Final documents were sent to the Internal Revenue Service (IRS) Friday, September 26, following an audit of The City of St. Ignace that focused on maintaining tax forms of independent contractors and the city's payment to them. A report on the audit is expected in October.

The city was chosen randomly for an audit of its 2006 financial records, said Clerk Renee Vonderwerth, as the IRS seeks to find loopholes in the 1099 form process and to educate municipalities.

This is the first IRS audit the city has had in at least 25 years, and the process was a learning experience, said Mrs. Vonderwerth. Based on the audit, the city now is updating its contractor files, making sure the proper tax forms have been completed and filed. The document of most interest to the IRS, she said, is the 1099 form, which reports the amount paid to an independent contractor.

Contractors for the city provide street paving, legal services, landscaping, carpet cleaning, and some equipment repair.

The IRS also is requiring that the city maintain similar records for golf course contractors. The golf course operates under the city's tax identification number, making the city liable for all taxes. The city pays wages and taxes for the golf course and charges an administrative fee for its work. The golf course then reimburses the city.

Lori Hill from the Marquette office of the IRS performed the audit.