Air-conditioning contractor Stewart Mechanical failed to pay payroll taxes between 2003 and 2004, and back taxes and penalties will force the nearly 70-year-old business to close, the company announced.

In a letter sent to The Courier-Journal, Stewart President J. Chris Maron said the company stopped paying quarterly payroll taxes in late 2003. He noted that the company's management and ownership changed last year.

The Internal Revenue Service filed a tax lien against Stewart on July 11, saying the company owes $538,824 in back taxes for the final quarter of 2003 and the first three quarters of 2004. The IRS declined to comment on the case.

"These shortfalls have been accruing interest and penalties ever since," Maron wrote. "The extent of the problems put Stewart in an extreme 'upside down' position financially."

The company will shut down soon and liquidate its assets, he wrote.

Calls placed to Maron yesterday and last week were not returned.

Stewart has not filed for bankruptcy, but it may, Maron wrote.

Stewart has been involved in some of the area's largest construction projects, including the Aegon building, the UPS WorldPort hub and Toyota's plant in Georgetown, Ky. The company also worked on the EPCOT pavilions at Walt Disney World in Orlando.

"We believe that Stewart Mechanical is currently a profitable, well-run company," Maron wrote. "Unfortunately, the current company and its owners must suffer for the sins of the past, and the hole that was dug for it by others is too deep to climb out."

The company told Contractor magazine this year that it had 150 employees and $36.5 million in sales in 2005, said Bob Mader, the magazine's managing editor. Stewart was founded in 1937.

Reporter Robert Schoenberger can be reached at (502) 582-4669.