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Supreme Court paid $227,541 after IRS Audit

CHARLESTON, W.Va. — The state Supreme Court paid $227,541 to the Internal Revenue Service as a result of an audit that lasted nearly a year.

The payment was calculated based on tax withholding the Court should have made.

Although spending decisions by Supreme Court Justices have been under public scrutiny for months, none of the justices were among those affected by the audit’s findings.

The IRS determined that the Court needed to make federal tax payment adjustments, mostly dealing with workers classified as independent contractors who should have been treated as employees for tax purposes.

Another finding had to do with per diem payments that should have been treated as taxable to the employees who received them.

“The Court welcomed the opportunity to meet its obligations under federal tax law and regrets the errors made,” the Supreme Court stated. “We are fully committed to compliance with our federal tax obligations in the future.”

MORE: Read the Supreme Court’s summary of the IRS Audit.

The Supreme Court released a summary of the IRS audit to MetroNews on Friday afternoon.

The court had initially declined a request to release the audit, saying it isn’t a public document.

Then, after receiving a Freedom of Information Request from MetroNews, the Court released a summary and a redacted resolution document from the audit.

“We believe that these documents are confidential and exempt from disclosure under the Freedom of Information Act,” the Court wrote.

“First, they contain personal tax information regarding individual employees of the Court and those employees are entitled to their privacy. Moreover, under federal and state laws, the tax return documents are confidential.

“However, in the interest of transparency, the Court makes this statement and discloses documents relating to the IRS audit. It should be emphasized that none of the employees listed in the Proposed Notice of Adjustment documents committed any wrongdoing and none of the employees listed are Justices.”

The IRS audit covered the tax years 2014, 2015, 2017 and 2018 through March 31.

The Supreme Court described it as a routine compliance audit of a broad range of issues including payroll processes and procedures, travel reimbursements and related policies, payments to independent contractors, educational reimbursements and related policies, payments to independent contractors, educational reimbursements and classification of employees.

The audit started about this time last year and concluded early this year.

The resolution closed the audit and resolved the federal tax matters.

The IRS audit was first mentioned publicly during the context of a separate legislative audit that focused more narrowly on the use of state vehicles by Justices Allen Loughry and Menis Ketchum.

“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,” Chief Justice Margaret Workman wrote in a memo responding to the legislative audit.

“The Court reached a resolution with the IRS on a number of other items, and one of the terms of the agreement was that issues related to tax years 2014, 2015, 2016, 2017 and 2018 through March 31, 2018, would be closed relative to the scope of the IRS Audit.”

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.

That followed a series of controversies over Supreme Court spending decisions.

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