The city of Grand Terrace might be in a bit of hot water with the IRS, as the city has failed to pay federal payroll taxes for officials’ monthly stipends for the past 32 years, or since the city was incorporated. One official argued that such stipends cannot be regarded as salaries, but the IRS does not see it that way because elected officials are considered city employees and are thus subject to payroll taxes. To make amends, the city has offered up $14,000 to cover missed payments for the past three years and the Press-Enterprise reports officials hope the IRS won’t seek more. The paper reports:
“City Manager Betsy Adams said city staff members are not sure how much money Grand Terrace would have to pay for all 32 years of back taxes, because council members' pay has changed. ‘We're coming to the IRS and saying, 'Mea culpa, mea culpa. We've just discovered something, and we are trying to make it right,' ‘Councilman Walt Stanckiewitz said by phone.”
At this point it’s not clear if any criminal charges will be filed. Stipends for council members are currently $250 a month. Read more here.