School district receives complete $642,149.51 IRS refund
Mondays might normally be a day in which people sullenly start their work weeks, but it can also be a day in which joyous work news can be received.
One prime example is officials at the Marshalltown School District received word — and a check — of a complete refund from the Internal Revenue Service.
Business Director Paulette Newbold said she heard colleagues whispering outside her office door — a piece of mail from the IRS was received. Who was going to deliver the dreaded envelope to Newbold? Because the mail the district received from the IRS since 2018 never contained good news. Then, someone noticed a check in the mail — a check for $642,149.51 — which is a complete refund of fees and penalties the district accrued.
“We were really excited,” Newbold said. “We were hoping to get at least 50 percent. We did not expect a full 100 percent. We are extremely satisfied with the efforts our attorneys put forth on behalf of the Marshalltown School District to get the money back.”
Superintendent Theron Schutte echoed Newbold’s surprise in receiving the full refund.
“We were pleasantly surprised to have received the full refund of the fees and penalties that we had paid as well as interest on that money,” Schutte said. “I would commend Paulette and her team as well for the countless hours that were put into this particular situation and any other ramifications that have resulted from it.”
The refund stems from former district payroll tax specialist Allison Meyer not paying payroll tax deposits on time from April 2017 to June 2018. Federal tax law requires large employers, such as the Marshalltown School District, to make payroll tax deposits the following day. The IRS was sending the district notification of the tardiness, but Meyer was the only employee receiving the notices.
In October 2018, the IRS slapped the district with $602,900 in penalties. Newbold said that money, plus the additional $40,000, came out of the district general fund.
It was into that fund that Newbold immediately deposited the IRS check. She herself drove the check to the bank.
Newbold gave credit to Marshalltown attorney Chris Wertzberger with Bradshaw, Fowler, Proctor & Fairgrave and Des Moines tax attorney Bruce Baker with Nyemaster Goode.
She said after the district learned about the actions taken by IRS, officials consulted with Wertzberger, who is the district attorney. He filed an appeal in September 2018. In December 2018, the IRS responded by informing the district that the penalties would not be removed. The district then hired Baker who filed a protest in January. Newbold said the response to that was a denial from the IRS. In June, she said Baker sent a final protest and the district received word in September that the IRS was reviewing the case.
“We had been going through the appeal process for the last 10 to 11 months,” Newbold said. “It was a long process.”
Already, she said people are making suggestions how the district should spend the refund — some of the suggestions have been using it to help pay for air conditioning for the school or for new tennis courts.
“The general fund is not used for infrastructure or construction projects,” Newbold said. “Those get paid for out of a separate fund. Eighty-eight percent of the general fund is used for salaries and benefits. The rest is used for things like tuition to other districts, utilities, transportation costs and curriculum.”
She said even after the IRS had taken the fees and penalties, and with a depleted student population, the district did not make any cuts.
Contact Lana Bradstream at 641-753-6611 or firstname.lastname@example.org.