CARSON CITY — Nevada has struck a deal with the Internal Revenue Service to repay $1.7 million in Medicare payroll taxes for judges and members of boards and commissions that the state overlooked for more than 25 years.
The federal government began requiring state and local governments to pay into Medicare in 1986.
But state Budget Director Jeff Mohlenkamp said judges and members of boards and commissions apparently fell through the cracks, and neither the employee nor state share was paid, the Nevada Appeal reported Friday.
The state discovered the problem this year and took it to the IRS rather than wait for auditors to find the issue.
The item, which goes before the Board of Examiners on Nov. 12, asks for nearly $1.7 million from a variety of state accounts to close the deal.
Under IRS regulations, the federal agency can demand payment dating back three years. Mohlenkamp said the IRS has agreed not to seek penalties and interest.
Medicare amounts to 2.9 percent of payroll — split equally between employee and employer. The state has been making the payments since July.
Mohlenkamp said that under the plan before the examiners next week, the state will front the employee share of the settlement — $847,648 from the payroll trust fund.
Employees will then be given up to three years to pay their share back through payroll deductions.
For those who have left state service in the past three years, the state will have to collect from them, Mohlenkamp said.
Mohlenkamp said 527 state employees are affected. For 389, the board and commission members who get very little compensation, the total owed is less than $200.
The big debts are owed on behalf of and by the state’s judges, in some cases up to $10,500.
All but $92,174 of the money is coming from sources controlled by the Board of Examiners, Mohlenkamp said.
That last piece is coming from the contingency fund and will require Interim Finance Committee approval.