EXCLUSIVE: IRS files $800,000 lien on ‘04 Kerry campaign

EXCLUSIVE:

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.

Download a PDF of the IRS document here.

Mr. Kerry’s office said the IRS claim is erroneous and that the campaign paid its taxes correctly in 2004 when the Massachusetts Democrat challenged President Bush and lost.

“The IRS merely has a gap in their electronic records of the 2004 campaign’s payroll forms,” Kerry spokeswoman Whitney Smith said of the lien. “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,” she said.

IRS spokesman Anthony Burke declined to comment on the lien or on the Kerry aide’s characterization of the tax issue, saying federal law bars IRS employees from discussing individual cases.

In general, the IRS files a lien to ensure it has a legal claim on property to collect a tax debt, but it’s unclear what Kerry campaign property remains to be claimed. The campaign filed termination papers with the Federal Election Commission (FEC) early last year showing a cash balance of zero.

Ms. Smith said the campaign received a letter from the IRS on Jan. 7, 2008, saying that authorities were missing W-2 forms from the campaign. She said the IRS letter noted the penalty was $819,000, the amount on the lien.

She said the campaign filed the forms correctly in 2004 but issued the forms again in response to the IRS letter.

“We’ve checked with the IRS at least once a month since then asking why the issue has yet to be resolved,” she said. “We still don’t have an answer.”

Because the Kerry campaign accepted public financing, it’s unclear whether Mr. Kerry could pay the taxes from his personal funds if the IRS doesn’t side with him, analysts said. The nonpartisan Center for Responsive Politics has estimated Mr. Kerry’s net worth at $284 million to $336 million, the third highest in Congress for 2007.

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