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1. Chancery and Circuit Clerks In order to understand the eight embezzlements that have occurred in chancery and circuit clerks' offices that are chronicled in this section, it is helpful to review the fee system of compensation and the duties and requirements of the offices. The following is a brief summary of the fee system—how fees are earned, some duties of the clerks,howthe clerks' operations are financed, and problems associated with the system. Under Mississippi law,chancery clerks and circuit clerks are elected officials who are paid from the fees they collect for their services. Prior to 1996, clerks were allowed to retain, as their pay,all the monies left over from fees generated after paying the expenses of running their offices. The legislature imposed a fee cap of $75,600 beginning in 1996. The cap was increased to $83,160 beginning in 2000 and to $90,000 beginning in October 2004. After the law establishing the fee cap became effective, chancery and circuit clerks were required to remit to the county byApril15 eachyear all monies collected as fees during the previous calendar year in excess of their salaries and expenses of running their offices. The Mississippi Code requires the following: After making deductions for employee salaries and related salary expenses, and expenses allowed as deductions by Schedule C of the Internal Revenue Code, no office of the chancery clerk or circuit clerk of any county in the state shall receive fees as compensation for the chancery clerk's or circuit clerk's services in excess of [now $90,000].All such fees received by the office of the chancery or circuit clerks that are in excess of the salary limitation shall be deposited by such clerk into the county general fund on or before April 15 of the succeeding calendar year ...There shall be exempted from this subsection anymonies or commissions from private or governmental sources which: (a) are to be held by the chancery clerk in trust or custodial capacity (as prescribed by law); or (b) are received as compensation for services performed upon order of a court or board of supervisors which are not required of the chancery clerk or circuit clerk by statute. 7 The wording of this law has caused problems because expenses allowed as business deductions on Schedule C by the Internal Revenue Code are ill defined and varyby type of business. That is, they include all necessary and normal business expenses. Other Mississippi laws explicitly prohibit public funds from being spent on certain things, and all monies coming into the clerk's possession as fees are deemed at least potentially public funds. The OSA has worked with chanceryand circuit clerks to produce lists of allowable and unallowableSchedule Otype expenses.These lists are modifiedas specific questions arise. The reason clerks are allowedto receivecompensation overand abovethe fee cap for services that are not required as a part of their duties as clerks is that small counties often cannot afford to payother professionals toperform these needed services. For example,some boards of supervisors appoint the elected chanceryclerkto serveasthe countyadministrator. Suchan appointment is specifically allowedby statute. Monies receivedby chancery and circuit clerks from certain sources must be deposited to the "chancery (or circuit) court clerk clearing account." Included for chancery clerks are receipts for garnishments, attachments, child support, spousal support, judgments, certain fees in civil cases, and monies that are deposited with the court and held in a trust or custodial capacity in cases proceeding before the court. Included for circuit clerks are receipts for garnishments, attachments, marriage licenses,judgments,certain fees in civil cases, and monies that are deposited with the court and held in a trust or custodial capacity in cases proceedingbefore the court. The clerks are allowed to disburse monies from these accounts as prescribed by law and are charged with properly accounting for the monies flowing in and out of the accounts. Monies receivedbythe clerks from the following sources aresubject to the fee cap restrictions. For chancery clerks, monies include fees for filing, recording, or abstracting any bill, petition, or decree in any civil case in chancery; fees collected for land recordings, charters, notary bonds, certificationof decrees,and copies of any documents; all land redemption and mineral documentary stamp commissions; anyother moniesor commissionsfromprivateorgovernmental sources for statutory functions that are not to be held by the court in a trust capacity. When such fees exceedthe salarylimitation, theymustbe maintained in a county account and accounted for separatelyfromthose monies in the chancery clerk clearing...

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