Almost $12,000 in penalties and taxes had to be paid by the city of Nitro, WV following an Internal Revenue Service audit.
"The reason they came in for an audit was we had a fire department individual who was paid as a fireman and also got a 1099 as the pool manager," said treasurer John Young.
A city employee working as a contractor for the city in his off hours prompted tax officials to take a closer look. They found other problems too. The penalties and taxes were only for 2011.
"They could have audited us for 2012 and 2013 and found the same things it has been done this way since I came," Young said.
Auditors found numerous employees that were listed as contractors that should have been considered city workers. Those positions included janitors, a library worker, the city attorney, judge and prosecutor.
Also the IRS said only clothing with a city logo could be included in the clothing allowances for employees. Plain pants would be considered a fringe benefit and needed to be added to pay checks and taxed.
Young said since the audit, the city has taken action to correct the mistakes.
"We made all of these people employees. We changed our clothing allowance so that it is done properly. The auditor gave me some other tips and things that I should do. They just wanted us doing it right from here forward," Young said.
Young added that even after paying the penalties and taxes the city is still finishing the year with a budget surplus.