IRS audit could cost LISD - KCBD NewsChannel 11 Lubbock

3/3/10

IRS audit could cost LISD

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LUBBOCK, TX (KCBD) – LISD already pays more into their employee retirement plans than most school districts in Texas. Now, as a result of a random IRS audit, the district may have to pay in even more.

"The Board of Trustees in the 1950's was looking out for employees... it seems a little unfair that we're being punished for that by having to pay into both systems," says Nancy Sharp, LISD Communications Director.

In the 1950's, district employees who were not teachers or administrators could not pay into the teacher retirement system, so they had not retirement plan.

To help them out, LISD entered into a 2-18 agreement to enroll them in social security. Later the rules changed, and the state required all full time district employees to pay into the teacher retirement system, but the federal government would not allow the district to stop paying social security on those employees.

So for years, the district has paid into two different retirement plans for many employees, but most do not receive any extra benefits, and it is costing the district quite a bit of money.

"We made an appeal to the legislature to try to help get some financial help for paying those Social Security benefits," Says Sharp.

They asked the legislature for $1 million a year to help offset extra costs, but didn't get it.

An ongoing IRS audit may add new employees to the list LISD already pays twice for in retirement.

"For certain employees, they're saying that we should be paying social security on them. We actually disagree because we've been paying for those employees into TRS, such as nurses, librarians, counselors," says LISD Superintendent Karen Garza.

For now, both the district and the IRS are waiting on the Social Security Administration to give their own opinion, and LISD hopes they won't have to pay any more than they already do, for benefits not received.

"It's very complicated, and it could go on... It's been going on for years, and it could go on for many years to come," says Garza.

LISD says there is no precedent in Texas for a case like this, but in other states, the IRS has not required any back payment, but they have required districts to pay more going forward.

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