IRS Penalizes the City of Corvallis $243,267 for Late Tax Payments

The City of Corvallis released information Aug. 18 regarding late tax payments the City made to the Internal Revenue Service (IRS) and the fines that were incurred over a period of more than three years. The fines and penalties from the IRS were reportedly due to late payroll tax payments. The penalties total $243,267 according to the City’s report published at Corvallisoregon.gov.   

The penalties were brought to the attention of the City in early August, finding that some payroll tax payments had been sent late to the IRS over a period longer than three years. Though the payments were sent, in most cases, only days late, yet it was still long enough to incur fines, and the late fees and interest were not addressed in a timely way. This means that the penalties were not only assigned, but the fines also incurred interest.   

Preliminary investigative efforts have revealed that it’s possible an employee of the city did not notify supervisors of repeated warnings from the IRS, nor did the employee respond to the IRS. The City is conducting further investigation to discover the full extent of the mistakes. The employee in question is no longer with the City, leaving in January long before the error was discovered.   

In a statement from City Manager Mark Shepard said “This singular incident, while serious and disappointing, does not reflect on the good work performed by the City of Corvallis each day in our community. We will move forward and find an acceptable outcome for this issue, and we will redouble our efforts to improve transparency and accountability in all aspects of City services.  

New policies will be adopted by the City to make sure that these issues do not occur again, and the City hopes to file an appeal with the IRS to address the penalties. Fortunately, all of the taxes owed by the City were indeed paid, so this penalty does not reflect a crime on behalf of the City of Corvallis.   

By Kyra Blank