WINDSOR – The smallest New Hampshire town south of the White Mountains is being divided by a battle over taxes – who pays them, when they pay them and where the money goes.

About a year ago, a group of concerned citizens formed the Windsor Coalition of Taxpayers and began asking questions that led to an audit and the resignation of longtime tax collector Bev Hines.

Bookkeeper Annette Poland’s audit revealed there are 27 landowners in this town of 230 who have failed to pay their property taxes – some for as long as seven years – and that there is approximately $175,000 in outstanding taxes dating back as far as 2000. Individual amounts owed range from $17 to $51,000.

Poland also reported there is at least $43,000 worth of collected tax money that can’t be accounted for.

Located on eight square miles in the southwest corner of the state, Windsor has an annual budget – including town, school and county – of slightly more than $500,000 and no police department or library.

Until recently, the town did not place liens on properties with outstanding taxes as New Hampshire law allows, according to Paul L. Apple, the town’s attorney. But since the problems with tax records started to surface, the town began treating tax delinquency more formally – a move that some residents believe is a direct attack on the Windsor way of life.

The matter came to a head at last week’s town meeting.

“There are families that have been in this town for 200 years and the selectmen have always allowed them to take their time paying their taxes,” said Ron Holton, Hines’ nephew. “Our way of life is being taken away by people who are making a fight where there is no fight.”

“All of the people in this town pay their taxes,” said resident Chris Davies. “It just takes some of them more time to do it.”

A request to have taxes collected twice yearly instead of once a year won approval at Town Meeting, but voters soundly defeated a measure that would bar anyone with outstanding taxes to hold a seat in town government. The voters also denied a request to hire a certified public accountant to conduct a forensic audit of the town’s books.

Hines, who grew up in Windsor and was elected to the tax collector post, eschewed computers and kept her records in hardbound books.

Windsor Coalition of Taxpayers member Don Palmer said his group asked for copies of tax receipts and records from Hines. When she refused, the coalition sued the town in Hillsborough County Superior Court and the town was ordered to comply with the request.

After reviewing the records, coalition members brought their concerns to the New Hampshire Department of Justice. At the state’s behest, the town launched an audit. Hines resigned as tax collector several months ago.

Apple said that it’s too early to determine whether the missing funds are lost in a tangle of bookkeeping errors, or if actual cash is missing.

“We’re looking to see if there’s been any conversion, which is a fancy way of saying that a public official has taken public funds for private use,” Apple explained to the audience of more than 70 residents at town meeting last Tuesday.