Officials at Pioneer Vocational Industrial Services are accentuating the positives after initial meetings with the Internal Revenue Services, but the organization still must find a way to pay a six-figure bill for back taxes.
Pioneer's chief executive officer and executive director Mike Pittman confirmed Friday the company owes the IRS about $300,000. Pittman, who came on board earlier this year after the retirement of Ron Zimmerman, said it came to light Pioneer had failed to pay payroll taxes for any quarter in 2011.
Pittman said the company has received preliminary indication it won't have to pay what would have been large penalties on the balance, but would still have to pay the full amount and interest. Officials met Thursday with an IRS revenue officer at the company's Corporate Drive offices.
"Now it's a matter of deciding how we are going to pay it back," said Pittman, who indicated the unpaid levees were noticed at the same time other financial problems were discovered following Zimmerman's departure .Pittman said Pioneer is up to date on paying its taxes since January of this year.
There will be another meeting with IRS officials next Thursday where a schedule for repayment is expected to be discussed.
Pioneer, opened in 1967 to offer employment opportunities and rehabilitation services for adults with disabilities, has been reeling since it became clear the non-profit was going in the hole on some of its major projects initiated under Zimmerman. Pittman and members of Pioneer's volunteer board of directors have said a large contract to do work on cold temperature parkas for U.S. Special Forces, which was announced with fanfare in 2010, had been losing money.
There were 34 layoffs announced in February. After 12 more layoffs due to another job that was apparently losing money, Pittman said there are about 24 employees and eight office staff left.
It is not clear whether there was any illegal activity with regard to the company's finances.
The white collar division of the Drug Enforcement and Special Investigations Unit of the Kentucky State Police, which investigates financial crimes, has an open investigation. Pittman has said it is clear there was mismanagement during Zimmerman's tenure, but funds don't appear to be missing.
Recently elected board president Eddie Caldwell has served on the Pioneer board for four years. According to Caldwell, Zimmerman, who was hired in 2006, concealed the fact the company was experiencing problems and never mentioned taxes were going unpaid.
Caldwell said the board had been meeting on a monthly basis, typically for an hour during lunch. During those meetings, he said Zimmerman offered reports but board members were not given financial information to back up the claims.
"We were told in his reports that everything was looking great and getting even better, that the company was making money," Caldwell said.
According to Caldwell, the board did not realize projects like the one to make military clothing were losing money until Zimmerman abruptly announced his retirement.
Workers at Pioneer, which depends on contracts to do light assembly and other manufacturing tasks, have continued to do work for local companies like Hobart and Caterpillar. Survival will require instilling confidence in potential clients.
Both Pittman and Caldwell say they are optimistic there can be a turnaround.
"I'm very confident it's going to survive," Caldwell said. "We as aboard, and Mike Pittman as our director, are committed. It's too important to the community to go away and we'll do whatever it takes to make it work."
"If there is one thing I can guarantee it's that we will do a good job for whoever decides to do business with us," Pittman said.