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MT. DIABLO Incurs IRS Wrath – Again

By Jackie Burrell
Tuesday, September 30th, 2008 at 1:03 pm in Schools.

Northgate High, Walnut Creek The economy is tanking, Wall Street is crumbling … and the Mt. Diablo school district is in trouble with the IRS for failure to pay payroll taxes again. Ah, some things never change. This time around, the Internal Revenue Service is levying the Mt. Diablo school district for $833,000 in unpaid payroll taxes and penalties from 2006-07. And once again, Superintendent Gary McHenry didn’t bother to notify the board that his administration had just incurred its sixth – at the very least – major IRS violation since 2002. McHenry never told the board about the other five penalties either. They found out about those from the Times, courtesy of a July 15, 2005 investigative piece written by yours truly. But this time around…

… it was board member Gary Eberhart who spotted the $833,000 whoops on a spreadsheet the board received in their contract negotiation background packets, more than a year after the penalties were incurred. And McHenry — who insisted back in 2005 that he was going to get “his house” in order after a payroll management meltdown so extreme, the state’s fiscal crisis response team had to come in to help, and then last spring announced that he is not responsible for the district’s budget – is blaming staff turnover for the latest IRS snafu.

See, his payroll manager and the chief financial officer – that would be McHenry protege Gloria Gamblin, whose shaky qualifications we questioned back in 2005 when she was hired – resigned just around the time those IRS payments should have been made. Um, really? Because by our reckoning, she didn’t go on “medical leave” until November 2007 and only retired in February of this year. And last time we checked, 2006-07 ended in… hmmm.

Want to hear about the other IRS problems? A public records request to the district in 2005 uncovered five IRS penalties in a span of two years – 2002 and 2003 – for late or incomplete quarterly tax payments. Penalties ranged from $4,555 to $418,364. So first, the district tried pleading to the IRS that it had “a history of paying our taxes by the due date.” Uh no, you don’t, they replied. “That’s when we wrote the letters and groveled,” assistant superintendent Dick Nicoll told the Times in 2005.

Nicoll said he told the IRS that the district’s former payroll manager – not the one a county investigator had deemed incompetent, but her predecessor – had hidden the penalties. Nicoll assured them then that the district was back on track. So the IRS waived all but the smallest fine.

Wonder what plea they’ll be using this time around?

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No Responses to “MT. DIABLO Incurs IRS Wrath – Again”

  1. MisterWriter Says:

    Jackie, excellent write up. Does this mean I have competition?

  2. Oh My Says:

    McHenry needs to be held accountable!!! Dont be trying to put the blame on others.

    Do you know if there were penalties to the district before McHenry came?

  3. Jackie Burrell Says:

    That’s an excellent question. We only uncovered the 2002-2003 IRS penalties after issuing repeated public records requests to both the Mt. Diablo school district and the county office of education, asking for all letters, documents and other paperwork relating to Mt. Diablo district financial matters from 2002 to 2005. There’s nothing in the Times archives, which go back to 1996, about IRS penalties prior to 2002, but that may be because the district didn’t divulge them – and my predecessors may not have asked that question. Theresa Harrington, the reporter who just took over the Mt. Diablo education beat – Shirley Dang stepped down last spring – might want to look into that.

    As you may have gathered, we’re resuming our weekly round-up of local school news, using the excellent coverage provided by our metro news and education reporters, including Theresa. The aim is to bring you Friday wrap-ups of the week’s hottest school stories, with links to the original news articles so you can read our metro reporters’ objective accounts, as well as our commentary. We’re still playing catch up on a few Mt. Diablo developments that emerged this summer, after Shirley left the paper and before Theresa moved into that beat. (In case you were wondering, I covered that beat from 2003 to 2005, before burning out.)

  4. Tina Says:

    Will the Times be making MDUSD school board endorsements this year? I stand firmly behind my union MDEA’s endorsement of Gary Eberhart and Sherry Whitmarsh. All of the employee unions in the district endorsed them. The district is in financial ruins. We need a board that holds the superintendent accountable. We need medical benefits, and April Treece needs to go. It would be great if the Times endorses and supports all the Mt. Diablo employees by endorsing Gary and Sherry.

  5. Jackie Burrell Says:

    Our Op-Ed editors say yes, they’ll be weighing in on the Mt. Diablo school board election, as well as other ballot battles being waged nationally and around the Bay Area.

  6. MisterWriter Says:

    It is good to see the Times taking a stand for education. One of the problems with this story is getting the documented information. As you have learned, you have to have considerable resources and persistence to actually get anywhere. And that is not including getting doors slammed in your face! Good work.

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