The 85 former employees of the shuttered St. Augustine Center of Buffalo are months away from getting back pay.
U.S. District Judge William M. Skretny on Wednesday set the stage for months of further court proceedings on federal tax liens against the center, which State Supreme Court Justice John A. Michalek closed last February.
Skretny said Michalek closed the books on the state court case Tuesday by accepting the final report from Adam W. Perry, the Buffalo attorney who was assigned last February to serve as receiver to acquire remaining cash assets from the center.
After Skretny's ruling, Perry said he will seek the state judge's permission to turn over to federal court custody a check covering center funds that he has been holding for months in an interest-bearing bank account.
Perry said he is disappointed the employees of the center are still months away from getting their back pay. He said turning the funds over to federal court seems to be the only way to stop the Internal Revenue Service, which was filing further court suits over that money.
Skretny made it clear that either he or U.S. District Judge John T. Elfvin will determine how much of the center's cash assets, estimated at $127,000, goes to the IRS, former workers and creditors.
The Justice Department and the IRS will study the latest court actions before determining the federal government's next step in the tax lien dispute, a Justice Department spokesman said.
The latest IRS court action had sought to block Michalek from taking any further action on the distribution of funds managed by Perry, as the IRS continues to press its demand for $699,553 in federal tax liabilities and interest debt that grows daily.
That tax action is against the St. Augustine Center but threatens to keep its 85 ex-workers, currently entitled to about a taxable $1,500 each on average, from getting any compensation for their last months of work last year.
Three weeks ago, Elfvin quashed an earlier IRS effort to have the entire tax dispute handled in federal court. Last week, Michalek refused to permit the IRS to intervene in the state court case.