Officials with the Housing Authority of Baltimore City say they have uncovered an IRS error that led the federal agency to claim the authority owes more than $626,000 in payroll taxes.

Internal Revenue Service records indicate that the authority missed tax payments in October 2001, but housing officials have bank statements and IRS receipts showing the taxes were paid, housing spokesman Melvin Edwards said yesterday.

For more than a week, housing officials had been trying without success to reach the IRS for an explanation after learning that a federal tax lien had been filed in Baltimore Circuit Court, Edwards said. Yesterday, an IRS territory manager confirmed that the October 2001 payments were the issue, Edwards said.

Housing officials plan to turn over records by Monday showing the taxes were paid and expect the matter to be cleared up soon afterward, Edwards said.

IRS officials have declined to comment, saying tax matters are confidential by law.