Kinexus Group's $662,000 Pandemic Credit Disallowed as Counties Draft Replacement Board

Berrien, Cass, and Van Buren counties have begun drafting a new interlocal agreement to replace Kinexus Group, the nonprofit that administers their federal and state workforce programs, after the IRS disallowed a $662,000 Employee Retention Credit claim, EIN Presswire reported. The counties' joint committee directed counsel to draft the agreement on October 16, with a first draft expected October 23.

Counties Move to Replace Kinexus Group

Kinexus Group is a Benton Harbor, Michigan-based 501(c)(3) nonprofit operating a family of six subsidiaries that deliver workforce, economic, community, and youth development services across Southwest Michigan and statewide, primarily funded through government contracts and grants, according to akta.pro company records. The counties demanded six years of financial and governance records from the organization on June 29.

Berrien County's lawyer, Corporate Counsel Thaddeus Hackworth, told the committee that records Kinexus produced on October 9 show the IRS audited one of its Employee Retention Credit claims, for $662,000, and disallowed it. "That amount was not paid by the IRS," Hackworth said. "Instead, after an audit, they disallowed it." He said the disallowance is not money Kinexus owes back because it was never paid.

The committee voted to direct Hackworth to draft a new interlocal agreement creating a public workforce development board, the structure he said most Michigan workforce areas use, in place of the nonprofit corporation that has operated under a 2000 agreement. Under the direction given, the new body would receive the grants, liability would be weighted by population and where costs arose rather than split equally, and borrowing, guarantees, and for-profit ventures would be barred.

The committee also voted it would not support paying an interim executive director above the federal salary cap. Cass County Commissioner Roseann Marchetti, a member of the search committee, reported that the committee reviewed nine applicants and narrowed them to three finalists, with in-person interviews set for October 26 at Kinexus's executive offices in Benton Harbor. The search is using a $179,000 to $280,000 salary range from the compensation consultant Element One.

Kinexus said in a statement that its review is ongoing and that the tax filings "were prepared and filed by the organization's CPAs." The agency said it "is continuing to gather and review information to develop its own complete understanding of these matters."

Kinexus Group's Pandemic Credit History

Kinexus recorded a $2.3 million Employee Retention Credit in its fiscal 2024 audited financial statements, as revenue without donor restrictions, and had earlier received a $1.2 million Paycheck Protection Program loan, later forgiven in full. The agency's fiscal 2025 financial statements still carried $1.8 million of the credit as money owed to the organization at June 30, 2025.

The Michigan Department of Labor and Economic Opportunity sent its own request to Kinexus on October 9, asking whether the agency had received any ERC or PPP money beyond the two amounts the state knew of, and requesting the calculations behind both, the specific staff salaries used, and what the funds were spent on. Hackworth said the response was due this week and he did not know of an extension.

What Comes Next for the Workforce Board

The committee meets again on October 23 in Van Buren County, when a first draft of the new interlocal agreement is expected. In-person interviews for the interim executive director are set for October 26 at Kinexus's executive offices at 330 W. Main St. in Benton Harbor.