WATERLOO — The Society of St. Vincent de Paul is in trouble with the Internal Revenue Service for failing to pay its employment taxes.

The IRS has filed three federal tax liens totaling $67,078 against the nonprofit agency’s Waterloo operations for failing to remit federal income, Social Security and Medicare taxes withheld from employee paychecks.

The liens cover the tax period from September 2015 through March 2018.

Local St. Vincent de Paul Executive Director Pat Russo said the IRS debt was due to declining program income coupled with the nonprofit’s decision not to curtail the services it provides to the community’s poor and needy.

“We ran into a situation where we didn’t have enough funds in our account to pay the (payroll taxes),” Russo said. “It’s important to point out that during the same period we gave out $435,000 in emergency aid to clients.

“We kept throwing money at the clients instead of the IRS, and we’re suffering for it now,” he added. “We screwed up. That’s the bottom line.”

Russo said he has been meeting with IRS staff to work out a payment plan and retire the debt, which had been whittled to $53,000 as of Thursday. He hopes to have the issue resolved within weeks.

As the agency’s chief executive, Russo could be held responsible for the debt as a third party. The IRS had placed a $23,403 lien against Russo’s personal property should the nonprofit not settle its obligation.

The Society of St. Vincent de Paul is an international organization in the Catholic Church which has local councils that provide help to the poor and needy. Volunteers have been providing assistance since 1950 in the Waterloo area, where the agency also operates two thrift stores.

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Russo, who is in his 38th year as director, said the local operation has been debt free, increased its services and balanced its budget for 34 consecutive years before the IRS issue. St. Vincent took on emergency assistance to residents when the county government scaled back similar services in the 1990s.

A large drop in commodity prices for the agency’s recycling program reduced revenue at the Broadway Street thrift store, and the death of a large donor also conspired to hurt the bottom line in 2015, Russo said.

While St. Vincent “always felt we were judged by the services we provided and not our bank accounts,” Russo said steps have been taken to prevent similar payroll tax shortfalls in the future.

Gary Stevens, national director of marketing and communications for Society of St. Vincent de Paul, said the situation doesn’t threaten the local agency’s standing with the national organization.

“This is a local issue of the Waterloo Council, and Mr. Russo is the appropriate person to address this,” Stevens said in an email.

“We are pleased that the SVdP Waterloo Council continues to serve those in need,” he added. “We look forward to the Waterloo Council resolving this situation and focusing on our mission of spiritual growth through continuing to serve people in need.”

Meanwhile, Russo said “ugly rumors” have been circulating as word of St. Vincent’s IRS issues trickled out. He said at least two individuals have been making false statements about the agency closing and discouraging donors.

“It’s the most trying time I’ve been through in nearly 38 years at St. Vincent because we’re facing enemies from within,” he said.

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Waterloo City Reporter

Waterloo city reporter for the Courier

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