Ceske Provides Update on District's Issues with the IRS
- Category: On Our Radar
- Published: Wednesday, 27 April 2022 07:37
- Joanne Wallenstein
What is the status of the Scarsdale Schools District’s tax issues with the IRS? At the April 25, 2022 meeting of the Board of Education, Board President Karen Ceske provided the following update on IRS matters:
(From Karen Ceske- reformatted for clarity)
Tax counsel has provided the following update on the status of the Q4 2020 matter:
First, the Appeals Officer confirmed that the Q4 2020 tax payment of $843,558 has been posted to the District’s account and has been properly applied to the outstanding Q4 2020 tax.
Therefore, as of April 13, 2022, the outstanding balance in Q4 2020 is a total of $460,609, comprising:
- a failure to deposit penalty in the amount of $410,178
- a failure to pay penalty in the amount of $38,138 plus interest
- a lien fee of $80 plus interest.
As instructed by the Appeals Officer, the District has made a payment in the amount of $85, representing the lien fee plus interest. Tax counsel has been told by the Appeals Officer that the Appeals Officer is in the process of drafting a final penalty abatement recommendation for the Appeals Officer’s manager to approve and sign. This process takes approximately two to three weeks. If and when the final penalty abatement recommendation is approved, the Appeals Officer should instruct that penalties and the related interest be adjusted to zero. This process takes approximately another two to three weeks.
Once the District’s account for Q4 2020 is fully paid, meaning the tax is paid, the lien fee plus interest is paid, the penalties are abated, and the interest is adjusted to zero, the District should receive a notice from the IRS stating that the balance of the District’s account for Q4 2020 is zero.
The Appeals Officer has advised that the lien should then self-release 30 days after the balance of the District’s account for Q4 2020 is zero. The District should receive a notice from the IRS when the lien has self-released.
After receiving this notice, the District anticipates pursuing the additional steps of having the lien fully withdrawn from all records by submitting a petition to the Appeals Officer, who has agreed to assist in submitting the petition to the Advisory Office.
After the Advisory Office considers and hopefully grants the District’s request for lien withdrawal, the Appeals Officer should issue a written decision, which will comprise only a very brief summary of what occurred over the course of this case as well as the final disposition of the matter. The Appeals Officer predicted that a decision will be issued no earlier than mid-July.
Additional IRS notice received by the District:
The Board and the District’s tax counsel have recently been made aware by District administration of another notice received for a similar issue to the Q2 2021 issue.
On April 4, 2022, the District administration received a Notice CP207, dated March 28, 2022, for Q3 2021. Specifically, this notice alleged that, like in Q2 2021, the District failed to submit or failed to submit a properly completed Schedule B with its Q3 2021 Form 941. However, we note that, unlike the Q2 2021 issue, this Q3 2021 notice is only a request for more information, not a penalty.
The District’s administration submitted a response to this notice on the same day that it was received. Both the Board and the District’s tax attorneys were made aware of both the notice and the response to the notice only after the response had been submitted by the District administration. The District’s tax attorneys have reached out to the Revenue Officer with which they have been working on the Q2 2021 issue to also discuss the Q3 2021 issue, but have not yet received a response. The District’s tax attorneys will continue to provide updates to the Board on both the Q2 2021 and Q3 2021 matters as they arise.