Oh, DowntownDallas, the U.S. Government Wants Some Money. Like, Yesterday.
Unfair Park has learned that the U.S. government is going after the Downtown Dallas Improvement District and its parent nonprofit, Dallas CBD Enterprises, claiming they owe the Internal Revenue Service $48,072.48 plus $24,036.24 in penalties. That's according to a federal lawsuit filed on Thursday, in which U.S. Attorney Richard Roper alleges that the DDID -- more commonly referred to 'round these parts as DowntownDallas -- failed to turn over money the government says it's owed by a security company DowntownDallas had used till last year to patrol downtown.
According to court documents, a Dallas-based company called Dunlap Security & Investigations owes the IRS more than $280,000 in federal employment tax liabilities, penalties and interest. For the last two years, the government has claimed that Dunlap hasn't been withholding from its employees' paychecks things like, oh, federal income taxes, Social Security and Medicare taxes. And since Dunlap won't pay the government, Roper says, it wants folks who use Dunlap's services to pay the government rather than Dunlap, thanks to tax liens that have been levied against the security company.
Only, says the government, DowntownDallas hasn't done that. So the government wants its $70,000, and it wants it right now. Only DowntownDallas says, in short, Not so fast.
The suit alleges that in June 2006, the government informed Paul Lindenberger, director of operations at DowntownDallas, that a levy had been filed against Dunlap. Indeed, in late June the IRS faxed to Lindenberger the notice of levy, Dunlap's invoice and Dunlap's payroll form in which it was indicated that DowntownDallas owed Dunlap $48.072.48. "Still," says the lawsuit, "both DDID and DCBD failed to honor the IRS levy and turn over the funds due Dunlap to the IRS."
On June 20, 2006, Lindenberger sent to Dunlap's owner, Henry Dunlap III, a termination letter, claiming the company was "in default under the terms" of its contract with Dallas CBD Enterprises. In the letter, which is included in court documents, Lindenberger said he has indeed received "a Notice of Levy for Dunlap Security, Inc. issued by the Internal Revenue Service." Shortly after that, in August 2006, DowntownDallas introduced its 31-officer Safety Patrol.
But, the government says, Lindenberger and his organization didn't pay up. Indeed, in August 2006, court documents say, the IRS sent then-DowntownDallas president Peter Armato a final demand for the dough -- which, again, was not honored. (DowntownDallas chairman John Crawford replaced Armato as president in March.)
"To date," read court documents, "DDID and DCBD continue to fail to honor the levy and turn over the funds despite requests from the United States to do so." Hence, the lawsuit filed on Thursday.
Until reached by Unfair Park this afternoon, Crawford and Lindenberger said they were unaware the IRS had even filed suit. Crawford said DowntownDallas' attorneys have been working with the IRS to resolve the matter "on an administrative basis," and both men say they were waiting to speak with their attorneys about the federal lawsuit.
"They [the government] had indicated that a claim had been filed by the IRS based on some payroll taxes that Dunlap had failed to pay," Crawford tells Unfair Park, "and to the best of our knowledge, we have no liability with that... Based on information from our attorney, we don't feel like DowntownDallas was liable for that, and that's where the rubber meets the road."
Nonetheless, both men insist DowntownDallas' move to the Safety Patrol last summer had nothing to do with its severing ties with Dunlap. Indeed, Lindenberger insists the decision had been made six months prior to the IRS' contacting DowntownDallas -- "to provide the best security for our employees," he says. "And we felt it was important to bring them in house and make them part of the family and to save money and give them better benefits." Crawford also says the organization no longer wanted to "outsource" downtown's security officers, and that the financial issues with Dunlap arose well after the decision to part ways had been made. --Robert Wilonsky
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you’ll never miss Observer's biggest stories.
- Ken Paxton Faces Yet Another Misconduct Investigation
Sat., Feb. 13, 7:00pm
Sat., Feb. 13, 9:00pm
Thu., Feb. 18, 7:00pm
Fri., Feb. 19, 7:00pm
- Maybe We Should Explain What the White Water Feature Is and Why It's So Screwed
- As Trustees Will Learn, Fixing Dallas Schools Means Fixing Segregation