IRS fines Marion $196,972 for failing to file health insurance information form in 2020

The City of Marion is facing yet another financial setback, this time in the form of a steep penalty imposed by the Internal Revenue Service (IRS) for failure to file a required form.

The IRS previously fined Marion $153,000 after the auditor's office, under the administration of former Auditor Robert Landon III, mistakenly sent $1.28 million in payments to the State of Ohio that should have been sent to the IRS. The fine stemmed from the city not paying the federal income tax withholdings for city employees in quarters three and four of 2020 and parts of the first quarter of 2021.

According to an ordinance that Auditor Miranda Meginness submitted to the Marion City Council finance committee on Oct. 12, the IRS has fined the city $196,972.39 for "failure to file and failure to furnish" form 1095-C for fiscal year 2020, when Landon was still the city auditor.

Additionally, Meginness submitted an ordinance to the finance committee seeking $20,000 to pay the law firm Vorys for "specialized services associated with federal tax law to pursue further appeals.

1095-C form is about employer provided health insurance

According to the IRS website, Applicable Large Employers (those with 50 or more full-time employees, like the City of Marion) are required to send form "1095-C, Employer-Provided Health Insurance Offer and Coverage" to "certain employees" along "with information about what coverage the employer offered. Employers that offer health coverage referred to as 'self-insured coverage' send this form to individuals they cover, with information about who was covered and when."

According to the IRS website, the "issuers of the form," in this case the City of Marion, are required to file the information with the IRS.

Meginness said she received two separate notices from the IRS about the violation on Sept. 18 and Sept. 25, respectively. One notice informed her about the city's failure to file form 1095-C with the IRS in 2020 while the other notice informed her about the city's failure to furnish the form to city employees.

Meginness said her office filed form 1095-C with the IRS this year, but noted that she would have to confirm whether the form was filed in 2021 and 2022.

Additional penalties could be coming

Councilman Jason Schaber, 3rd Ward, told the Star that Deputy Auditor Marden Watts informed him last week that the auditor's office has not filed form 1095-C with the IRS "for several years." Schaber said Watts further noted that the city "will likely see three more letters from the IRS (each) asking for ($196,000)" in penalties.

Schaber said despite the fact that Meginness received two notices from the IRS in September that city council was not informed about the IRS fine until he received an email from Meginness at 11:01 a.m. on Oct. 12 asking for the two ordinances to be added to the Oct. 16 finance committee meeting agenda. He canceled that meeting.

City council committees have met twice and the full council has also met twice in regular session since the auditor received the first notification from the IRS on Sept. 18.

City councilman criticizing auditor's performance

Councilman Ayers Ratliff, 2nd Ward, who has been the most vocal critic of Meginness on city council, expressed frustration with both Meginness and the inaction by his fellow city council members.

"It is another sad day here Marion where the auditor has failed to do their job and the citizens are left holding the bag. I did everything I could to sound the alarms on the previous Auditor Robert Landon and am doing the same with our current Auditor Miranda Meginness," Ratliff told the Star.

"The problem is that a majority of city council does not have backbones enough to stand up and say enough is enough, and take action before things get totally out of hand," Ratliff added. "I suspect we will find that the same forms were not completed by the auditor in '21, '22 or '23 resulting in over a half-million dollars owed in fines and penalties to the IRS."

Councilman Aaron Rollins, At-large, told the Star that he is "extremely disappointed in another failure in the auditor's office."

Looking for solutions

"I became aware late last week when the finance committee received the draft appropriation to pay the penalties. Finance chair (Schaber) asked if the auditor had contacted the IRS to ask about options or possible forgiveness. She indicated she had not reached out to the IRS," Rollins said. "So we suggested she do that and we decided it best not to have the finance meeting until we had some clear guidance from the IRS and some answers from the auditor.

"I put forth a motion a few weeks ago to have the auditor reach out to the (Ohio Auditor of State's) Local Government Services which passed through council. It's disappointing we had to force the request for help, but we are going to get that help."

Marion City Council is scheduled to meet in regular session at 6:30 p.m. on Oct. 23 at City Hall. To see meeting agendas, go to the City of Marion website www.marionohio.us. To listen to audio recordings of city council meetings, go to the City of Marion Ohio YouTube channel.

Email: ecarter@gannett.com

This article originally appeared on Marion Star: City of Marion fined $196,972 by IRS for not filing health insurance form