CLEARWATER –– When Pinellas County started offering domestic-partner benefits in 2013, it never paid taxes on the perk or included them in year-end wage records used by employees to file tax returns.
That error could now cost the county — and employees — a combined $500,000.
The county estimates it will have to pay about $250,000 in back payroll and income taxes since 2013. The 109 employees who received the benefits will have to file amended tax returns and pay a collective $250,000, human resources director Holly Schoenherr said.
A human resources employee discovered the error during routine work in 2017, Schoenherr said. The county has been working with a tax attorney to fix the oversight, she said. It would be unfair to point fingers at any one person for the error, she said.
"Our department had a good bit of responsibility for that," said Schoenherr, who took over the office in July 2016. "It’s a really unfortunate situation. If we find a mistake, we raise the white flag."
County officials have been working for months to correct the error.
In a memo to employees, the county said the "Internal Revenue Service requires employers who provide coverage for these individuals to report the value of that coverage as imputed income to the employee in the year it was provided. This means it is subject to payroll and income tax."
The county started taxing the benefits this year.
The back taxes do not include penalties or interest the IRS could levy on employees or the county. Schoenherr estimates the county will send corrected W-2 forms to the 109 employees in the coming weeks.
Pinellas County Commission Chairman Ken Welch said he understands the aggravation that workers will have to go through to file amended tax returns for several years. Though it was an error, employees will still have to pay the taxes because they received the benefits, Welch said.
But he supports asking the County Commission to pay the other costs from the blunder.
"I think that we should handle any fines and penalties" for the employees, Welch said. "It wasn’t their bad; it was ours."