Shenandoah withheld more than $21,000 in payroll taxes from its employees for two years but failed to submit that money to the Internal Revenue Service, the Borough Manager disclosed on Monday.
Mike Cadau revealed in his monthly report to Borough Council that in 2021 and 2022, Shenandoah never paid the payroll taxes it withheld from employee checks. He said Shenandoah owes $21,201.60 in unpaid taxes. Now, he says, the IRS is placing liens on Borough property.
“We’re not really sure this is the end,” he said.
Cadau said the failure to pay these taxes was disclosed to him by Solicitor James Crossen – who was notified by the IRS – earlier in the day, prior to Monday’s regular council meeting.
“Where did that money go,” Cadau said following Monday’s meeting. “That money has to be obligated to the federal government beacuase we took it out of people’s paychecks. Where did it go?”
The Borough Manager said Shenandoah will turn this matter over to the forensic auditor it hired, Joseph Yanushefsky, to investigate where the money that was withheld eventually went. Yanushefsky has been investigating other alleged financial missteps that the current administration is accusing previous councils of making.
In a recent statement from the Borough, it detailed more than $3 million in “historic financial obligations” the current council administration inherited from past officials. They include:
- $1,223,719.83 Sewer Authority bridge loan for a wastewater treatment plant that was never completed.
- Approximately $895,000 in Police Pension underfunding, with current estimates approaching $1 million.
- More than $100,000 in outstanding obligations associated with the 2023 sale of the Municipal Authority of the Borough of Shenandoah (MABS), with additional liabilities continuing to be identified.
- $163,522 in questioned federal COVID-19 expenditures identified in a prior forensic review.
- Approximately $200,000 required to be restored to the Borough’s Liquid Fuels account following a state audit.
- Approximately $240,000 in anticipated life insurance obligations related to the cancellation of a group policy in 2020.
- More than $200,000 in payroll taxes and related employment costs associated with historical payroll practices that remain under review.
- A potential $498,000 financial exposure related to prior Community Development Block Grant (CDBG) projects, which remains under review with the Pennsylvania Department of Community and Economic Development (DCED).
On Monday, Cadau added that Shenandoah allegedly didn’t pay its PPL Electric bill for 14 months and owed more than $100,000 to the utility.
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