Community discussions

Driscoll Payroll Transfers

by Tom Reynolds

January 6, 2012

The recent article about the Town Council’s letter to the NYS Comptroller had a statement that was truthful but may accidently have given the wrong impression. It conveyed the image that one payment for taxes was due at the end of the quarter from July through September. In fact, tax deposits are due within a few days after every payroll. Since town employees are paid every two weeks, this means that 6 or 7 consecutive payrolls were missed and not paid. At the end of a quarter, a reconciliation report is due within 30 days and, with it, any additional payment. So, not only were the 6 or 7 payments not made but the quarter end reconciliation was not submitted until well after it was due.

In his response, Supervisor Driscoll makes light of the penalties and interest that are due and indicates that they will be forgiven. From my 29 years experience as a corporate Treasurer, what will happen is that the IRS will send a letter assessing penalties and interests and demanding payment. This will have a specific amount due and it will be in the thousands of dollars. The town should then send a letter to the IRS asking for forgiveness and explaining why it should be forgiven. In addition, the town should contact our congressman and ask him to intervene for us; it helps.

I had to clean up a couple of these situations. In my experience, if you make a decent appeal, the IRS forgives some but not all of the penalties or interest. However, there are some factors here that may hurt the town. The town was not late with only one payment but did not make 6 or 7 payments; that’s negligence. Secondly, you may have noticed that the federal government is running short of cash; so they are becoming very aggressive on collections because they need the money and might not be as forgiving as in the past!

Missing all these payments raises a second, more significant question; why? Every payroll system that I have seen produces a figure for the amount of the tax deposit. The Town Supervisor is authorized to make wire transfers for this amount and it was his responsibility to wire-transfer the deposit after each payroll. Supervisor Driscoll had been in office for one and one half years when this occurred, so he should have made about 39 payroll transfers prior to this issue. Could he have suddenly forgotten how to make the transfers? If so, the bank is only about a hundred yards away, why not ask for help? Or had he given the password to an unauthorized person to make the earlier transfers and did not know how to make them? If that is the case, he violated both the bank’s and the town’s regulations and opened up the town’s bank account to potential theft. It would be the equivalent to giving someone your ATM card and your password. Not a good practice.