Tax problems haunt state candidates

In that sense, these challengers are very much like the lawmakers they hope to unseat.

Investigations in the past year by The Atlanta Journal-Constitution revealed Georgia lawmakers accrued nearly $1.5 million in current and past liens for overdue taxes.

A candidate's record of on-time tax payment is significant. Should they be elected, they would be in charge of setting tax policy for the state, as well as managing billions in tax money. Financially strapped legislators also can be easy prey for people willing to offer bribes — or de facto bribes — for legislative favors.

Like the incumbents, legislative challengers have a variety of reasons why they did not pay their taxes on time, ranging from personal tragedy to bad business deals to simple oversights. But many blamed the poor economy.

"I was downsized in 2005," said Doreen Carter, Lithonia Democrat and one of five candidates vying for an open seat in House District 92.

Carter said she was laid off from her job in a church, which put her behind paying her bills. DeKalb County filed $5,592.49 in liens against her property from 2006 to 2008.

"It was a matter of finding a job, taking care of a family. Being downsized in a recession was difficult, doing everything you can to pay your bills," she said.

The liens have been paid off, but Carter filed for bankruptcy in 2011.

Carter said her financial problems have an upside.

"Everyone is having a difficulty and as part of the government it's going to help me use more common sense to think on what we should do on taxes," she said.

With the July 31 primary elections a little more than a week away, the news that so many candidates have problems paying their taxes is worrisome to some voters. All 236 seats in the Georgia Legislature are up for election this year.

Rob Solon, a Canton resident, said anyone can have money problems.

"It's about how you are dealing with it," he said.

Candidates who haven't dealt with it, probably should press pause on their political campaigns, he said.

Candidates with tax problems raise a thorny issue. It is not illegal for them to seek office, even if they still owe, as long as payment arrangements for back taxes are in place. But if elected they will vote on state tax policy and be paid with taxpayer money.

That's a serious issue for voters like Solon.

"I'm not going to lock them up in jail, but I'm also not going to make them my representative," he said. "You don't have to run for office. It's not an entitlement."

Jared Thomas, spokesman for Secretary of State Brian Kemp, said a number of candidates this year have had their place on the ballot challenged because of tax debts.

"It's much more so than the past," he said. "It's probably just a reflection of the poor economy. A lot of people have found themselves in financial trouble and taxes are a part of that."

Kemp is reviewing the rulings of administrative law judges on several cases. He has yet to make a decision in those cases.

One candidate -- Chris NeSmith, who was running for a superior court judgeship in the Northern Judicial Circuit -- withdrew from the race Monday after an administrative law judge declared he was ineligible for the ballot after his candidacy was challenged for state and federal tax liens.

Only one candidate for the General Assembly has been challenged on the basis of their tax debt, incumbent Rep. Paulette Rakestraw Braddock, R-Powder Springs. Braddock faces a IRS tax lien for $36,343.59 in unpaid taxes from a failed marketed business. A judge in that case turned down the challenge.

Some candidates saw their past tax problems as a net positive on their political resume.

Bikram Mohanty, a Valdosta Democrat seeking the District 8 Senate seat, paid his 2008 state income taxes late, but not before the Georgia Department of Revenue filed a lien against him for the $4,466.58 bill.

"As most Georgian's can attest, 2008 and 2009 were the years that many families began to feel the influence of our current economic dilemma," he said.

Mohanty, who owns an occupational therapy practice, said he ran into tax trouble when he deferred his personal income to make up for the economic downturn.

"While this did create a problem paying my taxes from 2008, it allowed me to retain my entire workforce," he said.

Mohanty describes himself as an immigrant success story, having arrived in America with "$50 in my pocket and resolve to take advantage of the American promise of opportunity." As a legislator, he said he can bring his understanding of the new story of hard times to the Capitol.

"Because of my life experiences, I have a unique perspective that will allow me to both nurture the American dream and be a responsible steward with the people of Georgia's money," he said.

Many said they were unaware liens even existed. Dean Sheridan, a Republican from Woodstock running in the House District 23 race, said he has a "clean bill of health" from the IRS and was unaware of a lien for $1,399.09 filed in 2010 for taxes from 2008.

Sheridan said that was a "transitionary period" in his business that changed his tax profile.

"They were assuming I was conducting my affairs in the same fashion," he said. "I provided them with tax documents showing them differently, and they never wrote me again, so it's been resolved."

Except that the lien still is active.

Liens and bankruptcies are court documents and open to public inspection, so it is not surprising they become ammunition in hotly contested races.

When contacted by the AJC about $3,743.50 in property tax liens from 2002 to 2004, Adam Jacobson of Woodbine in extreme southeast Georgia assumed his GOP primary opponent, incumbent Rep. Jason Spencer, put the newspaper up to it.

"I am sure this information was dug up by my opponent because he is desperate to hide his record of failure for our district," Jacobson said.

As for the liens, he said they were the result of a dispute with a home builder and are "a non-issue."

"It was paid and taken care of," he said. "End of story."

In the race for Senate District 18 in central Georgia, Republican challenger Spencer Price held a news conference earlier this month to deal with questions about his past tax problems.

Price incurred $45,321.37 in state and federal income tax liens for the 2003 and 2004 tax years. The campaign of incumbent Sen. Cecil Staton, R-Macon, set up a website to publicize that and other claims about Price.

In an interview with the AJC, Price said the Staton-backed site does not offer any context to his tax problems.

"In 2001, my son, John Edward, was born with a serious heart condition," he said. The boy lived just 13 months, leaving Price with enormous medical bills.

Price said advisers at his son's hospital urged him to file a preemptive bankruptcy, but he didn't. A medical doctor and lieutenant colonel in the Georgia Army National Guard, Price said his financial problems worsened following deployments to Iraq and Afghanistan.

He has since paid off the state liens and is working with the IRS on the remaining federal tax. Price said he thinks voters will understand the liens given those circumstances.

"It's been a tough 10 years, but I did the right thing," he said.

Sen. Bill Heath and his supporters have aggressively criticized Heath's opponent, former Paulding County Commission Chairman Bill Carruth, over a $2.3 million federal judgment against him involving a loan for a failed private bank. Carruth is challenging the judgment in part because he doesn't believe he owes the penalties and interest. He is already making payments on the debt, according to Chip Lake, his political consultant.

But Carruth has tax liens too -- literally hundreds of them under his own name as well as his various real estate ventures -- for failure to pay local property taxes on time. The AJC calculated $327,067 in current and past property tax liens, nearly a third of the overall dollar amount the newspaper found among all candidates.

Lake said his candidate is in a similar boat with other developers who incurred liens when the real estate market tanked. The unpaid taxes get handled when the lots change hands, he said.

"This is inclusive of all fees, interest and penalties, in which case the county oftentimes ends up with more money," he said. "Mr. Carruth is working aggressively to move these lots and properties so that he can settle any outstanding liabilities as soon as practically possible."

While it is true that other candidates with real estate interests also have liens on their record, the AJC discovered no other candidate with so many.

Ken Payne, a Toccoa Republican seeking the House District 28 seat, said was one of several candidates who blamed others for the tax problems in their name. Payne said his financial relationship with a local steakhouse resulted $77,204.53 in local, state and federal liens.

Records show that between 2003 and 2005 the Toccoa Family Steakhouse missed paying property taxes and failed to take out federal taxes for its employees.

Payne said he provided the capital for the restaurant but didn't manage the day-to-day operations. Regardless, everything was in his name, so the liens were filed against him.

"I should have stayed on it closer than I did, but I thought they had the knowledge and experience to...do what they were supposed to do," he said.

The local and state taxes have since been paid, but the federal lien for $51,578.04 is outstanding.

"The lawyers told me to walk away from it and not worry about it because it was a corporation. The only reason they hit me with the lien is because my name was on the bank account," he said.

Other candidates -- particularly those with a sinlge blemish on their records -- simply copped to an unintentional mistake. House District 1 candidate Alan Painter, a Rossville Republican, said he just missed a 2007 county property tax bill on a piece of land he inherited from his father.

Records show the $760.99 bill was paid off after the lien was filed.

Painter still owns the land and records show he was only remiss that one year. He said he has a process in place to make sure it doesn't happen again.

"It wasn't that I wasn't financially able to do it," he said. "It was just an uh-oh."

William Blackmon, a Democratic candidate from Locust Grove in the House District 111 race, said liens and bankruptcies don't disqualify you from public service. He had a state income tax lien for $582.38 for the 2000 and 2001 tax years he paid off in 2003 and declared bankruptcy in 2009 after a business he invested in failed.

"As a candidate, I'm not different from any other individual that has had a business that went through that," he said. "If you check the background of some of those (legislators) in there now, you'll probably find a worse record than that. And I don't think that's bad. The economy hit a lot of people in business."

How we got this story

Reporters spent weeks combing though tax lien databases, candidate financial disclosures and other public records to see how diligent candidates for the Georgia General Assembly have been in paying their taxes. We then called and e-mailed candidates to ask them about the liens and why they were late paying their taxes. This story follows two prior investigations into taxes owed by incumbent legislators.

AJC staff writers Nichole Chavez and Edward Mitchell contributed to this report.