Finding Text
Federal Awarding Agency: U.S. Department of Health and Human Services
Pass-Through Entity: Sacramento County
Category of Finding: Allowable Cost/Cost Principles
Federal-Pass through Grantor: 7206000-23-136
AL No: 93.778
Finding: The audit identified that the non-profit organization had delinquent payroll taxes, which were paid after the
due date during the next fiscal year.
Cause: The Organization did not have adequate controls in place to ensure timely payment of payroll taxes. This could
be due to a lack of internal controls, poor communication among departments, or other factors that contributed to
delays in processing payroll tax payments.
Effect: The failure to pay payroll taxes on time could result in penalties and interest being assessed by the Internal
Revenue Service (IRS), which could result in a significant financial impact on the organization. Additionally, this could
damage the organization's reputation and relationships with employees, vendors, and other stakeholders.
Criteria: In accordance with IRS regulations, the failure to pay payroll taxes on time can result in violations of Internal
Revenue Code (IRC) Section 6656. This section imposes penalties and interest on late or delinquent payroll tax
payments. IRC Section 6672: Commonly referred to as the Trust Fund Recovery Penalty (TFRP), this section imposes
personal liability on individuals, such as corporate officers or responsible parties, for willful failure to collect, account
for, and pay withheld payroll taxes to the IRS. It holds individuals personally responsible for unpaid payroll taxes and
allows the IRS to assess penalties and pursue collection actions against them.
Questioned costs - $19,610
Repeat finding - Yes
Recommendation: The non-profit organization should establish and implement effective controls to ensure timely
payment of payroll taxes, including regular monitoring and reconciliations to ensure that all payroll taxes are paid on
time. This could include designating specific staff members responsible for payroll tax payments, implementing regular
reviews of payroll tax processes, and providing training to staff members responsible for payroll tax payments to ensure
that they are aware of the requirements for timely payment of payroll taxes. Additionally, the organization should
consider implementing automated payroll tax payment systems to streamline the process and improve accuracy and
efficiency. Finally, the organization should ensure that it has adequate reserves and resources to cover any penalties
or interest assessed by the IRS for late payment of payroll taxes.