City Awarded Refunds After IRS Payment Penalties

June 23, 2021 - The City of Corvallis received refunds totaling $190,117.83 from penalties imposed last year by the Internal Revenue Service (IRS). The City had initially paid penalties totaling more than $243,000 for late payroll tax payments due to the federal government. After filing an appeal and providing clarifying documentation to the IRS, the tax agency refunded most of the fines paid, leaving the City’s total penalties at just $53,444.53.

The penalties related to late tax payments or incomplete tax forms that were filed by the City to the IRS. In all cases, the tax payments were made, but some payments arrived a few days late. The City fulfilled its tax payment obligations and submitted the additional tax forms, but the late payment and interest penalties still applied.

An internal investigation was conducted, and increased controls have been put into place to ensure the City remains in compliance with IRS requirements. 

“I’m pleased that the IRS recognized the City’s good faith efforts to resolve this issue,” said City Manager Mark Shepard. “We did our best to acknowledge the errors while still pushing for an outcome that ultimately reduced the financial burden on the City.”