Colorado Businesses and Individuals Owing Tax Backs Receive COVID Help

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DENVER (AP) – At least 161 Colorado businesses and individuals who owed millions in back taxes were still eligible for federal pandemic relief loans, a 9Wants to Know investigation found.

“Essentially, they’re getting taxpayer dollars without contributing to the system,” said Tim Stretton, director of the Congressional Oversight Initiative at Project On Government Oversight.

9Wants to Know analyzed data from the Small Business Administration (SBA) and Colorado Department of Revenue. The analysis found that at least 161 businesses and individuals who were paid $ 13.2 million through the Paycheck Protection Program (P3) still owe more than $ 6.6 million in taxes. ‘Suffering state.

“These loans shouldn’t have been approved in the first place,” Stretton said. “These loans, like other COVID relief programs, were for businesses that were financially healthy before the pandemic, as they were supposed to help those businesses weather the pandemic.”

Stretton said the government could have been more careful about who got the money while moving quickly to help businesses facing an “economic crisis.”

Those seeking money for an Economic Disaster Loan (EIDL), another SBA program, had to provide tax information to obtain the loan. But PPP loans did not have the same requirements.

“There were some simple things they could have put in place, especially as programs were re-authorized and lessons started to be learned,” Stretton said.

Christopher Chavez, regional communications director for the Small Business Administration, said only EIDL applicants are checked for privileges because it is a loan that is non-repayable. PPP loans, on the other hand, are forgivable. He said the PPP was designed to help all businesses survive the pandemic, whether or not someone owed taxes.

“Federal tax liability was not a disqualification for PPP,” Chavez wrote in an email. “PPP was an emergency aid program to help all small businesses survive the pandemic. “

Chavez said in an email that business owners could get second-round PPP money even if they don’t pay off their federal student loans. He wouldn’t go in front of the camera to answer questions about 9NEWS ‘findings because “I can’t add anything more” on the subject.

A 9Wants to Know analysis of SBA data shows that 56% of the $ 15.1 billion distributed to Colorado businesses has been forgiven. In other words, companies don’t have to worry about repaying the $ 8.4 billion they received through PPP.

There may be other people and businesses that owe overdue taxes and have received PPP loans that have not been documented.

9Wants to Know conducted this analysis by merging data from PPP and the Department of Revenue. A reporter searched for the same names in both datasets with programming software.

The Department of Revenue (DOR) declined to provide additional information on any person or entity on its overdue list of taxpayers in order to give 9NEWS the opportunity to compare other similarities between PPP statements and DOR data.

Piles and piles of mushrooms grow in a dark complex in Alamosa. A parade of round mushrooms emerges from the earth, waiting their turn to be picked and prepared.

Colorado Mushroom Farm has been sending their crops to restaurants statewide since the 1980s. Owner Baljit Nanda said the COVID-19 pandemic has hit the business hard.

“Last year due to COVID all restaurants were closed,” he said. “Then, overnight, your 50-70% sale went nil. “

The mushrooms were wasted because there was not enough demand to keep up with what was being produced, Nanda said.

“You have to collect the mushrooms and then throw them away because there is no sale,” he said.

On top of that, the company experienced two COVID-19 outbreaks in 2020 and 2021 that affected 33 workers, according to data from the Colorado Department of Public Health and Environment.

PPP loan data reviewed by 9Wants to Know shows the company secured two loans totaling over $ 1.7 million in 2020.

“Without it, we could not have survived,” Nanda said.

SBA data showed that P3 funding saved 200 jobs on the farm.

But 9Wants to Know found that Colorado Mushroom Farm LLC owed $ 519,756.93 in overdue taxes as of October 2021 – the greater number of those who were paid and behind on their taxes. This $ 1.2 million gap between taxes owed and payment is the largest gap identified by the analysis.

Nanda said the farm was too important to Alamosa’s economy to shut down. Regardless of taxes owed, PPP funding was crucial. He said if the employees were made redundant they would eventually have had to rely on unemployment benefits.

“If we hadn’t had this money, what would have happened? Nanda asked. “The farm would have closed, the government would have lost the money and the local economy would have suffered. “

Nanda said the company was behind on its taxes in part because it spent $ 5 million on specialized farming equipment in March 2020 and was unable to use it. The pandemic prevented the manufacturer from traveling to Colorado from the Netherlands to finish installing it.

According to Nanda, the current equipment on the farm is 40 years old.

“So when the equipment breaks down, it delays all operations,” Nanda said. “We really lost a lot of money during COVID. “

He said the goal was to produce 52 batches of crops per year. In 2020, Nanda said they were only able to produce 20 batches.

Even before the PPP money arrived, Colorado Mushroom Farm was having recurring problems. The IRS issued a federal lien of $ 824,518.23 against Nanda in October 2020. The document shows that Nanda did not pay enough taxes in 2017 and 2018.

“The farm could not produce as it should have produced,” said Nanda. “So during that time, yes, (there was) taxes we didn’t pay. But at the same time, our attorneys are working with the IRS to set up a payment plan so that we can pay these taxes. “

Stretton said those privileges should have prevented the mushroom farm from obtaining relief funds.

“If these companies had tax privileges and didn’t pay federal taxes, they probably weren’t in good financial shape and probably shouldn’t have been eligible for these loans,” Stretton said.

The business could be on the hook for even more money. Rakhra Mushroom Farm Corp. owed Colorado taxpayers $ 1.8 million in October. Both have the same property.

Rakhra Mushroom Farm Corp is connected to Colorado Mushroom Farm on the company’s website. The companies have the same address in the records of the Secretary of State, with the same registered agent (Colorado Mushroom Farm and Rakhra). Nanda confirmed that the two entities are operated by the same property.

The tab keeps growing for the mushroom house. Businesses now owe $ 2.4 million in back taxes, an increase of $ 158,522 from July to October of this year.

Nanda said he would continue to grow mushrooms to keep his employees working.

“My obligation is to these employees, No. 1,” he said. “My obligation is to the local economy, and the business has to pay its taxes. And that’s what I’m focusing on. And that’s why I’m still here. I’m always working. Even during COVID. “

Thirteen of the companies that received PPP funding and were past due on their taxes in July are no longer past due, according to an October analysis.

This includes AfterOurs, an emergency care company that received $ 867,197.00 in federal P3 funding – the second highest payment among companies that were paid and were in arrears on their taxes.

Chris Rehm operates five AfterOurs sites and said a lot of the clinic’s effort has gone into treating and testing thousands of people for COVID-19. This PPP money meant they could stay open, he said.

“We would not have survived this period without this funding,” Rehm said.

The company has a history of problems paying its taxes. The IRS sent the company five liens in 2019 and 2020 for a total of $ 688,986.69. Rehm said that despite this, the company should be eligible for aid.

“What would be unfair? Rehm asked. “It was very explicitly addressed. And we spoke with the IRS representatives when we took out the loan, they were separated. We spoke to legal counsel about this. So we worked our way through it.

When 9Wants to Know first analyzed data for July 2021, AfterOurs owed $ 1,418.51 in overdue taxes. It was different from the federal privileges he also owed.

9Wants to Know first contacted the company for an interview in early October. Between July and October, AfterOurs repaid the $ 1,418.51 it owed in overdue taxes.

“We definitely had our struggles,” Rehm said. “And that gives us the ability to survive ahead of time.”

Rehm added that his company is in compliance with the IRS and has made payments on past tax debt. Without relief from COVID-19, he said 65 healthcare workers would not be working.

Of the 148 businesses and individuals still in arrears, the median amount owed was $ 30,396. Sixty-one companies have generally paid $ 2,193 in taxes since July. Sixty-six companies added overdue taxes to their tab – typically $ 1,351.


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