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Gainesville schools may face IRS fines, penalties

Mistake found when preparing W-2 information

POSTED: March 28, 2008 5:01 a.m.

The Gainesville school system faces penalties and interest for not filing paperwork last year to the Social Security Administration regarding its employees’ 2006 W-2s.

School officials discovered the error when preparing to file the 2007 W-2 transmittal this year.

"Federal tax deposits were made," said Janet Allison, the district’s finance director since the fall, or after the 2006 transmittal should have been filed. "That is not the issue."

The 2006 paperwork "either didn’t go through or wasn’t done last year," she told the Gainesville City Board of Education Monday night.

The district filed the 2006 transmittal on March 10 and should be able to check its status this week, she added.

"It will take anywhere from two to six weeks for employee earnings records to be updated by the Social Security Administration," Allison said.

Also, the district is "in the process of notifying former employees regarding this matter," she added. "We will update existing employees via e-mail."

School officials won’t know the fine amount until the issue is resolved, Allison said.

"I sent a letter last week asking for (reduction)" of penalties and interest, she added.

Each year, employers are required to give employees, current and former, W-2s by Jan. 31 for the previous calendar year.

Employers then must transmit by either the end of February or March 31 all W-2 information to the Social Security Administration for posting to employee records.

"The IRS obtains this information from the SSA and uses it to, among other things, match those records to what we report on our tax returns and what an employer reports on a quarterly basis," Allison said.

The Social Security Administration typically sends annual statements just before a person’s birthday each year.

Employees with birthdays later in the year may see the updated information on their annual statements.

Those with earlier birthdays may not "unless they specifically ask the SSA for a revised earnings statement," Allison said.

Employees can get corrected statements online, by phone or by visiting a nearby location.

The W-2 issue is one of several bookkeeping problems stemming from last year.

Gainesville school officials have worked to fix "many bookkeeping errors with entries during the past year, meaning most data is not correct," according to a Feb. 10 memo from Allison and Superintendent Steven Ballowe.

The report notes challenges associated with the system’s conversion to new accounting software, troubles regarding Allison’s predecessor and the retirement of a key department member. Former finance director Angela Adams now works for the Buford school system.

Allison has said she has had to use several consultant to help with items that need correction.

Dennis Fordham, retired superintendent of Hall County schools, plans to help the school system put together its 2008-09 budget, as a consultant paid by Cleveland-based Pioneer Regional Educational Service Agency.



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