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Commissioners approve payment of prior payroll tax and interest but withhold penalty while county seeks further review
Summary
Staff presented an IRS Notice (CP128) for unpaid payroll tax and penalties related to calendar‑year 2020 payroll. The board authorized paying the tax and accrued interest immediately but withheld payment of a $5,001.94 penalty pending further staff follow‑up and potential relief efforts.
County finance staff reported an IRS CP128 notice dated March 10, 2025 charging $110,771.14 related to unpaid payroll tax and associated penalties for the last quarter of calendar year 2020. County staff recommended immediate payment of the tax and interest portion and said they would pursue follow‑up with the IRS regarding penalty relief.
Robin Coos explained the county’s review into the issue. She said that in late 2020, certain sick and family‑leave wages tied to pandemic benefit rules were taxed differently; Cumberland County had paid Social Security taxes at the regular rate when those wages were subject to a different treatment. In early 2021 the IRS credited the county $83,369.30 for overpayment; later a revised filing produced a refund deposit that staff confirmed hit the county bank account. The IRS subsequently issued a notice assessing a tax/interest/penalty total of $110,771.14 related to the 2020 filing and the 2021 revisions.
Commissioners asked whether penalty relief could be sought. Coos said she discussed the possibility with IRS staff but could not guarantee relief; she recommended paying the tax and interest immediately to avoid additional interest accrual while staff pursues any relief for the penalty. After discussion the board approved paying the tax and interest and withheld the $5,001.94 penalty while staff continues review and potential negotiation with the IRS.
The board recorded the motion and vote by voice/show‑of‑hands and directed staff to make payment promptly and report back on any recovery or penalty abatement opportunities.
