Elaine Ekes, of Pruitt, Ekes & Geary, a Racine law firm, confirmed the IRS is examining the 2009 and 2010 tax years and that the Village Board has met in closed session to discuss the matter.
"When they audit they hone in on a couple of areas," she said. "We are still in the process of addressing it with the board and with the IRS."
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Ekes would not comment further on the audit. The meetings regarding the IRS audit were held in closed session because of the chance of litigation, according to Ekes.
"We will have the resolution figured out probably yet this week," she said. "We will be meeting with the IRS to sign off on everything."
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Tom Lebak, the village manager, referred all questions to Ekes when reached Monday morning.
An IRS audit of a municipality is much like an audit of an individual. Some are done on a random basis, while others are done because of a red flag.
"Sometimes the IRS will just pick some communities to audit and so it's not something that is unique to Caledonia," she said. "They pick a few each year and go and audit and make sure that everything is being handled appropriately."
When the IRS finds issues with a municipalities taxes, discussions and adjustments ensue, Ekes said.
"We're in the process of addressing it," she said.
