Agency: 4 candidates have back-taxes liens

State files reviewed on 400 hopefuls

The Arkansas Department of Finance and Administration had active liens last week for unpaid income taxes against at least four judicial candidates and one state representative who is running for re-election.

Two incumbents running unopposed for circuit judgeships in Pulaski County - Patricia James and Joyce Williams Warren - have more than $40,000 each in liens, according to department and county tax records. Arkansas Supreme Court candidate Tim Cullen and district court candidate Adam Weeks also had liens filed against them for smaller amounts.

Department records show that Rep. Eddie Armstrong, D-North Little Rock, who is running unopposed for his second term in the Arkansas House, had at least one unpaid state tax lien.

In March, the Arkansas Democrat-Gazette filed a Freedom of Information Act request with the Department of Finance and Administration asking for any records on active state tax liens filed against the more than 400 candidates running for state, federal or judicial offices in 2014.

“A tax lien gets filed after a taxpayer files a tax return and fails to pay a tax, or after an audit [if] DFA determines additional tax is due,” said John Theis, assistant revenue commissioner with the department.

Theis explained that the department sends notices of proposed tax assessments to taxpayers along with instructions on how to challenge the assessments’ calculations. Challenges must be filed within 60 days of that notice. If a taxpayer challenges his assessment and is not satisfied with the result, he can file a court challenge, Theis said.

The department waits until all administrative and judicial challenges have been exhausted, then it sends notices of final tax assessments, Theis said. The taxpayers then have 10 days to pay the amounts due or liens are filed by the department.

The lien serves as a notice to creditors that the state has a right to the debtor’s assets, including real and personal property, until that debt is paid or until the lien expires. The Arkansas General Assembly included a 10-year limit on state-issued liens when it created the state’s uniform tax codes in the early 1980s.

After a lien expires, a record of it remains, but the state no longer attempts to collect the past-due taxes.

Department officials said in their response to the newspaper’s Freedom of Information Act request that the department does not organize tax records by the debtors’ names but instead uses Social Security numbers or tax ID numbers, which are not subject to release under the Freedom of Information Act.

Consequently, Theis said, a candidate who had a lien and filed his taxes under a different name because of marriage or a nickname might not show up in a names-only records search.

The Democrat-Gazette used circuit court records to verify all of the liens and made several efforts to contact all of the candidates who have liens as identified by the department.

Judge Warren and her husband have liens for $65,726.12 in debt to the Internal Revenue Service and $43,188.11 in tax debt to the state. Five liens are on file, including four from the state Department of Finance and Administration. As of Friday, the department had not released those liens because the debt has not been satisfied, according to a search of the Pulaski County circuit clerk’s records.

In January, Warren listed outstanding tax debts in her statement of financial interest filed with the secretary of state’s office about a month before she filed for re-election. The debts were reported for 2013 and include $14,785.68 to the IRS and $33,560.49 to the state Department of Finance and Administration that Warren indicated were related to capital gains.

A reporter left a detailed message with Warren’s assistant at her office in Pulaski County on Thursday morning. The assistant said she would pass the message along to the judge and have her call back Friday. The assistant confirmed Friday morning that the judge had received the message.

As of the close of business Friday, Warren had not responded to the message.

Warren is running unopposed for re-election.

According to court records, Judge James had four state tax liens tied to unpaid business income taxes for the law firm that James ran with her husband, Bill James. Patricia James acknowledged that she has some unpaid taxes but said the liens’ figures are not correct.

Patricia James, who was elected in 2012, provided an official release of lien showing that the couple had paid the Department of Finance and Administration for one of the debts, eliminating more than $16,000 from the total.She also provided a receipt of payment showing that she had paid one of the other liens worth $5,120 more than two years ago, but the department had not filed an official release.

The Department of Finance and Administration withholds release of a lien if any penalties or late fees remain from a lien.

James said she planned to search through financial records to make sure the department’s records for the amount she and her husband owe is correct.

“I’m taking responsibility for this. It’s hard for any small-business owner right now, and private law firms aren’t any different,” she said. “If we had paid those taxes on time, then some of this confusion wouldn’t exist. I’m not making excuses, but we all make priorities with our money. We had to pay our employees and keep the business open, and that led to us paying the [income taxes] late a few times.”

Aside from the two liens for which James provided evidence of payment, two others exist, according to Pulaski County Circuit Court records. One lien filed in 2009 is for $14,278.92, and the other, filed in 2013, is for $21,026.43 - both are for unpaid income taxes, penalties and interest.

“We will pay everything we owe. But, before I pay those, I want to take the weekend and look through all of our business records and finances, and make sure the numbers the state has are correct,” she said. “Already some of my receipts don’t match their version of those taxes owed.”

James is running unopposed for re-election.

Last October, the state filed a tax lien against Cullen, a Little Rock attorney, for $3,361.90. At the start of last week, the lien hadn’t been released.

Reached Wednesday, Cullen, who is running for the seat on the Arkansas Supreme Court that is currently held by Justice Donald Corbin, said he was unaware that the lien hadn’t been released until contacted by a reporter. Cullen added that he was certain he had paid the debt, but he would look into the matter.

A day later, Cullen provided a written response to the newspaper. According to his statement, the Department of Finance and Administration notified Cullen that he owed $3,300.66 in taxes on Sept. 9.

Cullen said he paid that amount on Nov. 18, but by that time, an additional $205.38 in penalties and interest had been assessed. Notices of the penalty were sent to a Little Rock address that he no longer uses, and the notices weren’t forwarded to his current mailing address.

On Thursday, Cullen said he corrected his address and paid the additional amount,which was confirmed by a receipt and a lien release provided to the newspaper.

“I take full responsibility for paying my taxes. As a small-business owner for 15 years, I have done the best I can in light of a tumultuous economy,” he said.

“At the time of the filing, the tax had been paid; only a small penalty and interest of $205.38 was owed. I would have paid that if the notice had been sent to the correct address. That balance has now been paid in full, and the lien is released,” he said in the statement.

Cullen faces Arkansas Court of Appeals Judge Robin Wynne for the Supreme Court seat.

Lawrence County district judge candidate Weeks, a Walnut Ridge attorney, owes slightly more than $2,000 to the state for unpaid individual income taxes, according to two liens filed against him by the Department of Finance and Administration. The latest was filed on Oct. 14, 2013, for $1,552.90 in taxes owed for the 2006 and 2011 tax years.

Reached Wednesday, Weeks said he had found out about the latest lien on Monday, but he was unaware of a second lien filed in Pulaski County in 2010 for $478.03 in past-due individual income taxes.

“It’s embarrassing. I’ll just be as honest as possible,” Weeks said.

He said he couldn’t give a specific explanation for why he had liens for unpaid taxes. A reporter provided Weeks a copy of both liens on Wednesday, and he said he would be making arrangements to get the debt paid “very quickly.”

“Following law school, I moved a few times and as a result of that it looks like there were tax liens assessed against me that I was unaware of until recently,” he said.

Weeks said Friday that he had attempted to pay the debt over the phone with a credit card, but the state required him to mail in payment, which he said he did that afternoon.

Weeks is unopposed for the district judge position.

In January 2013, the Department of Finance and Administration filed a new lien against Armstrong, D-North Little Rock, according to Pulaski County Court records. The lien for $3,528.20 is one of four that have not been paid in full and have not been released, those records show.

Armstrong is running unopposed for re-election to the District 37 House seat.

Reached by phone Thursday, Armstrong said all of the liens are related to a lobbying and consulting firm that he used to own, which no longer exists. He said he became aware of the older liens when a reporter called him in 2012 when he was running for his first term in the state House.

Armstrong reportedly contacted the Department of Finance and Administration through his accountant in 2012, and worked out a plan to pay off four liens against him and his former business partner for unpaid income taxes. His accountant said via email Friday that Armstrong is on schedule with the payment plan that he worked out with the state agency, and one of the liens had been satisfied and released.

The court records do not show how much of the liens have been paid off in the past two years, but the Department of Finance and Administration does not release them until the debt is paid in full.

“As for the most recent [lien], I’ve worked it out with my former partner, and we’re already making payments on that one as well. I don’t have that company anymore, and we’re just working to bring everything up to date,” Armstrong said.

Front Section, Pages 1 on 04/20/2014

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