On Thursday, an unexpected visit by an IRS agent compelled the city to pay approximately $42,000 in federal tax fines tied to poor bookkeeping on the spot.
During the municipal council’s meeting on Tuesday night at the Municipal Complex, chief financial officer James Brigham informed the council of the agent’s visit.
According to Brigham, the agent delivered seven payment demands totalling around $56,000 to City Hall in connection with the city’s tardy submission or documentation of payroll taxes.
The biggest fine, according to Brigham, was a $39,000 fine from 2017, when Milton Rawle was the CFO, for failing to file the city’s employee W-2 and 1099 tax forms by the required date with the federal government.
The city failed to submit payroll taxes on multiple occasions within five business days after issuing payroll, which is where the rest of the claims came from.
Two of the smaller demands, totalling approximately $14,500, were dropped, according to Brigham, who told The Dispatch this morning that he could provide proof the city obeyed federal regulations.
To prevent interest from continuing to accrue on those penalties, he made a federal deposit for the remainder on Thursday. However, he is hoping to persuade the IRS to reduce and refund the $39,000 demand.
I’ll fight for it if I can; that’s a lot of money for the city of Columbus, he declared.
Following the meeting on Tuesday, Mayor Keith Gaskin informed The Dispatch that the IRS had informed the city of the $39,000 fine early in his administration, which started in July 2021.
The 2020 embezzlement indictment of Rawle was cited as the cause of the W-2 and 1099 reporting delays in a letter to the IRS from the then-CFO Deliah Vaughn and temporary COO Mark Alexander Jr.
That was not enough, according to the IRS, Gaskin claimed.
Brigham claimed that the IRS representative sent him a copy of the initial justification last week and that it was clear why it wasn’t approved.
According to Brigham, the justification was “just theft by former CFO Milton Rawle, and then it went into the indictment.” We need a better explanation because that doesn’t truly explain why those documents were late.
Brigham, who was appointed CFO in March, continued, “If you have a good explanation for the IRS, they are usually willing to abate (these types of penalties). “Before writing another letter, I’ll have to do some investigation because I don’t know what caused it.”
Following the discovery of two further bookkeeping errors that date back before his hiring, Brigham also disclosed to the council on Tuesday that he is working on creating a thorough and correct debt schedule for the city.
On a bonded debt for 2014 road construction that wasn’t recorded, he received and paid an invoice for around $611,000 on the obligation.
To minimise the interest rate, the council refinanced the remaining $3 million of the 15-year loan in 2021. According to him, the 2021 refinancing was not recorded, even though the city had erased the 2014 bond from its records.
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Brigham also claimed auditors from the Watkins, Ward, and Stafford company found no record of a $1 million loan the city took in the wake of the disaster in February 2019. Brigham stated that although the payments have been made, neither the debt nor those payments have ever been budgeted.
Brigham told The Dispatch, “We just need to get better organised so it’s very clear what debt the city has. “We’re working our way through and settling things, little by little.”
