The Rhode Island Department of Administration (DOA) is working to correct erroneous tax documents recently sent to some state workers and reissue new ones, the agency confirmed in an email Wednesday.
The forms are W-2s, officially known as Wage and Tax Statements, and they contain the most essential information about a workers’ wages, such as total earnings and withholdings for federal, state, and payroll taxes. The forms are used to file tax returns and are required by federal law to be sent out by Jan. 31 each year. This year, the deadline stretched to Monday, Feb. 2, because Jan. 31 was a Saturday.
At least one glaring error surfaced in this year’s batch of W-2s for state workers. Their employer was listed as the “State of Rhode Island Umbrella Company.”
Karen Greco, a spokesperson for the department of administration, confirmed via email Wednesday that an undisclosed number of employees received forms that were “populated with incorrect information.”
Greco said that, following a Tuesday letter from Gov. Dan McKee, the department is doing a “full review” to determine the cause of the error.
“The State is in the process of reviewing what adjustments need to be made to W-2 forms and sending corrected forms to all impacted employees as soon as possible,” Greco added.
As for the umbrella, Greco said it references a label within the state’s Enterprise Resource Planning (ERP) system — the payroll for state employees which debuted somewhat unsmoothly in December, with workers claiming there were missing wages and other remittance problems.
“The State of Rhode Island Umbrella Company refers to the way the three branches of government and the three colleges are structured within the ERP system,” Greco said, adding that the updated forms will “avoid additional confusion” by listing the employer as “State of Rhode Island.”
Greco did not provide an estimate of how many employees were affected, whether any boxes were wrong beyond the “umbrella company” labeling, or which state agencies were impacted.
The problems in December and January with the new ERP — such as absent wages, wrong pay, and overtime, benefit, and deduction errors — led to heightened scrutiny and attention on the system, which took six years to plan and build at a cost of over $91 million. McKee wrote to the administration department’s director Jonathan Womer on Tuesday with directions to correct the problems.
“This latest issue has understandably added to the ongoing frustration experienced by employees and their families following the ERP system launch,” McKee began in his letter, noting that W-2s are “critical tax records that employees rely on to meet personal, legal, and financial obligations…[and can] impose real burdens on employees.”
McKee’s office and the DOA have been meeting consistently with the state’s ERP implementation partner, Accenture, to get to the bottom of payroll and ERP issues, the governor said. But the latest debacle, McKee argued in his letter, “undermines confidence and highlights the need for stronger quality control measures.”
Accenture — a global consulting and professional services company with offices across the world, including Boston — did not respond to a request for comment Wednesday.
McKee directed the DOA to find the root cause of the W-2 errors, and whether they stem from problems with system configuration, data processing, internal controls, issues with the vendor, or some other source. Additionally, McKee told Womer to provide a “clear and definitive timeline” for employees as to when corrected W-2s will go out, plus “step-by-step guidance for employees explaining how to proceed.”
“Employees should not have to speculate about what went wrong, what is being done to fix it, or how they should proceed,” McKee wrote.
Richard Ferruccio, president of the Rhode Island Brotherhood of Correctional Officers, said via text Wednesday that “the governor was personally involved in a meeting with all labor unions this afternoon.”
“We appreciated his involvement personally,” Ferruccio added.
What Ferruccio and his fellow union members did not appreciate was another snafu, calling it “the latest and most embarrassing failure” in Rhode Island’s ERP rollout. Yes, DOA “moved quickly once the error was identified,” Ferruccio acknowledged.
Members of the correctional officers’ union are among the state workers impacted, Ferruccio said, adding that he was “shorted over $6,300” in a previous check during the earlier payroll problems.
“But they paid me in full last check,” Ferruccio said, adding, “And I don’t work for the umbrella company.”
“But this mistake should never have occurred,” he went on. “It just adds to a long list of payroll and administrative failures that have already eroded confidence in the system. When the ERP system can’t consistently process paychecks and now can’t correctly provide required tax documents, that’s not a technical hiccup. It’s a serious management failure with real financial consequences.”
Ferruccio suggested the state was in violation of the Jan. 31 deadline for W-2s because of the error that it “may cost the state federal penalties of up to $60 per W-2.”
The IRS can indeed penalize employers for late or incorrect information on returns. The size of a penalty depends on how much time has passed since the original deadline. A correct filing within 30 days of the due date allows for a $60 penalty per W-2, up to a maximum of $698,500 per year in penalties. The penalty fee rises to $130 for forms filed more than 30 days post-deadline but before Aug. 1. That penalty maxes out at $2,095,500 per year.
Michael McDonald, president of RI Council 94, said via email Wednesday that his union was aware of the incorrect W-2s.
“We expect the state will make this a top priority, correct the W-2s and reissue to employees as quickly as possible,” he wrote via email.
McKee’s rival takes jab
In 2020, a digital services team working under the U.S. General Services Administration, 18F, reported that large-scale government software rollouts have a tiny success rate: Only 13% of projects priced over $6 million are seen to completion on time and within budget. ERP state government project budgets typically cost millions of dollars — Texas, for instance, estimated spending $285.7 million on its rollout, and Illinois’s comptroller even stopped payments for ERP development in 2017 when it seemed the $250 million project was becoming wildly expensive.
Still, the ERP problems have arguably lodged a proverbial thorn in McKee’s side.
Employees should not have to speculate about what went wrong, what is being done to fix it, or how they should proceed.
Helena Buonanno Foulkes — McKee’s opponent in September’s gubernatorial primary — pounced on the umbrella mishap Tuesday, seizing it as another opportunity to critique McKee.
In a statement Tuesday, Angelika Pellegrino, a spokesperson for Foulkes’ campaign, wrote that McKee’s administration “continues to prove it is simply not competent enough to govern.”
“And when presented with this new screw-up, Dan McKee takes the bold action of…..sending a second strongly worded public letter to…..his own employee. Rhode Islanders are ready to restore competence and accountability to the governor’s office by electing Helena Foulkes this year.”
Foulkes also quote-tweeted a post by NBC10’s Brian Crandall about the issue, and added no written commentary, opting instead for a photo: An edited image of a black umbrella overlaid on the Rhode Island State House, its black polyester extending over the building’s marble dome, with the Independent Man sticking out from atop the spokes.
An X user replied to Foulkes’ tweet: “Cute jokes but…public servants aren’t being paid and can’t file their taxes. Is this how you will be as governor? Poking fun at their expense?”
“It’d be better if you shared what you would do differently & better please,” the reply continued. “I’m just so tired of the memeification of everything.”
Pellegrino wrote in an email Wednesday afternoon, “As governor, Helena will offer competence and consistent oversight, including regular in person check ins with accountability metrics for all major projects.”
“She will not govern by sending her own employees performative public letters,” Pellegrino added.
This story was originally published by the Rhode Island Current.
