The Internal Revenue Service executed a tax lien against a Verde Valley nonprofit after-school program, sweeping its bank accounts clean of cash two days before payday July 28, leaving dozens of employees without a paycheck.
Buena Vista Children’s Services owes about $77,000 in taxes, interest and penalties after the nonprofit failed to withhold about $12,000 in payroll taxes in 2005, according to Buena Vista Children Services Executive Director Erin Mabery Lamb.
Lamb said the nonprofit hasbeen negotiating with the IRS and recently made an offer in compromise to settle the tax debt.
“We were told by our agents that the matter was still in the settlement and compromise stage,” Lamb said. “Usually with the IRS, when you have a compromise on the table, they’re not going to hit you with things like levies.”
The IRS action forced Buena Vista to delay paying its staff, many of whom agreed to accept partial payment in order to keep the nonprofit operating as the school year begins.
“This has impacted us greatly and we are very frustrated that we have not been able to make payroll and that so many of our employees have been tremendously inconvenienced and hurt by this,” Lamb said.
Buena Vista serves hundreds of children throughout the Verde Valley, she said.
The nonprofit sponsors Discovery Connection programs at Clarkdale-Jerome and Dr. Daniel Bright schools, preschool programs at Dr. Daniel Bright and Tavasci Elementary schools, child care at Verde Valley Medical Center and a kindergarten extension program at the Cottonwood-Oak Creek School District.
Through its scholarship programs, Buena Vista provides after-school services at reduced cost to many low-income families, Lamb said.
The nonprofit has been working for the past 18 months to rectify the situation, she said.
“We have continued to do our part in working with the IRS and have complied with every request. We have nothing to hide,” Lamb said.
The IRS notified Buena Vista it is investigating what caused the accounts to be swept and reassured Lamb the money will probably be released back to the nonprofit at some point in the future. In the meantime, Buena Vista is asking for volunteers and donations.
The problem started in 2005, when the Arizona Department of Education demanded the return of grant money paid to Buena Vista in violation of the grant’s requirements.
“This is usually the death of a nonprofit agency such as ours but with widespread community support and a few generous donations, we pulled through,” Lamb said. “However, due to the turbulent times and with all the financial matters involved, we had some minor discrepancies in some of the taxes we paid and what the IRS felt we should have paid.”
The nonprofit’s administrative staff and board changed since 2005 and it wasn’t until late 2008 that the current administration learned of the tax deficiency, Lamb said.
To donate or volunteer, call 646-5200.
