Missed Forms Could Cost City $1.1 million
City officials are trying to work something out with the Internal Revenue Service to reduce a $1.1 million penalty assessed because the Cincinnati Retirement System failed to send in 1099 forms between 2001 and 2005.
Retirees got their forms, but the federal government didn't. The system paid the correct taxes.
This was discovered during an IRS audit that started in March 2006, according to a memo Tuesday from City Manager Milton Dohoney's office.
The memo attributes the mistake to a new pension operating system installed in late 2000.
"Upon the data transfer and conversion," it says, "the function of filing 1099 forms was not accounted for. Additionally, administrative personnel changes during this period also resulted in miscommunication regarding CRS responsibilities related to IRS filings."
The city's finance director and CRS pension fund manager say procedures have been changed so "this non-filing error does not occur again."
City lawyers and an outside tax attorney are trying to work something out with the IRS.