Hundreds of current and former D.C. government employees did not have Social Security and Medicare taxes withheld from their paychecks.
The problem dates back as far as 10 years, officials with the D.C. Department of Human Resources told News4.
The problem was discovered after Department of Human Resources Director Ventris Gibson ordered a comprehensive review of the D.C. government’s retirement system, which began in March.
“We are so sorry that this has happened, and I recognize that sometimes, when we are looking at process and procedures, old things are uncovered," Gibson said. "And our goal is to make our employees whole to the best of my ability and within the confines of the law and to let them know we are here to help them get through the situation as much as we want to get through it.”
D.C. government contacted the IRS and the Social Security Administration and is working to make the employees whole, Gibson said.
Gibson would not say exactly how many employees are impacted by the error or the dollar amount in question but said it spans all agencies of the government, including independent agencies. Current, former and retired employees have been affected, Gibson said.
“There is no pattern," she said. "It’s throughout the city, it’s years of service, it’s types of service, it’s retirement plans, and even those independent agencies that are not under the authority of the mayor it impacts as well.”
Government employees will not be responsible for paying back the money that was not withheld, but they may face tax implications depending on how they file their income tax returns. Affected employees will be provided with free tax assistance, Gibson said.
“We will work with them that the employer and employee shares of Social Security tax, we will take care of that financial burden for them," Gibson said. "And we will go to the Social Security Administration to amend their records over time so that it is accurately reflected, and through the accounting firm efforts, we are hopeful of identification and tax remediation as well as how do we look at data and make sure this type of error doesn’t occur in the future."
Gibson does not fault employees for not noticing the error, despite the fact it was a recurring error for as many as 10 years. The line item on their pay stubs which reflects the FICA withholdings was omitted, Gibson said.
Mayor Muriel Bowser has authorized the hiring of an outside accounting firm to perform a complete audit of the District’s retirement system. Gibson said they won’t know the full scope of the problem until that audit is complete. Gibson emphasized that she doesn’t believe the errors were intentional.
Notices to the hundreds of employees who have been identified as being impacted by this went out Friday. Every D.C. government employee will receive a guide as to how to read and understand their pay stubs, Gibson said.
The problem has been corrected on the paychecks for current employees who have been identified, which will mean less take home pay every week beginning with their next paycheck, Gibson said.
“I am so sorry about it because I can imagine what kind of a blow this would be to someone, especially someone who is living paycheck to paycheck," Gibson said. "What I would say to them is this is the right thing to do because we are looking out for their financial interests long term, and that’s retirement. It would be a bigger blow to get to retirement age and find out it’s not there.”