When the Sistersville Public Library Board met on Nov. 25, Board Co-President Beverly Henderson brought to light several problems regarding past payroll taxes.
In order to resolve these issues, the library board voted to approve the hiring of an outside auditor from Tetrick and Bartlett to review their records. Henderson, who is expecting that review to occur in January, explained that it would be a payroll audit and thus different from the regular state audits.
Henderson became co-president of the board in July. After the November meeting, she clarified her understanding of these problems.
She said the library board recently received a letter from the Internal Revenue Service (IRS) indicating that it has not received 941 forms from the library since the third fiscal quarter of 2002.
"That was the duty of the treasurer at the time," she explained, stating that they were still examining past board meeting minutes in order to accurately determine who held the position in 2002, as well as all treasurers since then.
Henderson said that the IRS received five federal depository payments between the fourth quarter of 2002 and the second quarter of 2004 and that those payments totaled $1,645. However, because the 941 forms were not received, the IRS had no amount with which to match that money, which was reportedly lost due to a statute of limitations regarding unidentified money.
Henderson added that her research has uncovered three notices from the IRS indicating that they could not credit or refund money they could not match with a 941 form. She said she had not yet found any indication that the past library board took action to resolve the issue.
"I have found some of the W2s, but not all of them," she said.
She noted that some incomplete 941 forms she discovered were not signed or dated. Furthermore, she said she was not willing to turn them in because there is a possibility that they have the incorrect information on them.
Regarding these issues, she also said that some library employees do not have earnings on their Social Security history.
Henderson described another situation with the W.Va. State Income Tax Department, from which they are missing annual returns and payments. She said that she has sent them the W2s she could find, and they are currently completing those returns in order to calculate how much the library owes.
"If there's missing ones (W2s) we can find, that's fine," said Henderson. "If we don't, we'll pay what they tell us we owe on the years that we have recovered."
She explained that there are two bank accounts for the library; one is a book fund and the other is for payroll. She said that the Sheriff's Tax Office is still the custodian of payroll and indicated 22 outstanding checks on the Sheriff's Tax Office Account.
"That means they were never cashed," she said of checks dated from 2004 to 2007.
She described those checks, totaling $6,315: 17 for 941 taxes payable to Union Bank; one for the W.Va. Tax Department; two for the W.Va. Unemployment Office; and two for Worker's Compensation. Henderson said that the money is in the bank. Although she has received copies from the Sheriff's Tax Office, the original checks have still not surfaced.
Henderson said she knew the problems were connected when she saw that the checks were payable to the bank.
"The payments should have been connected to the 941," she said. "We're digging through everything we can find. I know there was a problem with 941s because there was federal income tax reported on some of the 941 forms I had, and none on the W2s."
Although the Sheriff's Tax Office is still custodian of the library's payroll funds, Henderson explained that the Sistersville Public Library's payroll is now completed through the Moundsville Service Center, which services this region of libraries and has a Certified Public Accountant. The decision to have their offices handle payroll was approved by the board in the third quarter of 2012.
Henderson said she looked back at the last five years of audit reports and discovered that each one indicated an issue with unpaid payroll taxes. She said she did not think the state caught this issue when the audits were turned into them, or they would have notified Tyler County's Prosecuting Attorney.