NWACC discusses tax penalties

BENTONVILLE—A payroll manager will be hired and changing pay period schedules are the two latest procedural changes designed to prevent future late payments from NorthWest Arkansas Community College to the Internal Revenue service.

The NWACC Board of Trustees discussed the issue Saturday during a retreat, which is a meeting where issues are discussed and consensus can be reached but no binding votes are taken.

Between 2009 and October 2011, the college was fined nearly $70,000 for late payments. Board members discussed what internal processes were being developed to prevent future problems. The college did not have a centralized person who was responsible for managing the payroll or delegating the responsibilities. That will be solved with the hiring of the payroll manager, college officials hope.

There were several times when electronic payments were not scheduled on time (they must be entered the day before the due date, not the actual due date), thus incurring a late payment. There were also some incidents were notices of changed deadlines were not received.

The second procedural change is that the entire college was moved to a unified, 26-paycheck pay period. Previously, the college was on a 24-paycheck pay period schedule, thus making some of the pay periods drastically different in amounts, said Marty Parsons, senior vice president of administrative services and chief financial officer.

Parsons been working to create standardized procedures and correct previous mistakes since joining the college more than a year ago.

“There’s been a lot of cleanup in a department that had little to no procedures,” he said.

Mark Lundy, board member and member of the college’s finance committee, said that during the process of improving the department it’s been discovered that over the last 10 years the late payments have happened several times.

“It’s happened before but (these recent incidents) are the first time it’s been reported to the board,” he said. “In my 12 years on the board, this is the first time it’s come before the board.”

Transparency in financial practices and reporting is part of the changes Parsons is working to make, according to the discussion.

“It’s important to be transparent,” he said.

Lundy said that if the new procedures do not solve the problem, then future steps will be taken up and not limited to outsourcing the payroll functions. Outsourcing payroll is not a common practice among community colleges.

Lundy, who is a certified public accountant, said that while he is “certainly not making light” of the recent problems, he views the problem from a different perspective. IRS notifications and late payments are often a cost of doing business, he said. Of all the late payment fines that have been paid, it’s been only a small percentage compared to the college’s overall payroll budget.

Several board members agreed that in comparison, the fines are a small percentage but that public perception and their fiscal responsibility are still vital considerations.

“People don’t care that it’s common,” Board Member Hadley Hindmarsh said.

An appeal was filed last month with the IRS regarding some of the fines but no decision has been given to the college regarding the appeal, said Steven Hinds, executive director of public relations and marketing.