LEBANON, Pa.— The Lebanon City Government voted on a plan to apply for a grant opportunity to create a new downtown park area. In addition, Mayor Sherry Capello announced the conclusion of an IRS audit in the October City Council Meetings.
The Lebanon City Council voted 5-0 to pass Resolution No.24, which will allow the Lebanon City Government to apply for a grant with the Pa. Department of Conservation and Natural Resources for the development of an urban greenspace/park spanning across Liberty Street, which according to the codified book of ordinances has been closed for vehicle traffic since 1985.
The park, named Liberty Park Trail, will span from Walton Street past Willow. If the City is successful in acquiring grant funding, the project will be finalized in the spring/winter of 2024.
Mayor Capello said that the park’s total cost should be approximately $500,000 and would be covered entirely by the grant and remaining ARPA (American Rescue Plan Act) funding.
Mayor Capello also informed the City Council and the Public of the result of an IRS employment audit completed this year regarding a discrepancy with Medicare contributions.
Mayor Capello said the audit process began as the result of an automated computer search, which gave IRS agents leads on cities that may need to be audited next. She said this process allows the IRS’ small investigative staff to narrow down cities that potentially need to be audited based on whether or not the City’s reported Medicare wages are less than their gross wages.
After hiring a tax attorney, the City of Lebanon had two meetings with the IRS auditor on August 8 and 23, 2022.
The auditor found that the cause for the discrepancy lay in an IRS change of interpretation of whether Medicare could be included in a provision that allows police officers and firefighters not to have social security contributions deducted from their pay (as long as there is an agreement with the Commonwealth of Pennsylvania.
Mayor Capello said that while the City does not know when the Police Union voted to withhold social security contributions, they do know that it was in place from 1968 on. In addition, there was an agreement with the Commonwealth of Pennsylvania.
The discrepancy which resulted in the IRS employment audit lies in an obscure 1985 IRS interpretations change, which resulted in the Medicare Tax being removed from the classification of Social Security contributions (for any new hires after 1986).
Mayor Capello says she believes the City did not operate per the change because they were not sufficiently informed of it. She said none of the tax preparers, accountants, and CPAs knew of this change to notify the City of it.
Ultimately, after the 1985 IRS tax clarification, the City of Lebanon must withhold Medicare contributions (1.45%) from their officers (hired after 1986) as additional taxable income. Mayor Capello said that the City currently only employs one officer hired before the tax clarification.
Mayor Capello said the City has agreed to pay the additional employment tax for both the City and the police officers because it was the City’s mistake. Therefore, the City will now pay for the employment tax periods between 12/31/2020 through 12/31/2021 and 2022 until the officers have been properly notified of the pending audit results.
Mayor Capello said the City would be paying $238,313.89 total for this tax to the IRS. Capello said the IRS employment tax audit also looked at other areas and has made the determination that any volunteer fire chief that is completing the duties of a career fire chief must be considered as an employee and cannot be provided with a stipend (which is social security and Medicare withheld). This will go into effect as of 1/1/2023.
The Audit also determined that any gift of wearable clothing that is not strictly for uniform purposes (fundraiser shirts, baseball caps, etc.) that the City pays for must be considered a taxable form of income and must also be reported as such.
Capello said this money would come from the remaining ARPA money the City has. Additionally, she said that the City is not suffering from any interest penalties for this.
The Lebanon City Council passed Resolution No. 25, allowing the proper officials of the City to enter into a Reimbursement Agreement for the Lebanon City Resurfacing-Phase 3 project, which extends from Quentin Road and from Colebrook Road to Poplar Street and 9th Street, from Poplar Street to Maple Street.
Mayor Capello said that this reimbursement would total approximately $2,130,000.
The Lebanon City Council also released its November Budget Hearing Schedule, which will be:
Thursday, November 10 – 4:45 p.m. – Budget Hearing #1 Tuesday, November 15 – 6:30 p.m. – Budget Hearing #2 Thursday, November 17 – 4:45 p.m. – Special Council Meeting (introduce an ordinance
adopting budget) Tuesday, November 22 – 4:45 p.m. – Public Hearing regarding budget amendment for CDBG program Tuesday, November 22 -4:45 p.m. – Pre-Council meeting (the meeting will convene
immediately following the public hearing) Monday, November 28 – 6:30 p.m. – City Council meeting.
David Yanosik, 1657 Oak St., Lebanon- Raised concerns over the volume of train horns that pass through the City. He asked that the City look into getting Lebanon classified as a quiet zone.
Mayor Capello said that the City has looked into this in the past, and while the change of classification might stop the sound of train horns, the City would still be required to install sound emitters to notify people of the trains. She said that she would see if the rules had changed.
Karen Wolfe, 504 E Weidman St., Lebanon- Raised a concern that the development of the Liberty Trail Park (while nice for the community) could be a hotspot for crime/drug activity. Mayor Capello said lighting up the area should allow for security cameras to get a better view of the area, which should help reduce crime.
Craig Gates, 44 Berwyn Park, Lebanon- Spoke to the council as a representative of the CLA (Community of Lebanon Association) to notify them of upcoming events that the CLA is doing. He said that the CLA is hosting its annual tree lighting ceremony on November 18, the Holiday Parade on November 19, and will have carriage rides available for people on December 2nd and 9th.