Columbus project manager Jabari Edwards has accumulated more than $688,000 in federal tax liens since 2017, either personally or through one of his many business ventures.
J5 GBL, with which the city contracts to oversee construction, street repair and, most recently, storm cleanup projects, fell $11,406.09 in arrears in payroll taxes between June 2017 and September 2018, according to documents The Dispatch obtained from the Lowndes County Chancery Clerk’s office. All of those liens have been repaid to the Internal Revenue Service, the latest made whole April 3.
Still, Edwards is on an installment plan to repay a $76,000 federal income tax lien, according to Pat Davidson, who is the certified public accountant for Edwards’ personal and business accounts. Edwards also is repaying roughly $68,500 in federal payroll tax liens racked up by J5 Industrial, an entity established to supervise a union job in Mississippi and which has since been dissolved.
“I can’t say for certain if the (J5 Industrial) liens have been satisfied,” Davidson said. “The case (with the IRS) has been closed, but I don’t know if the liens have been officially released.”
The largest chunk of the liens, $533,272.55, is owed by North Atlantic Security Company, a firm which contracts out security guards that J5 acquired in December 2017. Those liens are in litigation, said J5 and North Atlantic Vice President Antwann Richardson, because they come from contracts the previous owners did not fully disclose before Edwards acquired the security company.
A federal tax lien is the government’s claim on a person or business’ property and financial assets. It is assessed if a person or business ignores repeated warnings from the IRS that outstanding unpaid taxes exist. Businesses can be assessed for unpaid taxes every three months, while individuals can be assessed once every year.
According to tax lien documents, most of the unpaid taxes by North Atlantic, J5 or J5 Industrial are employee withholdings, including employee’s withheld FICA or Social Security taxes, or the employer’s match to those withholdings.
The city pays J5 GBL a service fee of $90,000 each year, and the contract allows the company to charge up to 6 percent of the value of projects it manages. Richardson said the company has never charged the city more than 4 percent, however, and this year J5 is forfeiting the service fee to help mitigate the city’s projected budget deficit.
The Dispatch has submitted a public records request for all money the city paid J5 in fiscal years 2018 and 2019.
A ‘perfect storm’
In separate interviews with The Dispatch, Edwards and Richardson said J5 accrued tax liens in 2017 because the company chose to pay its employees instead of the IRS.
Richardson said that year the company did not take on any major projects, but continued to pay its employees full salary and benefits in spite of the fact many of them weren’t working. He said the company preferred that option over furloughing or laying off employees, and the plan was to repay the IRS when work picked up again — which happened in 2018.
Richardson said J5 has 35 to 40 core employees. North Atlantic employs about 175.
In a more than 8-minute video posted on J5’s Facebook page Tuesday, Edwards said 2017 brought a “perfect storm” for the company, and acknowledged the financial woes it caused.
“There were times we got late on bank notes,” Edwards said in the video. “I’ve got behind on taxes, had some tax liens and even had a tax levy during that time. … I made sure that even if I didn’t take a check home, (J5 employees) were going to take a check home.
“A lot of times, during that time…even though people saw me smile, I was crying on the inside, because I was holding on. But I didn’t know what I was holding on to,” he added.
However, Edwards assured video viewers his companies were on strong footing.
“For J5, going through 2017 and going into 2019 and into the future, we will continue to grow,” he said. “We will continue to put our best food forward, but we will also be better prepared for the struggles to come in the future.”
J5 issues not uncommon
Edwards’ and J5’s issues aren’t uncommon. In fact, Sandra Crosby, case manager for the Law Offices of James G. McGee, a Jackson law firm that deals with corporate income taxes, said construction and project management firms are “more likely than you realize” to get behind on their taxes.
“When cash flow is irregular or clients are dissatisfied or don’t pay on time, that affects their ability to pay,” she said. “So for companies like project management, construction, when they go through cycles, that can affect their bottom line and their ability to pay in.”
If a company owes tax liens, Crosby said it shouldn’t cause legal issues for the company or affect employees unless the company cannot make its payments to the IRS and closes down.
“When a company pays in, that payment goes into the employees’ contributions for FICA, Social Security, or whatever they owe,” she said. “But it wouldn’t affect employees unless it goes on for years — I’m saying, they do it constantly — and for the business to shut down.”
Councilman Joseph Mickens, Ward 2, said he “didn’t know much” about J5’s tax liens, but didn’t see why it mattered given the work J5 has done for the city.
“Some people make mistakes and come back and correct them,” he said. “I’m pleased with what J5 is doing. … I applaud them for taking care of it. This is news to me but just talking straight off my head, I don’t see why that would be a problem.”
Councilman Bill Gavin, Ward 6, said that he didn’t see any issue with a company owing taxes as long as they were repaid.
“As long as it doesn’t affect the work the city hired them for, which it sounds like it didn’t, I don’t see it’s a problem,” he said. “I know that sort of thing can happen all the time with any business.”
He added that, although J5’s tax debt didn’t affect the city, it may affect the way the company is viewed publicly.
“It’s a public perception thing, I think,” he said. “I don’t want to single anyone out. I would think if a company, any company, owed taxes, it would make them look a certain way. But if their employees are doing their work, I think that’s much more important than if they owe taxes.”
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