Adams Retirement Board Contending IRS Penalties
ADAMS, Mass. — The Retirement Board is contending penalties handed down from the IRS from seven years of misfiled taxes.
According to Chairman Bernard Pinsonnault, the board began receiving notices from the Internal Revenue Service last year of about $1,500 in late fees. The town treasurer, who is tasked with filing the taxes, began working with an IRS representative to sort out the miscue but that representative retired and lost contact, Pinsonnault said. The board then opted to hire a tax attorney to look over the issue.
The attorney is researching what happened with the filings and is contending the penalties on behalf of the retirement system. According to meeting minutes from November 2011, the board was told that various taxes on distributions were supposed to be filed weekly but were being done monthly and deposits were supposed to be made three days after the filings but were not, resulting in the penalties. Additionally, weekly liability forms were not filed correctly. The fines then began to accumulate interest.
"It's interest penalties for late or improper filings," Pinsonnault said, adding that the incorrectly filed forms led the IRS interest "snowballing" for the seven years the board had no idea of the problem.
"We believe all the monies are paid," he said.
The IRS has issued a $72,000 lien on the town representing the total amount of taxes being contended. Pinsonnault said the lien should be lifted once the appeals are figured out and he is hoping that at least some of the penalties will be lifted.
"We don't believe that is an issue," Pinsonnault said of the lien.
However, the attorney fees will fall on the town's shoulders. An auditor said the board must seek those, as well as any penalties, from the town instead of the retirement system. Through the first six months of 2012, the board spent $8,500 on the tax attorney.
"Hopefully, everything will work out OK. We'll still have to look to the town for some reimbursement," Pinsonnault said.
The attorney was expected to meet with the IRS earlier this month but the board has not heard the results or if that meeting had taken place. The IRS will have 60 days to respond to the attorney's contention, so Pinsonnault does not expect resolution until at least February 2013.
"We're still waiting to hear back," Pinsonnault said.
Tags: IRS, penalties, pension system, pensions,
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