IRS Demands $1.2M From City Of Pineville

PINEVILLE, LA (AP) — The IRS is demanding the City of Pineville pay about $1.2 million in back Social Security payments that city officials don't feel should be owed.

         Mayor Clarence Fields tells The Town Talk’s Richard Sharkey the city is studying its options to appeal the IRS' determination that the city and its firefighters should have been making Social Security payments for the firefighters for 35 years – even though the firefighters are in a state retirement system.

         The Internal Revenue Service is trying to collect for a three-year period that amounts to approximately $1.2 million.

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         If the city ends up having to pay, "the big problem is coming up with $1.2 million," Fields said, "and we could potentially have to take out a loan."

         Also, he said, the financial impact would be felt in future years by the city and firefighters, who would have to start making Social Security payments.

         City Attorney Mark Vilar said having to make the payment would be tantamount to "an immediate pay cut" for firefighters because they would begin paying into the Social Security system while likely getting little to no benefits.

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         Vilar is "evaluating appellate options" to the IRS demand for payment. Possibilities include going through the IRS, through the Social Security Administration and "direct action into either federal or state court."

         "All of those options are being looked at. Nothing's off the table," he said.

         In many cases, public employees who are part of a public retirement system, such as state workers, aren't included in the Social Security system. Pineville firefighters are part of Louisiana's Firefighters' Retirement System and have been for 35 years.

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         The city told the IRS that city firefighters opted out of the Social Security system in 1980 when they joined the state retirement system, "and they (IRS officials) are taking the position that we didn't," Vilar said.

         "They asked for the paperwork to prove it from 35 years ago," said Rich Dupree, the mayor's chief of staff. Vilar said the city doesn't have the paperwork from 1980 to prove the firefighters opted out.

         Fields doesn't think it's fair that the city is being asked to make the payments.

         "Ever since our firefighters joined the Firefighters' Retirement System, they were under the impression that they had opted out of paying into the Social Security system," Fields said. "The IRS is saying that we should have continued paying into the Social Security system, but we beg to differ a bit, particularly after 35 years. Nobody said anything in 35 years, particularly the Social Security Administration."

         If the city's planned appeal of the IRS demand is unsuccessful, "we're looking at about $1.2 million that we'd have to come up with immediately, and also our firefighters would begin paying into the Social Security system," the mayor said.

         The city would have to make the payments for the firefighters for the three-year period as well as the city's required matching payments.

         If the city loses its planned appeal, firefighters would have to pay about 8 percent of their salaries to the Social Security system moving forward, Vilar said. The city's amount going forward would be approximately 6 percent.

         For more information

 

 

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