Inside The Brian Watson Tax Lien Cases

The story originally went around late yesterday afternoon, but we wanted to circle back to unpack a few details surrounding the case of GOP Colorado HD-3 candidate Brian Watson’s hundreds of thousands of dollars in past tax liens. FOX 31 and the Denver paper both published stories yesterday showing that Watson at one time owed as much as $279,000.

Eli Stokols:

“I do not owe $279,000 in property taxes,” Watson told FOX31 Wednesday night, after an initial story citing IRS records showing nine tax liens pending against Watson for unpaid taxes on various properties that add up to $279,657.

“I employ 70 people in Colorado, I’ve tried to create opportunities for people in Colorado and it’s sad when campaigns come to attacks like this. I’ve always been open, honest and transparent.”

…Republicans hold a one-seat majority in the statehouse and, with Democrats expecting to pick up at least a couple seats, the GOP’s grip on control could very well come down to  Watson defeating the incumbent, Kagan.

“Brian Watson has always been very forward about the challenges he’s faced as the economy has turned down,” said Speaker Frank McNulty, R-Highlands Ranch. “Just like other families and businesses in the state, he’s faced challenges. It’s part of his challenges and narrative as to why he can represent that district.

“Compare that to Daniel Kagan who hasn’t earned a dime in his own life, who has investments offshore,” McNulty told FOX31 Denver, perhaps in a preview of attacks to come from Watson’s campaign.

So, there are a few details to clarify. For starters, Watson’s accountant asserts in a letter that he did eventually pay a portion of the unpaid taxes in question, though apparently quite recently. But for the information that Watson himself began circulating after these allegations became public, there would still be nothing to indicate these liens had been paid.

What we appear to have here is a case of a pretty well-off investor who got burned in the economic collapse of 2008-09. In the course of the recession, Watson appears to have incurred a number of outstanding debts and tax liens. We have a letter from an accountant saying that much, but not all, of these have been paid off–according to Stokols, there are still unpaid liens against businesses owned by Watson. Documents obtained by media have Watson explaining how through an unfortunate series of events, he was on the hook for these debts, and he’s in the process of contesting some and paying others.

A good example is a company called Peak Party Rentals. Watson claims a manager he hired stopped paying payroll taxes for the company’s employees. In the case of Peak Party Rentals, Watson claims through his accountant to have paid back the IRS. There is another $108,000 owed through Watson’s other business, Aspen Moving and Storage, that he first had reduced and is now appealing. It could be true, but again, only he would know, and all the press has to go on is the letter from the accountant.

In short? Brian Watson is a guy freshly recovering from significant business problems. It’s an affirmative defense that his accountant claims he has paid off many of these liens, but that doesn’t excuse him from responsibility for incurring them. The arguable worst of these liens, over $200,000 as a result of unpaid payroll taxes, Watson attributes to a subordinate–but the IRS held Watson personally liable. There’s enough in the news reports now to at least make a credible allegation, and that’s really all that opponents need. It’s not all paid back, and Watson is quibbling about responsibility.

No matter how it’s explained, the end result of all this is not positive for one of the GOP’s top-tier legislative candidates. His rebuttal to the charges in the mail piece that started this is dense, and comes across defensively. In the end, this is still a candidate for a taxpayer-funded office with a record of not paying his taxes on time. It’s a major problem for Watson any way you slice it. He’s left explaining exactly how much he owes the IRS, and how much he should really be “blamed for” as a managing partner of the businesses. He’s forced to have an accountant write letters insisting that he never acted improperly. The accountant even has to tell people that Watson didn’t pay attention while his manager stopped paying payroll taxes. How is that not an embarrassment?

And no matter how House Speaker Frank McNulty tries to spin it, this is a black eye for his recruitment efforts, and strategy to hold his perilously-thin GOP majority. Did McNulty know about this and do nothing to control its release, or–worse–did he not know?

We assume there are some funders asking that question right now.

13 Community Comments, Facebook Comments

  1. To everyone wishing to make a contribution, please enclose checks in a brown paper bag, to be deposited between the driver’s seat and the parking break. Cheerio!

  2. Jones Smith says:

    Looks liked he conned Frank McNulty pretty good.  

  3. AristotleAristotle says:

    “The arguable worst of these liens, over $200,000 as a result of unpaid payroll taxes, Watson attributes to a subordinate–but the IRS held Watson personally liable.”

    Maybe Watson assigned the responsibility for the taxes to a subordinate and trusted the job so much that he never gave it any kind of look-see when it was time to file. That’s possible.

    But it’s still Watson’s responsibility. The IRS knows that, and so should every voter in HD-3.

    Listen, Watson – if “you built that,” then you also fucking ruined that. You don’t get to claim credit only for the successes. Shit happens on your watch? YOU are to blame.

    ANY business owner who takes blames issues of this magnitude on subordinates isn’t fit to clean my toilet, let alone vote on issues that affect my state and my family.

  4. ohwilleke says:

    “Compare that to Daniel Kagan who hasn’t earned a dime in his own life, who has investments offshore,”

    Well duh.  Kagan grews up in England (in a family of Holocaust survivors), takes the helm of a family business there (brick and mortar and lots of employees stuff) in old industrial Britain, not hedge funds or captive life insurance companies.  He manages to revive the business that was going to fold and shutter its doors saving lots of (Industrial British) jobs.  And, he follows his future, in the end, to Denver, heeding the call that people have for a century to “go West young man.”

    Is it true that Kagan has investments offshore.  Sure, technically.  Those investments start with his childhood and young adult education.  But, what we are talking about in Kagan’s case is more Willie Wonka than Mitt Romney.  

    Kagan’s “offshore” investments aren’t just smoke and mirrors evasion of U.S. taxes and regulatory requirements and judgment exposure.  Taxes in the U.K. are higher than they are in Colorado and the British aren’t known for the leniency towards industrialists facing civil liability.  These are the people who invented debtors prisons, lawsuits and all the pro-creditor laws that Americans repealed in the Great Depression.

    As for never earning a dime in his life?  Certainly Daniel Kagan is not a Horatio Alger story (arguably his father was).  He inherited the garden, tended it using lessons he learned from his parents and their peers, and made it prosper – it is a story right out of Republican central casting, except for the fact that he happens to be a Democrat.  

    Last time I heard Republicans tell the stories, no kind of income is more important to the national well being and deserves lower taxes than investment income, and one of the most important priorities of the GOP was to end the taxation of inherited wealth.  Every tax package supported by Romney and Ryan supports this core idea.  But, apparently when a Democrat does what they want to encourage, it is a bad thing according to McNulty.

  5. caroman says:

    The IRS treats nonpayment of payroll taxes as theft from the employees.  Consider that the employer, Watson in this case, withheld Social Security, Medicare and Federal income taxes from the employees’ paychecks.  (For example, say an employee’s gross wage was $1,000.  The company withheld about $75 in payroll taxes and $125 in federal income taxes and, therefore, pays the employee an $800 payroll check.)  That $200 withheld from the employee is supposed to be paid to the IRS, along with the employer match for the payroll taxes.  Not making that payment constitutes theft from the employee for which there is no excuse.

    Watson should be considered a criminal.

  6. ArapaGOPArapaGOP says:

    http://coloradopeakpolitics.co

    Ferrandino is in an awkward position in many of his races because of incumbent voting records that are out of step for newly redrawn districts and the fact that certain candidates (yes, you Max Tyler) vote less than 50 days before the election against outlawing DUI for illegal drug users.  We’re guessing that none is more awkward than his situation in HD3 where incumbent Democrat and U.K. “textile tycoon” Dan Kagan is running for re-election against challenger businessman Brian Watson.  We’ll set aside for a moment the awesome irony of Ferrandino defending Kagan, a wealthy, entrenched white guy with untold family riches stashed in offshore accounts, as a “turnaround expert,” and look at how a liberal independent expenditure committee has ineptly undermined their own, and so far only, attack on Watson.

    Democrat “fact”-checkers incorrectly listed a tax lien on a property in California as Watson’s.  Watson rightly pointed out that the lien was filed after he had sold the property and couldn’t possibly have been assigned to him.  Because Ferrandino’s crowd didn’t do their homework, or worse, purposefully lied on the piece, they have given the GOP and Watson the perfect boomerang opportunity.  The Democrats lied once, what’s to say they’re not lying on this piece, or that piece.  The cycle continues and Ferrandino and his Democrat allies in the independent expenditure world see their credibility evaporate as they chase a faltering attack.

    Go on smearing a good man. The wheels are coming off the Democrat lie machine…

    • ClubTwitty says:

      The ‘reportage’ from CPP is questionable, but the writing is tedious, or perhaps odious?  

      • AristotleAristotle says:

        it’s simply way too partisan to EVER take seriously. And the BOT, who is part of the same machine, adds absolutely zero credence to any of their drivel.

        Hey BOT, what do you think of the fact that he’s blaming such a major accounting error on an underling and taking no personal responsibility for it?

        “Good man,” my ass. He’s a scumbag, like I said upthread.

        • ClubTwitty says:

          Republicans are all about blame and not about any responsibility…polls are ‘cooked’ and ‘biased’ (or Obama and the DOJ are pressuring polling firms to lie…yes, ABOT’s party faithful say such things).  

          Sure Romney said that half of Americans are moochers who he has no intention of trying to represent, but its the LIBERAL MEDIA that is to blame because they reported it.

          Etc. etc. etc. etc.  

    • Middle of the Road says:

      to quote a website that doesn’t even understand the difference between a noun and an adjective?

      Go back to the kiddie table, sweetheart. Neither you nor CPP are quite ready to join the grownups just yet.  

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