EAST KINGSTON — The town has admitted that it incorrectly prepared W-2 forms for several town employees by failing to include the full amount of their taxable wages, resulting in approximately $210,000 in under-reported earnings for tax years 2016 to 2018.
Selectmen informed employees of the mistake this week and have offered to reimburse them up to $500 to seek advice from a tax professional.
“Town government has a responsibility to ensure these forms are prepared correctly, and while it’s fortunate these administrative errors came to light, let’s be clear, this never should have happened in the first place. Our town employees are innocent victims here and we are committed to helping them through this process,” Selectman Richard Poelaert, board chairman, said in a prepared statement.
According to the town, the mistake was mainly due to the failure to include detail pay for police officers, and it involved approximately nine employees.
The town said the employees’ wages were paid correctly and that the problem related only to the reporting on their W-2 forms.
The problem was discovered in September and prompted selectmen to seek a review of payroll records through the accounting firm Plodzik & Sanderson, P.A. The goal of the review was to determine the correct amounts of employee income each year.
Selectmen also hired the law firm McLane Middleton to provide guidance on the proper way to report the findings.
The accounting review also found that the town may have overcharged some employees for health insurance coverage.
Using information from the payroll review, the town administrator will prepare corrected W-2 forms from the past few years for each of the workers. The town said the Internal Revenue Service allows tax returns going back three years to be amended.
In addition to the $500 reimbursement for any employees seeking professional tax advice, the town also issued a statement of responsibility, which workers can use to seek a waiver of IRS penalties.