Deltona says IRS paperwork glitch resolved; city owes nothing and received $7,800 refund

Deltona City Manager Doc Dougherty announced in a public statement that an IRS penalty allegation from nearly a year ago has been resolved: the City of Deltona does not owe the IRS and the agency repaid the city $7,800.

Dougherty said the issue began with a paperwork delivery glitch that led the IRS to question whether required annual health-care statements had been provided to employees for the tax years 2016 through 2019. He said the $1,000,000 figure reported earlier was not back taxes but a potential penalty tied to that paperwork misunderstanding.

"It should be noted that the $1,000,000 fee was not for back taxes. The fee was a penalty for a paperwork misunderstanding 5 years ago," Dougherty said. He added, "After a lengthy investigation, I'm pleased to announce that the city owes the IRS nothing. $0. In fact, it turns out that the IRS owes the city of Deltona $7,800 in overpayment."

Dougherty told listeners the current city staff were not involved in the original mix-up and have worked to correct the issue. He said the city recently deposited the refund check and thanked those who helped investigate and resolve the matter.

The statement also recalled that, when the allegation surfaced nearly a year earlier, some had suggested employee terminations; Dougherty said "cooler heads prevailed" and the city pursued an investigation instead. He closed by saying the city had received the repayment and that the matter is resolved.