Employees of the Central Florida Tourism Oversight District — formerly known as the Reedy Creek Improvement District — owe over $2 million in back taxes, according to a report last month.
The RCID was a special taxing district that oversaw the Walt Disney Company’s property in Orange and Osceola counties, though that changed earlier this year when lawmakers moved control over the district to the state.
On Nov. 28, the CFTOD wrote a letter to the IRS stating that 638 district employees hadn’t paid their fair share of taxes over the past few years.
In that letter, CFTOD officials said that the Walt Disney Company used to provide district employees theme park passes and discounts when the firm prepared its payroll taxes — just as Disney did with its employees.
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The payroll duties were later brought in-house at the district, though these passes and discounts were still provided to current and retired employees, the letter reads.
In addition, former district managers assumed that these passes and discounts didn’t have to be reported as taxable benefits, the letter says.
However, it was discovered in 2021 that the passes and discounts were supposed to have been reported to the IRS, though leaders were “distracted” by rumors about the district’s dissolution by lawmakers, CFTOD officials wrote.
After the state assumed control over the district in February 2023, the new board of supervisors decided to end the program for giving employees these passes and discounts, instead choosing to pay them stipends.
While the IRS wasn’t investigating the district, CFTOD officials explained they decided to pre-emptively write the IRS about the tax deficit to show “good faith.”
“The CFTOD’s acknowledgment of the error, coupled with the proactive steps taken to rectify the oversight by seeking professional assistance, underscores its commitment to ethical conduct and compliance with tax statutes and regulations,” the letter reads.
In total, the letter says that $2,146,449.66 of potential taxes were owed between 2020 and 2023.
CFTOD officials added that the district was willing to file the necessary tax forms to fix the problem, but issuing these corrected forms to all affected employees would cause too much confusion.
As a result, the CFTOD asked the IRS to issue a “closing agreement” to resolve the outstanding tax concerns.
Tracy Borden, a former district employee who left in July, told News 6 that she believes this is an effort to make the previous district administration look bad.
“This current administration would do anything to make the previous board and administration look like they weren’t doing their jobs and hiding important information, when in fact the opposite is true,” she said.
However, Certified Public Accountant Jeff Lareau explained that any sort of income a person receives is taxable, unless there’s a special rule that says otherwise.
“Reedy Creek failed to do what was needed to be done the first time around...” he said. “Any compensation you give to an employee, anything you give to an employee beyond De Minimis amounts has always got to be reported as wage-type income.”
News 6 has reached out to the CFTOD for more information, and the district responded with the following statement.
District administration will continue to advocate on behalf of District employees to the IRS that employees not owe or be responsible for the back taxes as it was not communicated to them by the prior district administration and board of the matter.
Central Florida Tourism Oversight District
The issue is set to be addressed during the district’s board of supervisors meeting on Wednesday morning.
In the meantime, the full letter can be read by scrolling down to the media viewer below.
Exhibit 56 November 28 2023 Tax Letter by Anthony Talcott on Scribd
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