Auditor candidate Thomas accuses Corlett of 'cover up' in tax-withholding discrepancy
AUSTINBURG TOWNSHIP - Ashtabula County Auditor's race candidate David Thomas held a press conference Tuesday morning, Oct. 9, at the Austinburg Town Hall about what he believes was the mishandling of tax withholdings by Ashtabula County Auditor Roger Corlett.
Thomas said he called the press conference at the urging of taxpayers to make public actions taken by the Ashtabula County Auditor's Office that he believes residents and taxpayers should know.
"The current County Auditor is running for re-election based on his slogan that experience and his degree matters. Using taxpayer dollars to subsidize county employees' income tax is the type of experience and practice of his CPA that the current Auditor has engaged in," Thomas said. "I ask, is this the type of experience we want for the next four years?"
Thomas said that on Tuesday, March 14, 2017, the Village of Jefferson alerted the County Auditor's Office of "major discrepancies for withholdings of income taxes owed to Jefferson for year 2016 by county employees."
Thomas provided copies of this email exchange and highlighted a response from Corlett to the Village of Jefferson that included the words "do not bill the employees" and "the county will make up the shortages."
"The current county auditor appears to have come to this conclusion not because it was the right thing to do, but because it was the quiet thing to do," Thomas alleged.
For some background, the Village of Jefferson has a 1.5-percent income tax on individuals working in Jefferson.
"It is the responsibility of the County Auditor's Office to correctly withhold income tax from county employees who work in Jefferson and pay the Village that withholding. The Village audited the Ashtabula County Auditor's office and found large discrepancies in County employee income withholdings," Thomas said. "The County Auditor's Office withheld a less-than-correct and incorrect amount from over 190 County employees' paychecks in 2016 alone. The shortages owed to the Village of Jefferson, based on information received from public records requests, were $6,381.11 for 2016 and $13,486.82 for that point in 2017. These shortages came from county employees in nearly every department who work in Jefferson. From $0.11 shortages in income-tax withholdings for some employees, all the way up to $700 shortages in income-tax withholdings to Jefferson Village."
Thomas said in his remarks that Ohio Revised Code Chapter 5747.06 paragraphs C and D state that the failure of the employer to remit income tax does not relieve the duty of the employee to pay the income tax: "the tax so required to be deducted and withheld shall not be collected from the employer." He also cited Ohio Revised Code chapter 718.03 paragraph E1: "An employee is not relieved from liability for a tax by the failure of the employer, agent of an employer or other payer to withhold the tax as required under this chapter or by the employer's, agent's, or other payer's exemption from the requirement to withhold the tax."
"These mean that if the employer does not withhold the correct amount of tax, it is the employees' legal responsibility to pay the income tax, not the employer. Having the county employees pay the correct income tax is not what the County Auditor's office did. Rather, the County Auditor used general fund taxpayer dollars to pay the shortage of county employee income tax. Rather than make these errors public, the Auditor silently paid the error from County taxpayer dollars," Thomas said.
Thomas said that everyone makes mistakes, especially in complicated matters like this.
"It is important to note that the county employees whose income tax was incorrectly withheld made no mistakes and likely do not know anything about this. These employees do the right thing and expect the County Auditor's Office to do the right thing, too. It is how those mistakes are responded to that is at issue here. This is Roger Corlett's cover up. Instead of the employees paying the correct difference to the Village of Jefferson for their income tax, county tax dollars from the general fund were used instead. Thousands of dollars of taxes paid by the public, instead of by employees, [were] used to cover these mistakes," Thomas said.
Thomas called for a full public disclosure of the discrepancies and update on the tax payments by the County Auditor's Office for 2016, 2017 and 2018.
"This type of practice in subsidizing county employee income tax is not fair for our taxpayers and should be stopped," Thomas said.
When contacted about the matter on Tuesday, Village of Jefferson Clerk/Treasurer Patty Fisher said that each year, there's a "reconciliation" with the income taxes, with the county sending over copies of the W-2 forms.
Fisher said the income-tax clerk pulled out the county employees, and they noticed that there were some inconsistencies in the percentages that were taken out for 2016.
Some employees did not have the right amount taken out, Fisher said.
Fisher said she contacted Corlett and said they needed to reconcile the amounts.
"We got it resolved," Fisher said.
Fisher said there was not a cover up involved, and that the employees had been told because they had to change their paperwork so the right amount would be taken out going forward.
She believes the income tax is confidential information, which is why names had not been discussed publicly, she said.
"There was no hiding of it," Fisher said.
Fisher said the issue came about because when a county department hires a new employee, the department heads have employees fill out paperwork, including what percentage is withheld.
"Everyone should be taken out at 1.5 percent," Fisher said. "They were letting the people choose what they want. They have no choice. It has to be taken out per our codified ordinances."
Fisher said it was the department heads' responsibility as the supervisors to make sure that information was correct.
"It's the department's responsibility. They're supposed to give the info to Roger Corlett," Fisher said. "It's really not any of Roger's responsibility at all."
It was the department heads that didn't send consistent info and weren't abiding by the codified ordinances of the Village of Jefferson, Fisher said.
When Corlett was made aware of the problem, he worked to have it resolved, Fisher said. Fisher acknowledged that some employees had been upset by the situation.
All but one of the affected departments chose, instead of going back to the employees and upsetting them any more, to pay the back taxes, Fisher said.
There was a letter given to the employees because the percentage had to be changed on their pay stubs, Fisher said.
"From then forward, the people were having it taken out correctly," Fisher said.
For the remaining department, they chose to have the employees pay, Fisher said. She said the village set up a payment plan with those employees, with no penalties or interest being charged.
To prevent the problem in the future, Fisher said contracts were set up so every six months, a list of all of the employees in each department is sent to the village.
On Wednesday, Corlett met with reporters to respond to Thomas' claims.
"First of all, there was no cover up," Corlett said. "Since I have been in office, I have always been open to the press and public. I am a problem solver, not a trouble maker. Dare I say, this is a political stunt to discredit me because my opponent has nothing better to offer."
Corlett said he worked with the Ashtabula County commissioners, the county administrator, Fisher, Jefferson Village Council and Jefferson's legal counsel about the issue.
"Everyone knew what the issue was," Corlett said. "Any discussion was in public. To my knowledge, there were no secret meetings."
He said 2016 involved a new process, after the state law changed and every city and village had to comply and draft new ordinances.
"Patty Fisher and I both knew that there might be complications implementing a new process. We were implementing a new agreement in 2016 for withholding Jefferson income tax on the county employees that work a portion of their time outside the village. The new village income-tax ordinance that became effective Jan. 1, 2016, required 100-percent withholding on all employees' wages, unless a special agreement was made with the employer," Corlett said. "Agreement between each elected official and the village had to be prepared. This process was not even complete until several months into the year."
Corlett said he depends on all elected-official offices to give him the correct information regarding their employees.
"This being the first year under these agreements, Patty Fisher and I worked together to find and identify those that were under withheld for 2016. We agreed on the result. I turned it over to the commissioners to decide what they would like to do. It was the commissioners' decision to pay that amount out of the General Fund and bill other respective funds, holding the employees harmless," Corlett said. "I was in agreement with that because it was a very small amount and seemed to be fairer to the employees. I believe the elected officials gained a better understanding of how important it is to give me good information regarding their employees."
Corlett said this resolution was a one-time deal, and if any future amounts are under withheld, the employees would be billed.
He also disputed the numbers cited by Thomas as to the amounts.
"Since Mr. Thomas' numbers come from documents I supplied, I would wonder why he couldn't get the facts straight. The final audit showed 46 employees that did not have enough withheld for various reasons and the dollar amount paid was $5,482.02 [for 2016], which the commissioners agreed to pay. The 2018 review of 2017 W-2's by the village turned up a shortage of $239 that we covered through taxes withheld," Corlett said. "I do not expect to have any major issues in the future unless the elected officials do not give me the correct information."
Corlett provided a copy of the check written to the village for 2017, showing $239.08. He also provided a copy of a voucher for the $5,482.02 as approved by the commissioners.
When asked about the discrepancy between the 2017 numbers in particular, Corlett said while that number is cited by Thomas as being for 2017, he believes it comes from a worksheet still part of 2016.
He also said the 2016 number may have started higher, but it came down as they reviewed each employee and how much they should be taxed depending on how much they work in the village and other factors, resulting in the final number of $5,482.02.
When asked about the Ohio Revised Code cited by Thomas, Corlett said, "As far as I'm concerned, it was legal. But I'm not the legal authority. The prosecutor and the commissioners were all involved in the whole process, and nobody questioned it. I can speak from prior CPA experience, usually the employer if they don't withhold, they're held liable. Now government's a little different, and I can see where that code section can be interpreted two different ways."
The commissioners decided to pay it, and the State Auditor did not find a problem with it for the audit of 2017, Corlett said.
Corlett believes the problem has been addressed and will not be an issue going forward.
"I'm an auditor from way back, and it has always been my philosophy that audits help you, they're not there to get you. That's the whole idea of auditing. You find out what's not working and you clean it up and go forward," Corlett said.