Tax troubles plague Shiprock shelter
FARMINGTON — A former director of a Shiprock domestic violence shelter admits she didn’t consistently pay several years of federal taxes as she tried to keep the shelter open for families in need during financial hard times. And now the IRS appears to be ready to try to collect approximately a quarter million dollars in unpaid taxes.
In late October, an IRS official visited a storage facility in Kirtland to catalog furniture the Home for Women and Children bought for a new shelter that remains unoccupied, said Reddawn George, the shelter’s finance director. She said the IRS intends to seize the furniture to recover some of the back taxes.
An IRS spokesman would not confirm that the agency is seizing any shelter property, saying he can’t comment on the taxes of a business or individual. But The Daily Times obtained copies of federal liens from the San Juan County Clerk’s office that document some of the taxes owed.
The records list $267,905.88 in unpaid federal taxes between 2009 and 2013. The unpaid amounts were owed by the nonprofit for the federal taxes withheld from employee wages and other compensation. According to one lien stamped at the county clerk’s office with a January 2013 date, $30,123.60 of the taxes were paid.
Gloria Champion directed the shelter for 21 years until June 2014. She couldn't say exactly when, but she said she eventually stopped paying federal taxes because the Navajo Nation cut critical funding to the shelter. Her board of directors, she said, approved keeping the shelter open by any means.
“They said do what you can to keep the shelter open however you can because it’s a matter of life and death,” she said.
The Daily Times made numerous efforts to reach previous board members. None wanted to be quoted by name.
One board member reached by phone said she served when Champion was director – though she couldn’t remember exact dates – and she didn’t recall any unpaid federal taxes.
Another board member said over the phone that she came to the shelter after “that whole mess happened,” and she would have never approved foregoing federal taxes.
“The intention, in terms of the taxes, was never to be naughty or not nice,” Champion said. “The intention was to hold it (the shelter) together.”
She said the administrations of former Navajo Nation presidents Joe Shirley Jr. and Ben Shelly held back funding while she was trying to build a new shelter. A contractor had demolished the old shelter to make room for the new one, and staff were working out of modular units, she said.
But leasing those units cost $6,000 a month, she said. When she stopped getting tribal funds, she had to find a way to stay open, she said.
Former chiefs of staff for both presidents said their offices did not cut funding to the shelter, directing blame instead to other tribal departments. They said that Shirley Jr. and Shelly believed the shelter was an important service.
George, the shelter’s finance director, said the tribe gave the shelter ample funding.
While she was still director, Champion said she began paying back the taxes every month. But she can’t remember when she began paying them back, and she can’t remember how much she paid back. At some point, the IRS came after her personal finances to recover the taxes, she said.
George said Champion's story isn't true. She said the shelter only began paying back the taxes in January. To date, she said, it’s paid back $45,000.
She said the shelter has also hired certified public accountant Sonia Lukow to investigate whether Champion embezzled or misused shelter funds. And she questions why the IRS would come after Champion’s personal finances.
Champion said she did not embezzle or misuse shelter money.
Now, George said, the shelter is trying to move forward. It has a new board of directors. Staff took pay cuts. Its new CPA is working closely with the IRS, she said. But because of its tax problems, she said, acquiring funding is now difficult.
In July, the shelter requested $350,000 in supplemental funds from the tribe, according to shelter documents. But they didn’t get the money, George said.
According to IRS Form 990s available online, the shelter has operated in the red for three out of four consecutive years, ending with the most recent report in 2013.
In 2010, it spent $86,346 more in salaries, benefits and other expenses than it took in through contributions and grants. In 2011, it posted a $191,420 deficit. It rebounded in 2012 with a $164,165 surplus by taking in more money in contributions and grants and cutting expenses. But in 2013, it posted a deficit of nearly $46,000 as the grants and contributions it received dropped by more than $200,000 from the previous year.
And between 2011 and 2013, the shelter's debt far outstripped the value of the assets it owned, with a peak negative fund balance of $374,443 at the beginning of 2012.
Champion says she tried to help the shelter. George says her actions only hurt it. Meanwhile, a partially finished building sits unoccupied — unable to provide shelter for women and families in need.
“That’s not how a director or board should have handled it,” George said.
Dan Schwartz covers government for The Daily Times. He can be reached at 505-564-4606.