Exactly what the blog said. Some taxes are Employer Paid and Some are Employee Paid... The plan to pay by the city was not sufficient. It surmounts to being additional income for the individuals and added cost to the citizens of GT. That is not right. Thank You Frank Guzman for taking action. The fix offered by Betsy Adams the new City Manager does not bode well for her judgement or the advise she received from "Professionals" she consulted with.
Guzman Warns Council
Friday, October 1, 2010
San Bernardino County Sentinel
Frank Guzman has served the current members of the Grand Terrace City Council with notice that his law office will take legal action to recover for Grand Terrace’s taxpayers the $14,000 the city has agreed to pay the Internal Revenue Service to satisfy unpaid income taxes accrued by city officials over the last three decades.
It was recently publicly disclosed that for nearly three decades the city did not withhold and the officials did not pay the income tax due on the stipends paid to city council members and planning commission members. Pursuant to a policy put in place by former city managers Seth Armstead and Tom Schwab, those stipends were not cataloged as income but reimbursements
for expenses. The IRS, however, has a different interpretation.
To prevent current and former city officials from being saddled with individual bills that would include the unpaid past due taxes and penalties, the city council arranged to make the $14,000 payment.
But Guzman, who was a driving force behind the move to make the mayor’s position an elected one in Grand Terrace in the mid-2000s and successfully used the court system to achieve a vote on the matter when city officials and politicians opposed him, has taken up the cause of having city officials pay their own unpaid income taxes, rather than transferring that burden to the city’s taxpayers.
“This is outrageous,” Guzman said. “First, they misinterpreted the tax code to their own benefit so they do not pay the income taxes that the rest of us pay. Then, after they are caught, they refuse to pay their own back taxes and make restitution. Instead, they want the city’s residents to pay their taxes for them. This is double-dipping.”
In a letter to Mayor Maryetta Ferre, Mayor Pro Tem Lee Ann Garcia, councilwoman Bea Cortes and councilman Walt Stanckiewitz dated September 29, Guzman wrote, “You are herein advised that this office will file an action in Superior Court, pursuant to California Code of Civil Procedure Section 562a, restraining and preventing the illegal expenditure of, and waste of public funds against any officer thereof, or agent who acted on behalf of the city in the payment of public funds to cover unpaid taxes on stipends paid to council members and other appointed officials.
“It is our position that the recipients of the stipends bear the obligation, are personally responsible for, and have the legal responsibility for payment of these taxes, and not the residents of the city,” Guzman’s letter continues. “As such, if the city has paid the taxes on behalf of the recipients, we demand that the city take immediate action to recover the illegally paid public funds from those who bear the responsibility to pay the taxes, the individuals who received the stipends.”
Guzman said he wanted the city to document and make public how much money it had expended on each individual public official to settle the outstanding debt with the IRS.
“We further ask that you provide this office with the names of the individuals and the amounts of taxes paid on their behalf within a reasonable time,” Guzman wrote, and further inquired as to “what, if any, action will be taken to recover the expenditures and a time frame when these actions are to be taken.”
Guzman said he would sue to recover the money taxpayers shelled out on behalf of city officials to pay their taxes if the council does not of its own volition move to make the officials responsible for their own tax burdens.
“Please be advised that unless immediate action is taken for the recovery of these funds, this office will file, on behalf of the taxpayers of the city, against all those who benefited from the illegal expenditure and all city officials responsible for the waste of the public funds, for the recovery of all funds, attorney's fees and costs, without further notice,” his letter states.
Jo Verheile, the secretary to city manager Betsy Adams, said Adams had not yet received the letter.
Opinion:
To round up Guzman's Point: IF your employer doesn't pay taxes on your income it is YOUR BURDEN to Declare the Income, and Pay Taxes and the appropriate contributions to all the category of withholding that should have been taken. Employers get in the most trouble when they collect and don't pay the withholding. Guzman is right the only part the city is responsible for is the Employer's Contribution to FICA and so forth, not the Income Tax Portion.
Those like Mr. Tom Schwab who are driven to "Blame Stanckiewits" for bringing the matter to the attention of the public and auditors are simply trying to cover their own assets and failures. Stanckiewits did the right thing when he asked his tax accountant, now where does the income from the City Council fit into his taxes.
Thank you Mr. Stanckiewits for being a good Citizen and Tax Payer who isn't trying to Hide from the taxes that should be paid. Thank you Mr. Guzman for putting the tax bill on the right taxpayer's table.
