Nonprofit agency takes first steps to way out of $850,000 debt to IRS

A government-funded nonprofit agency that assists Anne Arundel County's poor has named an interim director as it searches for ways to erase an $850,000 debt to the Internal Revenue Service for unpaid taxes.

Anne Arundel County Economic Opportunity Committee Inc. hired Yevola Peters to take over for Edith M. Knight, who retires today. A search is planned for a permanent replacement.


The agency's board said Knight did not tell it about program overspending that led to cash shortages and failure to send the IRS money withheld from employee paychecks to cover their income tax obligations. But Knight says subordinates told her "things were OK" financially and blames high staff turnover and computer glitches.

The agency plans to ask the county for help to repay the IRS.


Representatives of the agency met yesterday with the IRS in Baltimore as the first step in attempting to have at least part of the debt forgiven. The session was preliminary and no hard numbers were discussed, according to Knight.

"Just what they [IRS officials] are going to ultimately accept in the way of payment we'll have to see," said Sylvia Jennings, who chairs the agency's board of directors.

Jennings said no sign of theft has been found.

Rather, Knight's staff took $600,000 withheld from employees' paychecks for income tax and diverted it to cover overspending in Head Start and other programs the agency administers in Anne Arundel. Taxes were not paid for five quarters, she said.

The IRS also levied a $250,000 penalty.