By James Vaznis GLOBE STAFF –
The City of Boston paid nearly $1 million in penalties to the federal government after an IRS audit revealed wide-ranging problems with the city’s payrolls, from schools paying stipends to individuals under the table to the city failing to deduct Medicare withholding taxes for many employees, according to findings released Tuesday by the city.
In all, the IRS issued seven findings, four of which centered on mismanagement of student activity accounts at more than a dozen Boston schools. The three other findings focused on city payrolls. In addition to the Medicare deductions, the city was cited for a failure to deduct “deferred compensation” for some employees who do not qualify for the city’s pension plan and overtaxing some earnings.
The IRS described broad financial dysfunction in the School Department’s oversight of the funds and listed myriad excuses from school employees: