CHARLESTON, W.Va. — The state Supreme Court, which has been dealing with scrutiny of its spending decisions, says a recent Internal Revenue Service audit isn’t meant to be public.
The IRS audit, which apparently started about this time last year and concluded early this year, was referenced last week in association with a separate legislative audit of the court.
Chief Justice Margaret Workman referred to the IRS audit in a memo and then described the IRS audit to reporters at the Statehouse.
MetroNews asked the court for a copy of the IRS audit. The court spent several days discussing the request internally. One issue was the personal tax information that would be included in some parts of the audit.
On Monday, court spokeswoman Jennifer Bundy delivered the decision: “The Court does not believe the audit is a public document.”
The Supreme Court’s spending has been under public scrutiny since last fall.
That’s when stories kicked up about expensive office renovations—the $32,000 couch and $7,500 wooden inlaid floor in Justice Allen Loughry’s office, $500,000 office renovation and $28,000 rugs in Justice Robin Davis’s office, and $130,000 upgrade of Justice Beth Walker’s chambers.
Controversy then erupted over Loughry’s possession at his home of an antique desk associated with famed architect Cass Gilbert from when the state Capitol was first built. The legislative audit, which valued the desk at $42,000, briefly delved into the desk issue, concluding it was another example of using public office for private gain.
The Legislature, during the most recent regular session, passed a resolution that would provide greater legislative oversight for the court system’s budget. Voters would have to approve the proposed amendment to the state Constitution during November’s election.
The most recent legislative audit released last Monday concluded that justices Loughry and Menis Ketchum drove state vehicles for personal use without properly claiming the perk as a taxable fringe benefit.
Taxable fringe benefits — which also could have included the use of the antique desk in Loughry’s home — were apparently the focus of the Internal Revenue Service audit, too.
Justice Workman responded to the legislative audit with a memo dated April 12. In that, she made reference to the IRS audit.
Workman wrote that the IRS conducted an audit of the Supreme Court beginning in April 2017, concluding this year.
One of the lines of inquiry had to do with the use of state vehicles, Workman wrote.
“The IRS Audit Agents assigned to the previously mentioned IRS Audit of the Supreme Court requested and reviewed full fleet data and determined that the fleet did not present issues sufficient to spur further inquiry, issuance of any proposed adjustment or assessment of any monies due,” Workman wrote.
Workman wrote that the court reached a resolution with the IRS on “a number of other items.”
One of those was that issues related to tax years 2014, 2015, 2016, 2017 and through March 31, 2018, would be closed as far as the IRS audit was concerned.
“Further, the IRS auditors advised the court as the IRS Audit was in the final settlement phase that it would not be necessary to issue revised W-2s for employment tax issues,” Workman wrote.
During the separate legislative audit process Justice Ketchum had requested revised W-2s for 2012 to 2016, the years he had used a state-owned Buick to commute to the court from his Huntington home and for several golf outings. The court complied with Ketchum’s request.
“When the amended W-2s are given to me, I will fully comply by paying any taxes due for use of the state automobile,” Ketchum wrote in his own memo to the legislative auditor.
There is no indication that Loughry did the same, however. The separate legislative audit concluded that Loughry had likely used one of the court’s Buick’s for personal travel several weeks a year, several years in a row.
Loughry wrote in his own memo that he disagrees with the conclusions of the legislative audit.
In her memo, Workman referenced West Virginia Code 6-7-5, which deals with mileage and expenses of judges.
“The IRS auditors advised the court that since mileage reimbursement payments made by the court pursuant to this code section is for ‘commuting,’ these payments should always be considered taxable income to the recipient going forward from April 1, 2018,” Workman wrote.
“Based upon this, the court does not believe any amended W-2s are necessary relative to these payments for the tax years encompassed by the IRS settlement.”
After the separate legislative audit was presented to lawmakers last Monday, Workman spoke about several aspects of court spending with media in a Capitol hallway.
“It was all related to tax issues,” Workman said. “As part of that audit, the Supreme Court was able to settle the matter with the IRS. That was in connection with some car use, some of the 15-cents-per-mile reimbursement and some of the per diem.”
Workman indicated in her comments — as she did in her memo — that the IRS matter has been resolved.
“The IRS determined those were taxable matters. The Supreme Court paid the cost, but they didn’t place any penalties on us. The IRS at that time determined that employees to whom W-2s were not issued, they were not at fault and therefore there was no need for us to issue amended W-2s,” Workman said.
“The court thus far has taken the position that because the IRS, at least implicitly, indicated to us that all of those tax issues were settled by the settlement agreement, we’ve taken the position and were informally told that we don’t need to issue amended W-2s.”
Workman said that issue might need a second look, though.
“However, I’m going to recommend to the court that we go back to the same IRS agents and get a clarification on that issue,” she said.
Here is the memo that Workman wrote that references the IRS audit: