CC - Item 6B - Funding the IRS Penalties of the Rosemead Youth AssociationROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: MATTHEW E. HAWKESWORTH, ACTING CITY MANAGER
DATE: JUNE 9, 2009
SUBJECT: FUNDING THE IRS PENALTIES OF THE ROSEMEAD YOUTH ASSOCIATION
SUMMARY
On May 12, 2009 staff brought a request to the City Council to assist the Rosemead Youth
Associaiton (RYA) in the payment of penalties that had been levied by the Internal Revenue
Service (IRS) totaling $9,890.43. During discussions at the meeting the Council directed staff to
work with the RYA and their accountant to determine if in fact the penalties could be reduced or
waived. It was believed at the time that if the City paid these penalties, the IRS might be less
willing to reduce or waive them when the appeal was received.
Since the original direction was provided staff has been.working with the RYA and their
accountant and have determined that it is in the best interest in the RYA to pay off the penalties
as soon as possible. The RYA President, Jerry Faustinos, has been in contact with the IRS
Agent assigned to their account and has been assured that if the penalties are paid off, it will not
affect the appeal process regarding the reduction or waiving of fees. He was told that if in fact
the fees were reduced, the IRS would refund any payments that had been made. Secondly, the
outstanding balance for the penalties are accruing additional interest penalties at the rate.of
22%. While the RYA is making monthly payments of $500 per month, the added interest is
consuming a lot of their payment. Lastly, the IRS has the ability to automatically withdraw funds
from the RYA's bank account which is making it difficult for the RYA to collect funds to start the
season. It is very realistic that any league fees for the upcomimng season or funds generated
by the fireworks booth to help pay for the upcoming season could be taken by the IRS for the
payment of outstanding penalties.
The RYA Treasurer has contacted the IRS and has obtained a new payoff statement that is
valid through July 2, 2009. Their current outstanding balance is as follows:
Tax Year
Amount
2004
$2,927.11
2005
$2,185.77
2007
$3,807.93
$8,920.81
Staff Recommendation
That the City Council provide direction regarding the contribution of funds to the Rosemead
Youth Association.
FINANCIAL IMPACT
There are currently $31,631 available in the Community Contributions account 4160-6320.01,.
ITEM NO.
APPROVED FOR CITY COUNCIL AGENDA:
City Council Meeting
June 9, 2009
Pace 2 of 2
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
Matt E. Hawkesworth
Acting City Manager