State employees’ Medicare back-tax funding approved
December 9, 2013
The Legislative Interim Finance Committee on Monday approved the final piece of the funding to pay off back Medicare taxes for the state's judges and board and commission members.
The federal government began requiring state and local governments to pay into Medicare in 1986, and Nevada did so for nearly all employees. But for a couple of groups — most notably judges — neither the employee nor the state share was paid to the IRS.
Payroll discovered the problem this year and, rather than wait for IRS auditors to find the problem, reported it to the federal government.
That enabled the state to cut a deal letting it pay $1,695,276 in back Medicare payments. That covers the period from 2010 through today, as the IRS can only go back three years. Because the state reported the problem, the IRS forgave the potential penalties and interest.
Federal law splits the 2.9 percent of payroll that covers Medicare between the employee and the employer. The $1.7 million fronts the employee share as well as the state's share. Employees will pay the state back primarily through payroll deductions. Individuals can have up to three years to pay, if necessary.
The vast majority of the money is owed by Nevada judges — up to $10,500 apiece. Of the 527 people affected, 389 of them — board and commission members who make as little as $60 for each day they are actually in meetings — owe less than $200.
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Deputy Budget Director Stephanie Day told the committee there are only 111 judges who owe more than $1,000.
Courts Administrator Robin Sweet told lawmakers each judge on the list has been told how much he or she owes. If any former judges refuse to pay, Day said, the debt will be turned over to collections by the Controller's Office and sent to the IRS, which then would consider the money owed additional income and potentially fine the judges.
The funding was approved unanimously.