State owes taxes on interest earned

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The state of Vermont owes the federal Internal Revenue Service more than $300,000 for interest it earned on borrowed money. And the chairwoman of the Senate Appropriations Committee is saying the money wouldn’t have to be paid if the state had managed its finances better. The problem dates to 1998, when the state Treasurer’s office, then headed by current Governor Jim Douglas, borrowed $34 million by issuing bonds for various construction projects and state grants. Some of that money wasn’t spent quickly. It was deposited in the bank instead and earned interest. It is those interest earnings which have triggered the debt currently owed to the IRS.

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