The Fulton County Board of Supervisors voted unanimously Monday to use the county’s contingency fund to pay $87,198 in payroll taxes IRS auditors have determined the county failed to pay for county employees who declined health insurance benefits in 2008 and 2009.
Before the U.S. Internal Revenue Service notified the county it was in breach of U.S. tax law, it had been the policy of Fulton County since at least the mid-1980s to award payouts to employees who declined health insurance coverage offered by the county. The checks, which were $750 each in 2008 and 2009, were paid to county employees without withholding Federal Insurance Contributions Act taxes. The county treasurer’s office issues the checks to employees treating them as “vendors,” instead of through the normal payroll process.
The resolution to pay the IRS passed by the board also included language to authorize the county personnel department to begin a process to get back some of the money owed by county employees. Under normal circumstances, approximately half of the amount withheld for payroll taxes is owed by employees, the rest by the employer.
Johnstown 2nd Ward Supervisor Michael Kinowski, chairman of the county’s personnel committee, said the procedure to recoup money from employees will likely involve withholding all of the amount owed for the last two years plus this year from health insurance “declination” checks issued in December. He said depending on the person, the withholding is roughly about $250 from the $750 payout per year.
“If you still work for the county we’re going to take it out. So, for those people they just won’t get a check this year,” Kinowski said. “The union is opposed to that and we have a problem with people who have already retired. We’re going to write them letters telling them they owe back money.”
CSEA Local 818 President Ron Briggs said the county hasn’t approached his union yet about the issue. He said the process for reclaiming “overpayments” in his union’s contract is not as simple as deleting money from checks, employees must be given a chance to pay the money back in installments. He said he doesn’t agree that health insurance declination payouts constitute overpayments, but if it’s determined they are he hopes the county’s management-level employees and elected officials who received the payouts will also be required to pay back the county.
“I think they got a heck of a bargain giving people who didn’t take insurance $750 when health insurance costs about $7,000 for an individual,” Briggs said. “I understand there’s an error and we will work forward but I don’t see going back and trying to collect that money as a great option.”
Gloversville 3rd Ward Supervisor Michael F. Gendron, chairman of the county finance committee, said he receives the health insurance declination payout and he will repay the county the money owed.
“I hope everyone who owes will pay,” he said.
County officials said the IRS has assured them it will not seek back taxes for the health insurance declinations for years prior to 2008.
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Categories: Schenectady County