Will Co. (ECWd) -
The old phrase of what comes first; the chicken or the egg seems to come into play quite a bit when we look at local government and their operations.
Former DuPage Township Supervisor Bill Mayer appears to have once again taken steps which appear to put the egg before the chicken.
Since the creator is always greater than the created (chicken and egg), let's start from the beginning.
The compensation setting resolution for elected officials outlines that the Supervisor is to be paid $29,000.00 a year. There is no provision for health insurance for the Supervisor. The only other compensation permitted in this resolution for the Supervisor is participation in IMRF. Keep the IMRF issue in your mind for another bombshell article to come.
In January of 2018, Mayer has the board vote on a new policy manual. One that contains a clause allowing elected officials and family members to participate in the health insurance at their own cost.
Most people would understand this to mean, you get paid your salary as set by the resolution, which has all the appropriate taxes and withholdings deducted (the chicken), and then you take the balance of your money and pay for the cost of your insurance (the egg).
Not the case with Bill Mayer
Mayer established a health insurance policy for himself, his wife Christine, and three dependent children with an effective date of February 1, 2018. The first question, is this the real reason the policy was changed the month earlier, so he could obtain health insurance for himself and his family on the Township policy?
Looking at his January and February 2018 pay, prior to this new benefit he created, appropriate Federal and State taxes were deducted according to the ledger provided from the Township. However, the first time Mayer actually pays for his policy is AFTER he is receiving the benefit. Thus during the first 26 days of February, he has provided himself a benefit of health insurance that was not part of his compensation setting resolution. This would constitute an increase in compensation during his term of office, which could constitute a violation of the law.
The annual cost of that policy was $22,186.35.
From February 26, 2018, through the rest of 2018, there are no State or Federal taxes being withheld and the insurance premium is being recorded as a Deferred Compensation. Health insurance is not deferred compensation. Additionally, the FICA and IMRF columns continue with the same contribution figure, unlike the taxes. Those two columns have a long term benefit to Mayer when it comes to retirement.
As recorded, only $627.54 was withheld for Federal taxes in 2018, which should have totaled $5,020.32 ($201.18 per pay periods times 24 pay periods.) State tax reflects only $117.54 was withheld, which should have totaled $940.32 ($39.18 per pay period times 24 pay periods).
The way it is recorded in the ledger, Mayer was paid $28,999.92 in 2018 yet as can be seen in the ledger, less than $750.00 was withheld for Federal and State income taxes. Recording his pay and health insurance obligation the way they did, Mayer ensures $5,215.56 stays in his pocket instead of going to the Federal and State government.
Mayer and his wife had tax liens against them covering three years as reported in this article, totaling $45,275.33.
We understand the Supervisor is permitted to use his funds as he sees fit, however as the treasurer of the public body, he has a duty to first ensure all compensation is paid and appropriate withholdings are taken out based on the filed W-4 IRS forms.
In order to legally go from having Federal and State income tax withheld to none being withheld (exempt), a change in the W-4 information must be made. The only way a person can have zero withholding, legally, is to follow the IRS rules.
"If an employee qualifies, he or she can also use Form W-4.pdf to tell you not to deduct any federal income tax from his or her wages. To qualify for this exempt status, the employee must have had no tax liability for the previous year and must expect to have no tax liability for the current year. A Form W-4 claiming exemption from withholding is valid for only the calendar year in which it's filed with the employer. To continue to be exempt from withholding in the next year, an employee must give you a new Form W-4 claiming exempt status by February 15 of that year. If the employee doesn't give you a new Form W-4, withhold tax as if he or she is single with no withholding allowances. However, if you have an earlier Form W-4 (not claiming exempt status) for this employee that's valid, withhold as you did before."
Again, in order to qualify for a federal tax exemption status, the employee, Mayer, must have had no tax liability for the previous year and must expect to have no tax liability for the current year. Considering he receives $29,000.00 a year in compensation from the Township and the fact he had tax liens against him, it is hard to imagine there is no tax liability.
We have requested a copy of his W-2's to see how the health insurance benefit is reported and W-4's to see if proper withholding documents were provided.