WINNSBORO – Interim Fairfield County Administrator Laura Johnson informed council on Dec. 18, 2023, that six months earlier and apparently without council’s knowledge or consent, she authorized $1,184,417.11 in unbudgeted funds to be paid from the general fund to the Internal Revenue Service for penalties and interest stemming from late, incorrect and unfiled healthcare tax forms 1094 and 1095 and quarterly financial reports dating back to 2017.
There is no record that Johnson asked council to amend the budget or approve those payments. SC state law requires that budget amendments must be authorized by council when unbudgeted money of this magnitude is spent.
Some council members expressed surprise at the Dec. 11, 2023 council meeting when they learned about the IRS payouts.
When The Voice questioned Council Chair Doug Pauley last June about rumors concerning hundreds of thousands of IRS penalty and interest charges for late and unfiled IRS reporting by the county, he said those rumors were not true.
Johnson’s authorization of the IRS payments also may not have complied with the county’s procurement procedures, which limit expenditures over $25,000 without council approval.
According to Johnson’s report to council, the penalties and interest assessed on the county were for five specific tax years: 2017, 2019, 2020, 2021, and 2022.
“Honestly, I have yet to understand or know why all of this occurred,” Johnson told council, as she appeared to be placing blame for the seven-year span of healthcare form and quarterly report issues on the former county comptroller, Anne Bass.
Johnson, however, was the county’s comptroller during tax years 2017 and 2019 for which she says forms were submitted late or with errors to the IRS:
Tax Year 2017 – IRS healthcare forms submitted on time but with errors, costing county $386,379.51
Tax Year 2019 – IRS quarterly reports were two months late, costing county $378,682.76
Bass was the county’s comptroller from April 2020 until the end of February 2023, when Johnson says forms were submitted to the IRS late or not submitted at all.
Tax Year 2020 – Quarterly report for December, 2020 was late, costing the county $390.027.18
Tax Year 2021 – Quarterly report was never filed for Sept. 30, 2022, and the county has not yet been billed or paid for it. It is estimated that the cost to the county will be $214,133.96
Tax Year 2022 – Quarterly report filed twice, costing county $29,327.66
Johnson said IRS healthcare forms have not been submitted for 2021, so she does not know yet what that penalty will be.
Johnson served as Assistant County Administrator from January 2020 until June 2021 and was Bass’s county supervisor during that time.
According to Johnson, the letters from the IRS notifying the county of penalties for tax years 2019, 2020, 2021, and 2022 were received in May and June of 2023. She told council that those assessments were paid in those same months.
The IRS letter notifying the county of errors in healthcare forms for tax year 2017 was received in February 2023, according to Johnson, who also said the 2017 errors had been successfully appealed. Bass was the comptroller at that time and, according to an email she sent to council dated Dec. 11, she is likely the one largely responsible for successfully appealing the penalties for the 2017 tax year.
In that email, Bass noted that she had received notifications from the IRS of rejection of forms with errors for one year that was received in February 2023, though she did not identify that year as 2017.
“I was able to complete the appeal on that year, supplying supporting documentation to resolve the errors,” Bass wrote. “Often it would be things like a person’s name being different on the county employee record compared to how they file their taxes, or a name or address change that didn’t match up.”
Bass said the assessed fees on that one year were relieved following her appeal.
“It was a long process, but thankfully was resolved in the county’s favor,” Bass wrote.
From Johnson’s report to council, it appears that notifications of errors, late filings, and failure to file for tax years 2019, 2020, 2021, and 2022 were all received in May and June of 2023, after Bass’s departure from the county, and they have not yet been appealed by current staff.
Bass noted in her email that she could not comment on any notifications that were received after she left.
While Johnson says she can find no records of fillings or letters from IRS going back to 2020, Bass, in her email to council, said the Affordable Care Act health forms were filed each year, and that the electronic documents are on the shared file on the county server.
Bass also wrote in her email, “Mrs. Mozie (current county finance director) asked me how to handle [subsequent] years with errors [2019, 2020, 2021, and 2022, and] my answer was to continue to work through the appeals process.”
PIO Press Release
In response to the health care form issue, the county’s public information officer Gene Stephens issued a press release two days after the meeting stating that, “the late filing was due to a lack of credentials by the human resource staff which resulted in the former finance director submitting the information after the deadline. The Human Resources Director is currently seeking the proper credentials to submit the forms in a timely fashion in the future, reducing the need to rely on another department to submit the form.”
However, Bass did not state in her email to council that was the case.
Davis Anderson, a former Deputy Administrator for the county, said the filing of the IRS health care forms were never a responsibility of the Human Resources staff.
“Back around 2017, when Ms. Johnson was the county comptroller, she requested that the filing of the healthcare forms be turned over to Human Resources, but I instructed that they continue to be filed by the finance department because of the nature of the forms,” Anderson said. “While the health care insurance is an employment benefit, the forms are filed with the IRS and have to do with paying out money to employees and have always, even until the present, been the responsibility of the county’s finance department.”
Again in 2019, after Anderson left the county’s employ, Bass asked the Human Resources staff to take over the responsibility of filing the forms, according to Jennifer Leaphart, who was then Assistant Director of Human Resources.
“We did inquire with the IRS about accommodating the request, but were unable to get our staff credentialed,” Leaphart said. While there were certain things her department checked on regarding the forms, Leaphart said the county’s finance department has always been tasked with the filing of the IRS healthcare forms.
Stephens said the current director of Human Resources, who was hired in 2023 by Johnson, is currently seeking the proper credentials to submit the forms.
