We are reporting the existing of IRS Withholding failures, after confirming that an email was provided to all Council leaders on 9/29/2025 (making it public record). Shady Cove was delinquent on IRS payroll reporting for over four years. The attachments to the letter indicate Shady Cove was sent multiple notifications of delinquency. The missing filings date from March 2021 through June 2025. The start of the failures appears to coincide with the same timeframe in which Shady Cove stopped reconciling bank records in 2021. Paperwork to complete the filings (totaling almost $300K) was apparently completed in September 2025. However, at this time, the actual financial impact to the City is unknown. Scroll down below to read the letter and attachments.
*** We recommend all Shady Cove employees check their reported IRS and Social Security contributions to ensure they are accurate. ***
During Shady Cove’s FY24-25 budget committee meeting on June 4th, 2024, there are two instances in the audio recording where City leaders acknowledge additional problems with PERS and payroll taxes. Scroll down below to listen to the audio and transcript.
During Shady Cove's FY24-25 budget committee meeting on June 4th, 2024 there are two instances where City leaders acknowledge additional problems with PERS and payroll taxes with the last completed audit. The audit that is referred to appears to be FY20-21, completed in Feb 2024.
Audio excerpts have been combined for ease of listening, however these occurred at different times in the meeting. See the Shady Cove website for the full audio (when prompted for a password use ky&r8m#3 ).
At approximately 26:43 minutes into the recording, a City Leader talks about the last audit (FY 20-21 which was completed -- disclaimed-- in Feb 2024) and states “It really is that god-awful. “Uhm, in that last audit, if you got into the actual entries and stuff, there were payroll taxes that weren’t paid for a whole year.”
At approximately 37 minutes into the recording, another City Leader acknowledges that the City had a PERS payment problem. The City Administrator (who had been on the job for about 3 weeks) discusses personally calling the state to confirm PERS payments are cleared up, and says the City is waiting on fees to come in from the federal government.
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