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North Miami to pay $33,000 in fines after IRS audit

Councilwoman Marie Steril (left) and former Mayor Kevin Burns introduce Mayor Wilson Jeudy from Delmas, Haiti during a North Miami City Council meeting in 2008. The city was ordered to pay nearly $19,000 to the IRS, following a review, due to travel expenses for a 2012 trip to Haiti--including a visit to Delmas, a sister city of North Miami.
Councilwoman Marie Steril (left) and former Mayor Kevin Burns introduce Mayor Wilson Jeudy from Delmas, Haiti during a North Miami City Council meeting in 2008. The city was ordered to pay nearly $19,000 to the IRS, following a review, due to travel expenses for a 2012 trip to Haiti--including a visit to Delmas, a sister city of North Miami. Miami Herald File

After a months-long review by the Internal Revenue Service, North Miami has been ordered by the agency to pay about $33,000 in fines.

The review began last September and focused on four tax-return periods from 2012. The federal tax agency asked for clarifications on money given to about a dozen people, including Councilwoman Marie Steril, Deputy City Manager Lumane Claude, former Councilman Jean Marcellus, former Police Chief Marc Elias, former Mayor Andre Pierre and other city staffers.

The clarifications were related to travel expenses for trips to Haiti in 2012. The IRS initially asked for clarification on about $15,000 that was given to Steril and Claude.

The agency levied about $19,000 in fines due to the travel expenses from the trips. The rest of the $33,000 the city will pay is related to a list of about 73 vendors and contractors with the city. North Miami had to pay $200 per company for adjustments to those companies’ W-2 forms. That amount was about $14,000.

City Manager Aleem Ghany said the review is now closed, but the city is still waiting on a final list of adjustments and further instruction from the IRS after settling the audit this week.

Councilwoman Marie Steril, who will not seek reelection in the upcoming city election, said that the trips to Haiti were never decisions made solely by her but were agreed to by the City Council at the time and were part of North Miami’s Sister Cities International relationship with Delmas, Haiti.

“There was never once that I decided to go to Haiti on my own,” Steril said at Tuesday’s City Council meeting. “If I had to do it again, I will always go back and help wherever in the world that I would be able to help.”

Ghany said that the city will make the necessary adjustments to the W-2s for the various companies and some of the former employees that were included in the agency’s report. He said that some of the employee-related adjustments were due to issues including the city not properly reporting taxable benefits such as shoes and uniforms for police officers.

He said that he can’t do much retroactively about the trips, but plans to take additional steps to address the issue in the future.

“There’s nothing I could do if the City Council approved it,” Ghany said. “If the trips were not approved that would be a different issue.”

Ghany said he will take steps to regulate travel and travel expenses and plans to bring a resolution similar to one recently passed in North Miami Beach that says travel expenses must have a “valid and identifiable’ benefit for the city’s taxpayers.”

Councilman Scott Galvin said the fines occurred because people “wantonly disregarded” regulations and the city should be more aggressive and find ways to get the money back from those individuals that are no longer in the city.

“I don’t think we should just throw our hands up and say, ‘Oh well too bad,” Galvin said. “Whatever options are there we should try to recoup those losses aggressively.”

The city’s separate state audit was set to begin May 1 and expand a few weeks after that, Ghany said.

That audit, which was approved by the Florida Joint Legislative Auditing Committee in February, will look at the city's financial records, expense reports, building and zoning records, vendor-related party review and approval safeguards and any irregularities.

The City Council approved pursuing the more in-depth audit last July. Steril cast the only no vote on that item.

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