Rollover crash injures 2
American Idol 2012 finale
News hounds (5/24/12)
Home > Blogs > Butler County News and Issues > Archives > 2009 > March > 16 > Entry
County could be assessed $500,000 in back taxes for employee perks
I wrote two stories for this weekend on Butler County possibly owing the IRS back taxes for employee perks not claimed as income.
Here is the first story (Read the full story here):
Butler County could have to pay roughly $500,000 in back taxes for not reporting use of county cell phones, uniforms, cars and other fringe benefits as employee income, according to county officials.
The Internal Revenue Service is wrapping up an audit of the county’s books in 2005-07 that found the county spent about $1.5 million in fringe benefits that should’ve been reported on employee taxes. The taxable portion of this is about $500,000.
Butler County Commissioner Gregory Jolivette said the assessment is unfair and based on a “crazy policy.”
While in Washington, D.C., recently, Jolivette urged area lawmakers to push the IRS to exempt the county from the assessment or provide stimulus money to pay it, while changing the tax code regarding fringe benefits.
“It doesn’t make governmental sense,” Jolivette said, for the federal government to be handing out money to create jobs with one hand and draining local government budgets — which could force layoffs — with the other.
This comes after county leaders spent months working through a budget crippled by major reductions in sales tax and other revenues during the recession. Commissioners have cut roughly 63 jobs in the last year.
Commission President Donald Dixon agreed the IRS should waive the assessment as long as the county adopts a policy to comply in the future.
“I don’t know why they would want to take public dollars and have a finding against us,” Dixon said. “If it’s found that we owe it, we’ll pay it and we’ll make sure it doesn’t happen again.”
But he also said the county should have had a policy in place already, and questioned why the county gives away so much stuff to its employees. “That’s a problem in itself,” he said.
Here is the second story (Read the full story here)
Staring down the barrel of a potential $500,000 assessment for back taxes, Butler County Auditor Roger Reynolds said the county is drafting policies to make sure employees pay taxes on fringe benefits in the future.
It’s unclear why the county wasn’t paying these taxes. Former deputy auditor Randy Groves said in 2007 county officials were unaware these items were taxable until shortly before an ongoing Internal Revenue Service audit began that year.
That audit is wrapping up now, and is finding that county employees should have paid taxes on roughly $1.5 million for perks such as use of county cars, cell phones and uniforms. Since the county didn’t report those perks as income, that bill may soon go to the county.
While county leaders agree the county will comply, some also question the wisdom of the tax code.
For example, the IRS wants to tax employees who are given county cell phones because they could use them off the clock. But county policy prohibits employees from using cell phones for personal use.
“Why is the telephone on my desk any different from my cell phone?” said Commissioner Gregory Jolivette, who called the IRS rule “crazy.”
The IRS wants to tax the county for roughly $580,000 spent on employee cell phones, roughly $720,000 spent on uniforms and roughly $250,000 for vehicles employees take home.
This includes parts of uniforms worn by sheriff’s deputies, such as T-shirts and certain pants that could conceivably be worn mowing the lawn at home. But a deputy would be fired for doing so, according to Sheriff’s Office Chief Deputy Anthony Dwyer.
In addition to deputies, Jolivette said it’s vital that utility workers and others in the public have uniforms that clearly identify them as county employees.
“Is that worker, when not in the field, supposed to go back to the office and change into a shirt that they own to go out to lunch?” Jolivette said. “It doesn’t make sense.”
Other fringe benefits the IRS wants to tax are tuition reimbursement, travel allowances and parking passes.
Permalink | Comments (1) | Post your comment | Categories: Butler County
Comments
By Donna Mollaun
March 30, 2009 9:54 AM | Link to this
I’m confused as to how a $500,000 stimulus package applies to an IRS debt for cell phones and cars. This doesn’t improve roads, bridges and schools. It also doesn’t create jobs for the people hurting from payoffs in Butler Co. The arrogance of it all blows my mind. In the meantime, so many citizens of Butler Co. are worrying about their next meal. Let the Butler Co. employees, with those county cell phones and cars, take a salary cut to make up for it. They do their own income taxes. They too should have known better.