The Internal Revenue Service filed a tax lien in November 2012 for more than $80,000 against a company headed by Democratic lieutenant governor candidate John Burkhalter, one month before Burkhalter dissolved the company.
More than 15 months later, the tax lien has yet to be released.
Asked about the lien, campaign spokesman Bryan Griffith initially said Burkhalter doesn’t owe the money and never assumed the presidency of Burkhalter & Stevens.
“John was never president of the company. The company ceased operations in 2009,” Griffith said.
But asked to explain state tax and corporate records from 2010, 2011, 2012 and 2013 - some of them signed by the candidate - listing Burkhalter as the company’s president, the campaign acknowledged the records are genuine.
“These are authentic documents and are accurate in the respect that these forms must be filed with the signature of an ‘authorizing officer,’ and as last man standing in the company that had ceased business operations years earlier, outside accounting professionals listed John as president in the absence of any other officer in order to successfully close out the affairs of the company,” Griffith said.
A spokesman for the IRS declined to comment on the lien.
Burkhalter of Little Rock said through a spokesman that he’s trying to resolve the matter.
Through his spokesman, Griffith, he blamed “the management team at the time” for the IRS lien, which he says stems from unpaid payroll taxes in 2007 and 2008. Burkhalter declined to identify his business partner’s identity, saying a confidentiality agreement signed in 2007 prevented him from doing so.
Records filed with the secretary of state’s office and U.S. Bankruptcy Court identify the partner as Joseph “Joey” Stevens.
Stevens was listed as president of Burkhalter & Stevens Inc. in records dated 2007 and 2009 in the secretary of state’s office. Burkhalter was listed as the company’s president beginning in 2010.
Reached by telephone last week, Stevens declined to comment.
An April 21, 2008, Arkansas Business article about Burkhalter & Stevens Inc. described Burkhalter as that company’s “lead investor.”
Nearly three weeks ago, Griffith said the tax lien dates to “a silent ownership” from 2007 under which Burkhalter provided his name and credibility to a construction business. He said Burkhalter “never received any compensation or distributions from this company.”
In an interview, Robert Ferguson of Sherwood, managing partner of FCA Certified Public Accountants, said Burkhalter agreed to be a guarantor on an existing line of credit for the company in 2007 when the construction industry was growing, and Burkhalter was given 50 percent ownership of the company.
In a recent interview with the Democrat-Gazette, Burkhalter - a former member of the state Highway Commission and chairman of the state Economic Development Commission - said he was “a passive investor” in Burkhalter & Stevens.
Burkhalter said the construction firm “was a victim of the times in the downturn of the economy.”
The company aimed to use “insulated concrete forms,” an energy-efficient technology, in building walls and “there was not enough revenues during the downturn of the economy,” he said. “Not all businesses are successful. Some are going to fail.”
Burkhalter, president of Burkhalter Technologies, said he’s highly successful in business and he wants to help create jobs as the state’s lieutenant governor.
Burkhalter has ownership in 14 entities that employ 45 workers in central Arkansas, Griffith said.
The tax lien was filed after Burkhalter & Stevens’ management “diverted some 2007 payroll into an unrecognized federal tax ID number and failed to pay the taxes associated with that payroll,” Griffith said.
“Mr. Burkhalter did not participate in any of the operations of the company until he became aware of this and other problems, which ultimately led to the discontinuation of business in 2009,” Griffith said.
Griffith said Burkhalter’s representatives started working with the IRS to resolve the issue upon discovering the duplicate federal tax numbers.
“Despite the fact that these professionals agreed that liability lies with the dissolved company and active partner, they are still working on Mr. Burkhalter’s behalf to make sure this gets resolved,” Griffith said.
Ferguson, in the interview, said Burkhalter had no role in day-to-day management of the company when the payroll problem occurred, and Burkhalter doesn’t have any direct liability for the tax lien filed against the company. Stevens filed for bankruptcy, he noted.
Griffith said the company has the liability for any unpaid amounts, because corporations are separate entities from their shareholders under the laws governing corporations.
“In some cases, if the liability cannot be immediately collected from the business, a portion of the unpaid liability can be assessed against a person in the company who, during the period of noncompliance, is ‘responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and willfully fails to collect or pay them,’” he said, referring to the IRS website, www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employment-Taxesand-the-Trust-Fund-Recovery-Penalty-TFRP .
“I think it has been established that this was not the case for Mr. Burkhalter,” Griffith said.
The three Republican candidates for lieutenant governor - U.S. Rep. Tim Griffin of Little Rock and state Reps. Debra Hobbs of Rogers and Andy Mayberry of East End - declined to comment Friday on the tax lien.
Arkansas, Pages 9 on 04/02/2014