Lu, a recent State Board of Account Audit, supports your theory.
http://www.in.gov/sboa/WebReports/B41655.pdf page 62 & 63
PAYROLL EXPENDITURES AS VENDORS
The City contracts with various promoters for events held at the Civic Center. The contracts generally
allow for the promoter to retain the ticket sale revenue, while the Civic Center is paid a facility rental fee, and
expenses.
The expenses include amounts to compensate individuals for working security, the box office,
ticket takers, ushers, maintenance, emergency standby services, etc.
For these events, the Civic Center is responsible for employing, determining the rate of compensation,
and remitting wages to the event workers.
All are paid in cash. The wages paid are not accumulated for reporting to the Internal Revenue Service or the Indiana Department of Revenue in accordance with Federal and State laws.Some of the individuals working at the events are also employed by the City on either a full-time or
part-time basis for various departments in the City, including the Park and Recreation, Police, and Fire
Departments. The compensation paid for working these events does not agree to the amounts approved in
the Salary Ordinance as compensation for their other employment positions.-63-
Some promoters may request that the Civic Center provide staff, but the promoter pays the staff
directly. In these instances, the Civic Center will generally determine the rate of pay; however, since the
promoter is paying the staff directly, it is not clear who would be responsible for the reporting of the wages to
the Internal Revenue Service or the Indiana Department of Revenue.
The City also employs individuals to work at the Festival of the Lakes, a Park Department sponsored
event. These individuals are paid in accordance with rates established in the Salary Ordinance for part-time
employees; however, they are not paid through payroll. These individuals are paid on a vendor claim.
A vendor check is issued to the commission members of the Human Rights Commission. The
amount paid to each is $50 per attendance at each Commission meeting. This compensation is not
addressed in the salary ordinance, and they are not paid through payroll.
All compensation and benefits paid to officials and employees must be included in the salary ordinance
adopted by the legislative body unless otherwise authorized by statute. Compensation should be
made in a manner that will facilitate compliance with state and federal reporting requirements. (Accounting
and Uniform Compliance Guidelines Manual for Cities and Towns, Chapter 7)
[url]Each governmental unit is responsible for compliance with all rules, regulations, guidelines, and
directives of the Internal Revenue Service and the Indiana Department of Revenue.[/url] All questions concerning
taxes should be directed to these agencies. (Accounting and Uniform Compliance Guidelines for Cities and
Towns, Chapter 7)
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