An accounting gaffe could cost Belmont close to $300,000 in fines to the Internal Revenue Service this year.
In a memo to Town Administrator Patrice Garvin in late January, Assistant Town Administrator/Finance Director Jennifer Hewitt and Treasurer Leslie Davidson wrote that the town failed to pay withholding taxes on time for about a year. Withholding taxes are the amount deducted from employee paychecks and retiree pension checks for federal taxes.
The IRS initially fined the town $134,237 for failing to file withholding taxes in 2022. The town appealed, and the IRS set the final amount at $40,665.
However, because the problem persisted into 2023, the town could face a second fine in the “likely range from $75,000 to $250,000,” Hewitt wrote. She added they will appeal that amount as well.
Garvin said this week that the town paid the initial fine.
The problems became apparent after Davidson took over last year and realized the town had failed to process withholdings from the Retirement Board from August 2022 through July 2023.
According to the memo, the Retirement Board sends its withholdings to the town, which the town then passes on to the IRS.
There was a transition in the treasurer’s office starting in August 2022.
“The Assistant Treasurer who was responsible for the day-to-day functioning of the office left and was replaced by an internal candidate who was not adequately trained to maintain the same level of office functioning and did not receive sufficient ongoing support from the Treasurer,” the memo stated.
The treasurer at the time was Floyd Carman, who retired last year after 18 years in the post. He was Belmont’s last elected treasurer. The Select Board now appoints that position.
“If it wasn’t for Leslie’s [Davidson] work on this, I wonder how long it could have gone on for,” Garvin said.
According to Garvin, the issue was a lack of understanding by the previous treasurer, not malice or malfeasance.
Davidson and her staff have added new fail-safe procedures to better protect the town against such oversights in the future, Garvin said.
The town is still waiting to find out just how much of a fine the IRS will levy.