Belen Schools penalized $20,000 for IRS noncompliance

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The Internal Revenue Service audited Belen Consolidated Schools for noncompliance of the issuance of file form 1099-MISC, resulting in almost $20,000 in penalties.

The Internal Revenue Service audited Belen Consolidated Schools for noncompliance of the issuance of file form 1099-MISC, resulting in almost $20,000 in penalties.

An audit of the district was triggered after IRS representatives found the district didn't submit file form 1099-MISC for miscellaneous income to vendors they paid services for in the 2010-11 audit.

This form must be submitted for a minimum of $600 in payments for services rendered from a small business or independent contractor, states the IRS website.

IRS auditors investigated the matter for a week in October 2011 from the district offices and finalized their findings a few weeks later. During that visit, George Perea, director of the district's business and finance department, turned over a list of active district vendors — proof a 1099 was sent to them and proof they received it.

"We found that some vendors should've gotten the 1099 that didn't, some got the 1099 who shouldn't have and we had some that weren't valid," said Perea.

To correct these problems, the district created about 50 new 1099 forms for vendors who needed them and sent the updated information to the IRS, Perea said.

Since these forms were turned in late, the penalties and interest handed to the district resulted in almost $20,000, Perea said. The district paid those fines in December 2011.

Belen Board of Education President Sam Chavez described the matter at the Jan. 8 board of education meeting, saying the error was "an oversight."

"Somebody just slipped up and it didn't get addressed," Chavez said.

At that time, there was a high turnover in the director and staff of the business and finance department, Perea said.

"Maybe they didn't know how to do it or they forgot to do them," he said. "There was a lot of staff turnover at that time and it just didn't happen or get finalized."

But Perea said these slip ups have been corrected and his staff is staying on top of completing and submitting these forms correctly.

"We're filing them electronically and making sure we stay on top of them and that they are done correctly," Perea said.

The district's business and finance director said he plans on reviewing his staff's work concerning 1099 forms before submitting the information to vendors and the IRS. The 1099 forms must be submitted to vendors by Jan. 31 and to the IRS by March 31.


-- Email the author at aortiz@news-bulletin.com.