The Leeds City Council and representatives of Children’s Charities of Alabama, the organization behind the ATROX Factory haunted house, came to an agreement on the payment of back taxes.

The City of Leeds filed a tax assessment against Children’s Charities for the payment of sales tax, use taxes and business license fees dating back to 2003. Children’s Charities filed an appeal, but the hearing was indefinitely postponed, according to a Leeds city attorney.

Following an audit, it was discovered that Children’s Charities owed approximately $105,000 in sales tax, $18,300 in use taxes, in addition to payment for business licenses. More information was to be gathered on whether the non-profit organization is required to pay the business license fees. Also, the city levied penalties against the organization for lack of payment.

Paul Johnson, owner of the ATROX facility and president of Children’s Charities, said his organization was set up as a non-profit that helps various Leeds charities and brings many visitors to the city each October. He also said that he was informed in September 2009 of the requirement to pay sales tax.

“Since 2003, Children’s Charities has given $403,000 to local charities,” Johnson said. “Each year, 30,000 people visit Leeds who would not have come here if not for us. We are not in this for profitability, we do it to give back.”

Leeds Mayor Eric Patterson said the primary concern was the lack of sales tax from ATROX ticket sales.

“The issue here is that sales tax is supposed to be paid, but it never has been paid. No sales tax has ever been paid on this … ever,” Patterson said.

Legal representative for Children’s Charities, Bart Koffman, said the group could provide $25,000 immediately, then paying off the balance in two payments – one after the 2010 ATROX season and another after the 2011 season.

After an executive session – citing pending litigation issues – the council offered to waive all penalties through 2008 and to require sales and use tax payment for the years 2003-2008 by November 2010 and to pay the 2009 taxes with penalty by November 2011. The group will also be required to pay 2010 current by November 2010.

Johnson agreed to the payment system after discussing options with his legal counsel.

Also during last week’s meeting, the mayor presented the council what was described as a simplified worksheet describing city debt obligations. In all, Patterson said, the city is tied in one form or another to about $89 million in bonds.

“I’m providing this so that we all know what we have to deal with,” Patterson said. “I do think we are moving in the right direction. We are boxed in (by the debt), but we are progressing. We just have to do the best we can with what we have to work with.”

Also, the city approved for the deannexation of property that is the location of the Alabama Auto Auction. The property is located off of Markeeta Spur Road. The deannexation is part of an agreement with the City of Moody.