SOUTHERN ILLINOIS UNIVERSITY PHYSICIANS AND SURGEONS, INC.
June 30, 2001
Summary of Findings:
Total this audit 1
State of Illinois
WILLIAM G. HOLLAND
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SIU PHYSICIANS AND SURGEONS, INC. SOUTHERN ILLINOIS UNIVERSITY AT
FINANCIAL AND COMPLIANCE AUDIT
For The Periods Ended June 30, 2001
|FINANCIAL OPERATIONS (Current Funds - unrestricted)||
Net professional fees
General and operating
|SELECTED ASSETS BALANCES (All Funds)||
At June 30, 2001
At June 30, 2000
Due from SIU
Plant and equipment
|During the audit: Mrs. Elizabeth Collier
Currently: Mrs. Elizabeth Collier
Payroll taxes totaling $4,318 were not paid or withheld
FINDING, CONCLUSION, AND RECOMMENDATION
NEED TO FOLLOW PAYROLL REQUIREMENTS OF THE INTERNAL REVENUE CODE
Southern Illinois University Physicians and Surgeons, Inc. (the Corporation) did not pay payroll taxes on a termination settlement to a physician. The settlement was the result of a termination agreement with a member physician. The Corporation did not pay the employer's share of required payroll taxes in the amount of $2,159 as required by the Internal Revenue Code.
In addition, the payroll insurance taxes for the employee's portion that should have been withheld from the physician, an employee of the Corporation, were not withheld. Therefore, the Corporation may also be responsible for paying $2,159 on the employee's behalf.
Corporation personnel indicated they made the conscious decision not to pay payroll taxes on the termination settlement. Corporation opinion was the settlement was disbursed to an attorney and not directly to the former employee. Therefore, the settlement was not considered payroll. Underpayment of payroll taxes could result in a request for the unpaid tax plus additional penalty and interest charges by the Internal Revenue Service. (Finding 1, page 11)
We recommended Southern Illinois University Physicians and Surgeons, Inc. make the required payment due as required by Internal Revenue Service rules and regulations.
Corporation officials stated that there could be an exposure of $2,159 for employer taxes. The settlement check was written with full knowledge that the terminated physician was to report this as income. The Corporation reported the payment as a 1099 income item to the IRS. Should the IRS notify the Corporation that there is an outstanding liability, the Corporation will resolve it expeditiously.
Mr. Peter R. Cadwell, Chief Financial Officer provided the Corporation's response.
Our auditors stated the June 30, 2001 financial statements of the Corporation are fairly presented in all material respects.
WILLIAM G. HOLLAND, Auditor General
SPECIAL ASSISTANT AUDITORS
Kerber, Eck & Braeckel LLP were our special assistant auditors for this audit.