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La Joya Housing Authority failed to pay an estimated $100,000 in payroll taxes

The La Joya Housing Authority failed to pay an estimated $100,000 in payroll taxes during the past six years.

Executive Director Ruben Villarreal informed Mayor Isidro Casanova and the housing authority board about the situation last month.

“I was not shocked,” Villarreal said. “What surprised me was the amount.”

The problem with payroll taxes apparently started in 2016, when the housing authority board fired Executive Director Juan Jose “J.J.” Garza.

“It’s a basic, real simple thing,” Garza said. “It’s not hard.”

The housing authority withheld federal income taxes, Social Security taxes and Medicare taxes from employee paychecks, Garza said. The money withheld from employee paychecks remained in the payroll account until the end of the quarter, when Garza paid the IRS.

“You don’t touch that money at all,” Garza said, adding that he made the quarterly payments himself.

In September 2016, though, a federal grand jury indicted Garza on wire fraud charges. He pleaded guilty and spent nearly two years in prison.

The housing authority fired Garza. Board Chairwoman Frances Salinas became the interim executive director in February 2017.

Whether or not Salinas made any payroll tax payments remains unclear.

The U.S. Department of Housing and Urban Development, which completed a report on the housing authority in February 2020, found many records from that period were missing.

“As of the date of our review, we found that the LJHA owed the IRS at least $36,690 in unpaid payroll taxes accrued for 2017 ($8,146) and 2018 ($28,544),” according to the report. “Per the 2017 general ledger, the payroll tax entries of $8,146 were recorded between August 3rd and December 31st; however, the amount was inexplicably reversed by the fee accountant at the end of the year. There were no payroll tax accruals recorded between January and August of 2017.”

The board fired Salinas in October 2018, when questions surfaced about how she managed the housing authority.

Salinas pleaded guilty to a federal wire fraud charge in June 2021. Sentencing is scheduled for December.

Her successor, Executive Director Cristi LaJeunesse, attempted to address the problem with payroll taxes.

LaJeunesse calculated the payroll taxes and cut a $19,537 check to the IRS. She also prepared two quarterly tax forms.

The housing authority, however, never actually mailed the check. LaJeunesse resigned in July 2019.

Villarreal took the job three months later. When he arrived, Villarreal said he couldn’t even find the housing authority’s employer identification number.

“There were no actual files,” Villarreal said, that showed how much employees had been paid — or how much the housing authority owed.

Villarreal said he contacted the IRS and requested a payment plan.

“I provided my name only to be told that I was NOT ‘authorized’ to discuss the housing authority’s IRS matters,” Villarreal wrote to the housing authority board on Sept. 29. “He further stated that I could not be given authorization due to the on-going government shutdown of the time. He told me we would be contacted at a later date by the proper IRS department.”

The IRS contacted him in August 2021, requesting payment.

“They’re not looking to put a noose around our neck,” Villarreal said, but the IRS warned the housing authority not to miss any more payments.

To calculate how much the housing authority owes, Villarreal said he needs to review old bank statements.

“I’m going to have to do some forensics with bank accounts, I guess,” Villarreal said. “And see if I can put two and two together.”

Villarreal said the housing authority had already submitted two quarterly reports that covered about $14,000 in payroll taxes.

Mayor Isidro Casanova, who appoints people to serve on the five-member housing authority board, said the situation concerned him.

Casanova questioned why Villarreal, who took the job in 2019, still hadn’t addressed the unpaid taxes.

“I don’t know who dropped the ball on this one. Whether it was a case of him not being notified or it being overlooked,” Casanova said. “But when we found out that they had to pay all those taxes back, that was a shocker.”

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