The Internal Revenue Service has asked for additional documents from North Miami as part of a review involving payroll taxes.
The federal tax agency asked for records clarifying payments made to elected officials and city staff.
City Manager Aleem Ghany sent a letter to the City Council on Oct. 21 noting that the agency asked for a new round of documents including clarification on individuals who were apparently paid to attend city board meetings and explanations of money given to about a dozen individuals including Councilwoman Marie Steril, Deputy City Manager Lumane Claude, former Police Chief Marc Elias, and former Mayor Andre Pierre.
The dates of the payments correspond with trips that Elias took to Haiti starting in April 2012. His trips cost residents about $14,000 of which he was required to pay back $3,000 because he didn’t have the necessary paperwork to be reimbursed.
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The dates in the case of Claude and Steril correspond with payments given to them by the city for expenses when they traveled to Delmas, Haiti, in 2012. The payments the agency wants clarified for Steril and Claude total about $15,000.
The agency also requested documentation explaining flights and hotel reservations and dozens of vendors who apparently did not receive 1099 tax forms.
In general, employees don’t have to pay tax on reimbursement employers provide for work-related expenses. But workers and employers must pay tax on expenses that can’t be adequately documented and tied to a business purpose.
The files were initially requested by Nov. 6 but, according to an email from Councilman Scott Galvin, the city was able to negotiate an extension to Nov.20.
“The city is cooperating with the request from the IRS and following up with providing the documents they’re requesting,” said city spokeswoman Pam Solomon.
City staff met with a representative from the agency last month, and Ghany described the meeting as positive, but suggested that there could be other things that need to be clarified.
“There might be two or three areas on there that might be gray areas,” Ghany told the Herald last month.
The IRS examiner initially requested documents including correspondence between the IRS and the city about payroll taxes, employee contracts in force during four tax-return periods in 2012, copies of all retirement-plan documents, a list of fringe benefits provided to employees and the city’s personnel, policy or procedure manuals.
The agency also requested year-end payroll summaries and accounts payable records for two employees who were apparently acting as independent contractors.
North Miami doesn’t pay income taxes, but they do have to file returns for Social Security and other payroll taxes.
The IRS investigation was first brought to the council’s attention in September, when Ghany notified the council about his initial conversation with the IRS examiner about the selected documents and some of the decisions made in the city’s returns.