Season ticket holders are being notified of their options.
YOUNGSTOWN — The IRS has slapped a lien on the Youngstown Playhouse for unpaid payroll taxes and penalties that now total more than $25,000. As a result, the Playhouse has suspended its season as it tries to find a way out of its troubles.
Because of the lien, which was issued Jan. 29 and received by the Playhouse two weeks ago, the Internal Revenue Service has frozen the assets of the Playhouse, forbidding the staff and board to enter the theater off Glenwood Avenue.
It’s just the latest in a string of setbacks for the financially reeling Playhouse.
In October, the Playhouse took the unprecedented step of going dark for the winter, postponing several productions until spring. It blamed rising fuel prices, the exorbitant cost of heating the building, and a severe drop in grant money from foundations because of the tanking economy.
In January, the Playhouse board said the building would no longer be used. It discovered that a pipe had burst in the costume storage area, causing water damage to ceiling and floors. That only exacerbated the poorly insulated building’s problems; it is also in need of a new roof and furnace, and has water in its basement. The theater company also still carries tens of thousands of dollars of debt from past seasons.
The federal tax lien came as a surprise to the board, and has thrown the Playhouse into a deeper quagmire.
According to the IRS Notice of Federal Tax Lien, the Playhouse owes $25,213.25. The debt was incurred over seven consecutive quarters, beginning Dec. 31, 2006, and ending Sept. 30, 2008. John Holt was executive director and business manager of the Playhouse during that period. He resigned in October.
“We were blindsided by the situation,” said Rand Becker, president of the Playhouse board. “We don’t know where to go next. There is more that we don’t know than we do [know]. We are forced to take a hiatus until we get a handle on it.”
The board met with its tax expert Feb. 16, who outlined the lien. According to Becker, roughly $16,000 is for unpaid taxes, and the remainder is for penalties and fines. Interest on the unpaid taxes continues to accrue.
Holt withheld taxes from paid staffers but failed to forward them to the IRS. Instead, according to Becker, the money was used for royalties for play rights, set construction and even payroll.
Playhouse leaders will be summoned to meet with the IRS, but they do not know when. In the meantime, the board has no choice but to suspend operations and send every dollar of revenue it receives to the IRS, said Becker.
Season-ticket holders are being sent letters outlining their options. In addition to getting a refund, they can choose to donate the unused portion of their payment to the Playhouse and receive free tickets to productions in the next season.
Before the tax lien was filed, the Playhouse board was actually growing in optimism. A fundraiser was scheduled for March 31, and the resumption of the season was set to be announced.
Scheduled were three productions — “Barefoot in the Park” in April, “The Odd Couple” in May, and “The Wizard of Oz” in July — that were to be staged in the Boardman Middle School auditorium.
While Becker agreed that the situation appears grave, he also said there is cause for hope. “Royalty houses have given us tremendous discounts, and Boardman [school board] gave us a fabulous deal, pricewise, on the use of their building,” he said. “And there are three [charitable] foundations that are in our corner, who are awaiting a plan from us. If we have something specific and ready to go, we have a shot.”
The Playhouse also could receive funding from the federal stimulus bill. “Mayor Jay Williams is working on it,” said Becker. “He is a strong supporter of the Playhouse and wants to keep it in the city.”
Still, Becker acknowledged that a comeback would be slow. “We have to convince ticket holders that this isn’t [the end],” he said, adding the best way to do that is to remind them of the quality of its productions the last few years.
“John Holt might not be a great businessman, but he was a fabulous artistic director,” he said.
Becker said the board constantly gets calls from people asking how they can help. “There is a core out there that wants us to succeed,” he said.