Following News 8 investigation, tax audits in construction trade spike

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by DAVID SCHECHTER

Bio | Email | Follow: @davidschechter

WFAA

Posted on December 22, 2011 at 11:40 PM

Updated Friday, Dec 23 at 11:55 AM

MANSFIELD - When we first met Andy Anderson in July, work was drying up for his rebar company. Why?

His competitors, like Macario Mireles and his company, AB Rebar, were not paying employment tax on workers, while Anderson was.

In court documents, Mireles admits to it. And that’s what allowed Mireles to underbid Anderson by 30 percent to win the rebar bid on the $39 million Mansfield ISD Center for the Performing Arts.

When Anderson contacted Mansfield ISD about the problem it responded, "good cause does not exist to believe AB Rebar violated the law."

"Mansfield's not worth my spit right now,” Anderson said in July.

But while Mansfield saw no problem, the Texas Workforce Commission (TWC) did. Following News 8's story about lax enforcement of payroll tax law in the construction trade, and how that hurts small business owners like Anderson, the TWC took action.

Court records show the TWC hit Mireles with a nearly $7,000 tax lien for unpaid state unemployment taxes and penalties.

Based on that, Mireles would also owe an estimated $161,000 to the IRS for unpaid federal taxes, like Medicare and Social Security.

It's the standard practice of the TWC to refer all state tax liens to the IRS, so it can initiate its own federal investigation.

How does Anderson feel now?

"I'm so happy with them right now," he said. "So, so, so happy with TWC right now."

And it's not just Anderson who's effected by this new aggressive approach by the TWC. It's the whole construction trade in Texas.

Records show the Texas Workforce Commission has increased enforcement of unpaid payroll tax by an astounding 500 percent, year-to-year. It's a complete leveling of the playing field.

What does that mean?

Before our story, Anderson was down to 20 employees, from a high of 60. Today?

"It has since come back," Anderson said. "I got 60 guys working for me now, and for sure I need 200 more guys in the next eight weeks."

And what about Mansfield ISD? Remember, it found no reason to believe Mireles violated the law, by not paying payroll tax on a project paid for with taxpayer dollars.

Here's an exchange from July, between board president Sandra Vatthauer and News 8 reporter David Schechter:

Schechter:
"I want to know what you think about legitimate businesses trying to make it."

Vatthauer: "We have strict guidelines that we have put forth to our contractors."

Schechter: "What happens when they don't follow them?"

Vatthauer: "We do due diligence to make sure that we are maintaining the standards we would like to see."

Schechter:
"So you're confident the people out there are paying their taxes?"

Vatthauer: "When they are not followed, we will take action."

It's clear now, based on the investigation of the Texas Workforce Commission, that those strict standards were not followed. So, what action has Mansfield ISD taken?

None.

It says smaller sub-contractors, like Macario Mireles, don't actually work for the district, they work for the General Contractor who hires them. Even though it’s the district that benefits from the lower prices contractors like Mireles bring to the table.

E-mail dschechter@wfaa.com

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