Council approves move to ADP after review of unpaid payroll taxes

Shady Cove’s City Council voted unanimously May 7 to move in-house payroll to ADP Payroll Services following a review that uncovered years of late payroll tax transfers and related penalties.

Councilor Nuckles reported the city identified unpaid payroll tax liabilities dating to 2021 and continuing through June 2025. She told the council the mismatch between Caselle-generated 941 forms and manual electronic fund transfers caused quarterly payments to be applied to the wrong quarters and “triggered additional penalties.” City payments in late April 2026 included $51,042 in penalties and interest and $15,448 in back taxes; the city has filed a request with the IRS seeking partial relief of penalties and interest.

The council then considered Resolution 26-04, a proposal to migrate payroll administration to ADP. Councilor Mitchell moved adoption and Councilor Vanier seconded; the motion passed 5-0. City staff and Councilor Nuckles said ADP’s services will include federal payroll tax filing and automated electronic transfers to reduce the risk of late payments.

Councilors noted the migration is intended to improve financial controls and reduce future exposure to penalties. The action follows Councilor Nuckles’s recommendation “that the city does not perform its own payroll and instead contract with a payroll company to ensure the payroll taxes are being paid on time.” The resolution was approved with no recorded dissents.

The next steps are contractual migration to ADP and staff implementation; council did not set a specific completion date in the minutes.