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Richland County CUSD 1 board hears more than $1.13 million in IRS penalty exposures; appeals underway
Summary
District staff told the school board that unfiled or error‑ridden IRS 1095‑C filings have produced penalty assessments dating to 2019 and 2021; the district reports $861,666.22 in collections for 2019 and $276,011.35 for 2021 and said it is pursuing appeals and abatement.
The Richland County Community School District 1 board received an update on the district's exposure to IRS penalties, and district staff said they are pursuing appeals to reduce or remove the assessments.
A staff member told the board that notices related to employer health insurance reporting (Form 1095‑C) date back to 2019 and that the district fell behind on responding. "That issue at the time in the fall of 2024 had been sent to the collections portion of the IRS, and that penalty is currently sitting at $861,666.22," the staff member said.
The district also reported a separate 2021 penalty of $276,011.35; the staff member said an initial request to abate that assessment was denied and that a second‑level appeal was filed within the 15‑day window. The staff member summarized the overall exposure as the district pursuing abatement for $1,137,677.57 across the 2019 and 2021 matters.
The staff member said the district engaged its auditors and accountants (Kemper CPA) immediately upon discovering the issue and has supplied additional documentation to the IRS during the appeals process. A 2022 penalty was previously waived after the district responded to the third IRS request and the staff member said the district received a notice waiving a $283,910 penalty for 2022.
Board members asked who handled the filings in the past and the staff member answered that individuals involved at the time are no longer with the district. "Anybody who was involved in it is no longer with the district," the staff member said.
The staff member described the IRS process in three stages — investigation, deliberation/consideration and collections — and said the district is now working through the deliberation/appeals stage for the 2019 and 2021 issues.
Board members did not vote on the issue; the update was given for information and the district said it will continue to pursue appeals and keep the board informed.
What happens next: staff said they will continue to work with Kemper CPA and the IRS appeals process and will return to the board with developments. The board asked clarifying questions about responsibility and the appeals timeline.
