IRS Files $800K Lien Against John Kerry for President Campaign

IRS Files $800K Lien Against John Kerry for President Campaign

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The Washington Times reports that the IRS has filed a federal tax lien (PDF) against John Kerry’s 2004 campaign for failure to remit payroll taxes:

The Internal Revenue Service has filed a tax lien seeking more than $800,000 from Sen. John Kerry’s 2004 presidential campaign, escalating a dispute over payroll taxes that the lawmaker’s office blames on faulty government paperwork.

The episode has left a candidate who fell just a few percentage points short of winning the White House trying to convince the government’s tax collector that his campaign already paid the taxes and doesn’t owe any more.

The IRS filed the lien in the District of Columbia earlier this year, claiming that a previous attempt to collect the money was unsuccessful. “We have made a demand for payment of this liability, but it remains unpaid,” the tax filing stated.

The IRS is taking action more than a year after the campaign closed its books and sent nearly $200,000 in leftover presidential campaign money to Mr. Kerry’s Senate election fund.

Kerry’s campaign ended in November 2004 when he lost the election to George Bush. That means it has taken the IRS 4 and 1/2 years to file a tax lien against the campaign.

The IRS’s delays raise the following questions:

1.  Would a typical American small business with more than a half million of unpaid payroll taxes be allowed this much time before a tax lien was filed against it?

In my 20 plus years representing small business taxpayers, I have never seen the IRS take this long to make an assessment and pursue enforced collection. Read my prior post titled Payroll Tax Crimes: “Lovegod” Gets 22 Years For Failure to Remit Payroll Taxes to see what happens to ordinary businessmen who don’t pay their payroll taxes.

2.   Has the IRS conducted an investigation to determine who in the Kerry campaign was responsible for the failure to remit the payroll taxes?  

The IRS routinely assesses a trust fund penalty against those within an organization who are deemed responsible for its unpaid payroll taxes. This is especially true in the case of businesses (or campaigns) that are no longer active because by definition inactive corporations do not generate future operating income from which the IRS can collect the unpaid taxes. 

So, I wonder whether the IRS has conducted its 4180 interviews? And if so, who did it interview? Senator Kerry himself would be an obvious choice.

Kerry campaign spokesman Whitney Smith said it’s all much ado about nothing:

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.

There’s no there there; nothing to see here so move along folks, end of story.

Of course that’s just silliness. There is in fact something to see.

It’s right here.

The IRS’s filing of the lien means one of two things:

  1. The Kerry campaign ignored the IRS’s previous notices (a lien cannot be filed until notice and a demand for payment is served on the taxpayer); or
  2. The campaign responded to those notices but failed to convince the IRS of its position.

If the IRS is clearly wrong, as Ms. Smith suggests, wouldn’t the Kerry campaign have responded to its earlier notices and demands for payment by proving that it had paid its taxes thereby avoiding the embarrassment of an IRS lien altogether?

The truth is that when there is a legitimate dispute as to whether or not taxes have been paid, the IRS refrains from filing a federal tax lien until that dispute is resolved.

The fact that the Kerry campaign was given (granted by law) several opportunities prior to the issuance of the federal tax lien to prove that the IRS assessments against it are incorrect and failed to do so is troubling.

Update – Response from Kerry Campaign:

John Kerry’s press secretary, Whitney Smith, sent me an email stating that the Washington Times article from which I quote is inaccurate.

I have posted Ms. Smith’s email in its entirety at John Kerry Responds, Says Tax Problem is Due to an IRS Glitch.

Related Posts:

What Happens if Your Business Hasn’t Made its Payroll Tax Deposits

The Five Biggest Payroll Tax Mistakes of Small Business Owners

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida

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  1. This Lien, would normally not be filed in John Kerry’s name, or, it should not have been. I had a similiar case involving a political figure where payroll taxes were not paid. The campain, not Kerry, is responsible for the none payment of the tax. Kerry did not pay the payroll. Kerry was not a responsible person, as described by IRC § 6671(b).


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