IRS clerical error... or Senatorial scofflaw? Kerry campaign has tax woes

When Senator John Kerry (D-MA) ran for president in 2004, naturally he had a significant staff helping him. The IRS has taken the position that in the process of hiring and employing these people... the Kerry campaign overlooked one minor detail: They failed to pay payroll taxes on campaign staff. That's why earlier this year in the District of Columbia, the tax agency filed a lien against the campaign in the amount of $819,848.

The lien is standard procedure when a tax liability goes unpaid, and is intended as a claim on property to make sure the IRS can collect the debt. Unfortunately, the Kerry campaign closed its books last year, leaving a zero balance. In other words there is nothing left to claim.
According to the IRS, they contacted the Kerry campaign in 2008, demanding payment of the tax liability from 2004, but have not received that payment.

What the campaign says..."

The Kerry campaign's spokeswoman Whitney Smith told reporters that the Senator and his staff see it differently.

"The IRS merely has a gap in their electronic records of the 2004 campaign's payroll forms. We filed these forms correctly, and we're working with the IRS to provide them any and all needed information to set the record straight."

She added that they were surprised when the lien was filed, because, she said, the campaign has stayed in close touch with the tax agency to make sure this matter is resolved. "The IRS contacted us last year about data they lost from the 2004 campaign. We gladly resubmitted all the forms needed to fill in the gaps, end of story."

... and what the IRS says

"We have made a demand for payment of this liability, but it remains unpaid." In addition, the IRS disputes the claim that the Kerry campaign filed the proper forms at all.

Marc S. Owens, the former director of exempt-organizations for the IRS told reporters that campaigns are not exempt from payroll tax. "Campaigns are employers just like any other business. The IRS wants its employee withholding taxes."

If this matter is resolved in the IRS favor, it is unclear whether or not Senator Kerry will pay the delinquent taxes out of his own pocket. Candidates can ordinarily contribute any amount of personal funds to their own campaigns. But because Kerry took public funding for his presidential campaign, his personal contributions have to be limited to $50,000.

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