BENTONVILLE — The Internal Revenue Service claims NorthWest Arkansas Community College has a history of late penalties when it denied an appeal from the college from late last year.
“You explained that you have a good history of making timely and accurate deposits,” according to a May 11 letter from the IRS to the college. “However, a review of your account history shows that we have charged similar penalties in the past.”
President Becky Paneitz, through a news release, apologized for the college posting three recent tax payments late.
At A Glance
Tax Workshop
NorthWest Arkansas Community College’s board will discuss tax processes during a workshop in July. The workshop will be held in Peterson Auditorium in the Shewmaker Center for Global Business Development, 900 S.E. Eagle Way.
w July 13: From noon to 5 p.m.
w July 14: From 7:30 a.m. to 11:30 a.m.
Source: Staff Report
The college was penalized $5,533 by the IRS for late payments stemming from June 30, 2011, Dec. 31, 2011, and March 31 deadlines.
The college paid a $27,760 fine to the IRS last year for three late tax payments. It also paid $2,375 in penalties to the state for late withholding wage taxes due in 2010. A $40,000 penalty from the IRS for 2008 W-2 filings was waived following an appeal.
“While we remain hopeful that the penalties will be reduced or waived, we also recognize that this issue must be addressed immediately and permanently,” Paneitz stated in the news release. “There is no reason that NWACC should not process these payments properly and in a timely manner.”
In April, the college appealled a $425 penalty for late payments on its Dec. 31, 2011, tax period, but was notified by the IRS in May the waiver had been denied.
Marty Parsons, college senior vice president for administrative services and chief financial officer, sent the appeal April 2.
“The reason for the late payment was that we were experiencing difficulty reconciling our W-2 to the 941 for Calendar Year 2011,” Parsons wrote. “It was our understanding that we were to include that payment on our 4th Quarter 941. Since that isn’t due until January 31, 2012, we thought we had until then to make the payment. Based on our prompt payment record and the fact that the 4th quarter 941 was submitted by the due date of January 31, 2012, we are respectfully requesting that this penalty be removed from our account.”
The IRS responded in a letter on May 11 saying the appeal “did not establish reasonable cause.”
“You explained that you were unable to make your federal tax deposit timely because you were not aware of general tax deposit rules,” the unsigned letter states. “We understand that your failure to make a timely deposit was not intentional. However, it is the responsibility of the taxpayer to become familiar with the basic requirements for making federal tax deposits.”
The college is awaiting response from the IRS after appealing penalties from the March 31 tax period.
At A Glance
Internal Revenue Service
The Internal Revenue Service is a bureau of the Department of the Treasury. It was created by President Abraham Lincoln in 1863 as the Commissioner of Internal Revenue after Congress enacted a temporary income tax to pay war expenses in 1862. Today the service’s headquarters are in Washington with five service centers around the county. The centers are in Austin, Texas; Cincinnati; Fresno, Calif.; Kansas City, Mo. and Odgen, Utah.
Source: Government Accounting Office, irs.gov
A letter sent by the IRS on May 21 notified the college it had $5,103 in fines from late payments on its March 31 tax period, which was due March 16. The letter states payments for the period were made three, five and 21 days late.
Parsons sent an appeal May 18 stating some of the payments were made on time. He stated $249,148 was paid March 16, not March 19 as the IRS stated. He included a printout of the electronic federal tax payment system that shows the payment being received March 16. He also questioned the 21-day late payment.
“On April 6, 2012, the NorthWest Arkansas Community College made a payment of $1,171.92. This payment was for additional taxes that were owed on the March 31, 2012, payroll,” Parsons states. “The additional taxes from our March 31, 2012, payroll were identified during the preparation of the Quarterly 941. The additional taxes were due on April 2, one business day after payroll according to the IRS regulations. The attached EFTPS shows payment date of April 6, 2012, four not 21 days late as initially assessed.”
The college also paid fines from the June 30 tax period.
Two letters were sent by the IRS on Sept. 12.
The first states an outstanding balance of $1,167.52 regarding the June 30 tax period. It included a $11.51 penalty and $5.43 interest. The second letter informs the college its Employer’s Record of Federal Tax Liability wasn’t included with its Form 941 for the June 30 period. It states a penalty could occur if the information isn’t filed with the IRS by Oct. 27.
On Dec. 26 another letter was sent by the IRS regarding the June 30 period. It stated the college received a $12,491 penalty for not making a proper federal tax deposit based on its record of federal tax liability. A $2,629 overpayment by the college was used toward the fine leaving $9,861 due.
An account transaction log from the Internal Revenue Service states $12,491 was removed from the college’s account by the IRS on the same day the Dec. 26 letter was sent. It also shows the money being sent back to the college on the same day.
Parsons said he was unsure the reason for the fine or the reason for the abatement. He said either the IRS made a mistake or college officials were able to resolve the issue.
A letter was sent by Parsons to the IRS on Jan. 13 regarding the issue. He stated employees of the college spoke with the IRS on Sept. 16, followed instructions to resolve the issue and he asked the $9,861 penalty be waived.
Alex Vasquez, NorthWest Arkansas Community College board chairman, said the board would look at the process regarding tax payments.
“We take these mistakes very seriously and are reviewing our processes again to make certain this problem is resolved,” Vasquez stated in a college news release. “While there were recent changes made in our processes and procedures the college will once again revisit this specific area and further update the NWACC Board of Trustees at the July 2012 retreat addressing specific corrective actions.”