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IRS a 'Grinch' to center workers

State Supreme Court Justice John A. Michalek Thursday reluctantly transferred a wage dispute between former employees of the defunct St. Augustine Center and the Internal Revenue Service to federal court.

Michalek, who had expected this to week order the distribution of about $220,000 of the agency's assets to about 85 employees, granted a U.S. attorney's demand to have U.S. District Judge John V. Elfvin consider the IRS claim.

"This is a Grinch action by the IRS," said Joshua Minor, a St. Augustine case manager for five years who had expected to be paid his final wages for work he performed from late last year until the center was closed in February.

Unpaid state court receivers are planning to fight the matter before Elfvin, possibly as early as today.

Minor, who came to Michalek's court Thursday with a half-dozen other former St. Augustine staffers, said his unpaid work forced him to prematurely sell mutual fund shares "to stay afloat."

A visibly disheartened Minor said the premature mutual fund sales led to income tax penalties. And, he said, should the back wages of the former agency workers like him be finally paid, each will have to pay federal and state income taxes on that money as well.

Attorney Peter A. Muth said the IRS court action over wage payments came so late in the state court case that it "places these workers into involuntary servitude by ambush." Muth will join his law firm partner, Adam W. Perry, today in urging Elfvin to send that matter back to Michalek.

Assistant U.S. Attorney Jane Wolf, who argued that Elfvin has jurisdictional authority over all issues involving the defunct human services agency, declined comment after Thursday's court session.

Perry was appointed by Michalek last year to serve as receiver for the agency, which was shut down after years of mismanagement and fraud. He told the judge Wolf's contention that the unpaid workers will likely get income tax credits for their unpaid wages was a "disingenuous" contention.

Wolf told Michalek that should Elfvin rule the matter was "improperly moved" from the state court, he can order it returned to the state court.

But Wolf insisted that as a result of prior IRS action against the nonprofit St. Augustine corporation itself, wage issues also belong in federal court.

Her statements prompted Perry to note that Elfvin several years ago quashed IRS court action seeking money from the failed Manor Oak nursing home corporation, which was shut down by State Supreme Court Justice Joseph D. Makowski.

Michalek agreed with Perry and Muth about their contention that the IRS wage action came at "the eleven and one-half hour" of the court-ordered closing of the St. Augustine Center but he cited federal law on agreeing to transfer the wage case to Elfvin.

The low-wage St. Augustine workers cared for an estimated 150 clients, elderly, infirm and young persons without pay until they were all transferred to other local human service agencies, court officials said.

e-mail: mgryta@buffnews.com

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