Like most businesses contracting with human resources outsourcing company InFocus Partners, Iowa Barnstormers majority owner Jeff Lamberti assumed the sports franchise’s payroll and unemployment taxes were being paid as part of the agreement with the West Des Moines company.
Last week, he found out differently when IRS officials asked for documentation proving the Arena Football League team's taxes had been paid for the quarters ending March 31 and June 30.
On Friday, court documents show the IRS filed a nearly $1.2 million federal tax lien against InFocus Partners and its subsidiary, ILC Staffing Inc., seeking to collect taxes that should have been paid on behalf of the company’s clients.
“Given the situation, would they even have the ability to make good on this? I don't put much stock in any of that.”
– Jeff Lamberti, Iowa Barnstormers majority owner
Not only did InFocus Partners fail to pay taxes for each of the past two quarters, according to the lien filing on the Iowa Secretary of State’s website, InFocus and its affiliated companies have been behind in tax payments off and on since 2006. The latest filing is part of an overall $3.8 million collection effort.
A woman answering the telephone at the InFocus office at 5930 Grand Ave. said company founder and owner John Vratsinas was not available for comment. She also said the company’s president, Charles Ganske, and at least two other top officers reportedly resigned Friday after learning of the liens against their employer.
Barnstormers' Hit Not "Fatal," But Could Hurt Sole Proprietorships
The IRS filing means that unless InFocus Partners’ clients can provide documentation, they’ll be out the money they’ve deposited for taxes and, potentially, may have to pay it twice.
Lamberti, an Ankeny attorney, told Patch it’s too soon to know how the Barnstormers will be affected. Because InFocus had multiple clients, the potential for co-mingling of funds is great, he said, and untangling how much each party paid will take time.
Lamberti said it won’t be “fatal” if the Barnstormers organization has to make the tax payments a second time. The payroll is small, with six or seven employees at the most at any given time. Players and coaches are employed by the Arena Football League.
“We have a diverse ownership group,” he said. “We wouldn’t like it, but if we had to pay some of it, we have the ability to do that. No one would be very happy about it, but we could do it.”
Can Small Businesses Withstand Financial Blow?
Sole proprietors might not be as fortunate.
“It could be a real hardship, no doubt about it, including up to jeopardizing some businesses’ ability to survive,” Lamberti said. “No, it’s not fatal to us, but I could see how for a lot of small businesses, it could be a real burden to them.”
How many companies are affected isn’t known, but Lamberti said an IRS official he talked to indicated there were “quite a few,” many of them small businesses.
Lamberti said InFocus Partners officials sent a letter acknowledging an administrative error and promising that it would be rectified. And the Des Moines Business Record reported that attorney Christopher James, who is representing Vratsinas and his companies in the tax cases, said the current lien is related to an administrative mistake and that the taxes will be paid in the next week and a half.
"That will resolve what is generating the latest controversy," he told the newspaper.
“Given the situation, would they even have the ability to make good on this?” Lamberti said. “I don’t put much stock in any of that.”
The “situation” isn’t limited to the IRS filings.
Former Partner Alleges Fraud
InFocus Partners does business as ICL Staffing Inc., and both are owned by Iowa Construction Logistics Inc., a company John Vratsinas founded in 2001 to provide staffing to the construction industry, including his own company, John Vratsinas Commercial Builders, which he founded in 2000.
Darren Schlapkohl, Vratsinas’ former partner at JVC Builders, filed a fraud charge against Vratsinas for allegedly taking money from their business to Iowa Construction Logistics. That case went to a bench trial in Polk County District Court last month, and a verdict is pending.
The Business Record also reported that Iowa Construction Logistics owes $619,155 for withholding taxes that should have been paid between March 2006 and March 2009. Additionally, the IRS has filed a nearly $2 million lien against Vratsinas under what is called a "responsible person" penalty, the newspaper reported.
Such penalties are assessed against persons who “wilfully” fail to collect, administer and pay withholding taxes. Those taxes were due between September 2008 and March 2011.
Vastrinas’ attorney said that in 2010 Iowa Construction Logistics paid $40,179 in tax liens that have since been released, and that his client’s problems stem from a downturn in the construction industry.