A landscaping business that landed more than $2 million in Montgomery County government contracts in recent years violated county law by not disclosing cash payments to employees on tax forms, an audit obtained by The Washington Examiner shows.
The outside audit was initiated to investigate claims that JRP Management Resources Inc., a Burtonsville lawn-maintenance company, failed to pay contracted workers the required minimum wage — $12.40 an hour — for mowing, clearing and landscaping jobs in late 2008.
However, the recent report by Bethesda’s Reznick Group found a series of glaring omissions on the extent, location and individuals involved in landscaping tasks for the county’s Department of General Services and Department of Transportation — prompting auditors to recommend the county “consider sanctions or other actions to address JRP’s noncompliance.”
And ofmost concern to county officials, investigators discovered that cash payments for JRP employees weren’t reported to the government.
A random sampling of more than a half-dozen JRP employees during two pay periods in 2008 found that most received at least some of their wages in cash that wasn’t disclosed to the Internal Revenue Service.
“Cash payments made to JRP employees were not reported on [tax] forms,” said the report released by the county’s Office of Internal Audit. “Based on this information, JRP was incorrectly reporting wage information. Therefore, JRP would not be in compliance with [general terms] of their contracts with the county.”
JRP officials downplayed the findings, saying the cash payouts were reported as “owner’s taxes and cash payments to unrelated jobs.”
But auditors slammed those claims in the report, as did a former IRS agent, calling it a “slam-dunk case of a business trying to reduce its tax burden.”
The agent did not want to be identified because he is not involved with the case.
Employers must file a IRS “Wage and Tax Statement” each year to report wages, tips and other compensation, including cash and non-cash compensation, paid to an employee.
» The county’s Department of General Services and Department of Transportation should require JRP to provide proof that all cash payments have been reported to the Internal Revenue Service.
» JRP should recalculate payments to employees who worked overtime to include additional pay.
» The company needs to adjust payments to employees who made less than $12.40 an hour.
» Montgomery should require JRP to correctly submit forms that reflect all hours worked under contract.
» JRP must maintain records that indicate time and location worked by all employees involved in government contracts.
Internal county records show the company was awarded more than two dozen county contracts totaling more than $2 million over the last four years.
Besides paying workers in unreported cash, the company failed to give them the required minimum wage, as well as overtime money, and doled out incorrect checks when adjusted for actual hours worked, according to the audit.
When the cash payments are not included, the hourly paid wage is less than $8.50 in some cases, the audit shows.
However, county officials say they are maintaining active contracts with the company.
“Concerning follow-up, [the county’s Department of General Services] has been following up with JRP on behalf of the Office of the County Executive and that process is ongoing,” said Patrick Lacefield, spokesman for County Executive Ike Leggett. “Concerning the size of any incorrect reporting by JRP we cannot go beyond the information appearing in our audit report.”
When contacted by The Examiner, JRP officials refused to discuss the audit.
“I shouldn’t talk about it,” said JRP President Jorge Pino. “You should talk with our accountant.”
However, the accountant, Luis Lopez, said, “Our information is private. We don’t want to share any information with you.”
According to the company’s Web site, JRP has been in business since 2001, providing services in Maryland, Virginia, the District and Philadelphia. The company employs about 50 full-time employees and lists Montgomery County, the Maryland State Highway Administration and Washington Suburban Sanitary Commission among its clients.
