Print

Email story

Comment

Email editor

State Democratic Party faces IRS lien

The party faces a lien of about $200,000 for unpaid federal withholding from paychecks. Stunned party leaders order an audit.

By ADAM C. SMITH
Published June 22, 2005

The IRS has placed a lien of about $200,000 on the Florida Democratic Party for failing to pay federal taxes withheld from the paychecks of party staffers.

The move, in effect, froze the party's accounts and stunned party officers responsible for overseeing the budget. Karen Thurman, the new party chairwoman, told Democrats Tuesday she learned of the lien the day before.

Party officials then ordered an independent financial audit of the beleaguered state party. Some members fretted that it appears more than $900,000 is unaccounted for.

"We're trying to find out how this happened," said Fort Lauderdale attorney Mitchell Berger, a Democratic activist the party retained this week to help deal with the IRS.

The lien is the latest blow to the cash-strapped party, which in the first quarter of the year had been spending more money than it raised. It's also potentially damaging to the gubernatorial campaign of Scott Maddox, who was chairman of the party during the period of 2003 and 2004 cited by the IRS.

Maddox, who touts his executive experience, resigned from the state party in May to run for governor after assuring Thurman and other party activists that he had left the party on firm financial footing. The day Democrats elected Thurman chair, Maddox brushed off questions about hundreds of thousands of dollars unaccounted for in the party. Audits showed everything fine, he said May 7.

On May 12 the IRS filed its lien for nearly $190,000. Party officials say the lien, which includes penalties, has since grown to more than $200,000.

Maddox referred phone calls on the matter to his campaign pollster, Dave Beattie.

"He did not know about it," said Beattie, suggesting that the lien appeared to stem from a bookkeeping error. "Any mistakes that were made he takes responsibility for. He's going to work with the new party leadership to rectify the problem as soon as possible."

State Democratic vice chairwoman Diane Glasser said Thurman likely will pay off the lien and free up the party's accounts quickly, perhaps as soon as today. She said Thurman also promised to start providing at least quarterly financial reports to party officers, a practice that has halted during the tenure of Maddox and his predecessor as chairman, Bob Poe.

"I don't think it's going to be a big problem," Glasser said of the lien.

But a fellow member of the party's budget committee, state committeeman Jon Ausman of Tallahassee, contends that at least $900,000 seems to be unaccounted for, based on financial reports since the end of 2003. He wants the party to sue its internal auditor for failing to do its job correctly.

"It's very serious," Ausman said. "We have to reassure our donor base that we are securing and managing their money in a responsible way."

Ausman said the IRS had sent the party certified letters about the unpaid taxes, but "somehow they miraculously got lost." He said he was not suggesting that money had been stolen from the party, "but I would like to see that money accounted for."

Party leaders said they were less concerned about the party's ability to quickly pay off the lien than determining how it happened and making sure proper controls are in place.

"How serious it is just depends on what else is there, and very few people probably know that right now," said state Rep. Dan Gelber, of Miami, who is in line to be the next House Democratic leader. "But Karen (Thurman) is going to be a good steward. She is very intent on dealing responsively and directly with a problem she inherited."

Hillsborough Democratic chairwoman Janee Murphy, who also sits on the state party's budget oversight committee, said the party can't move fast enough to fix its fiscal problems.

"We've got a governor's race. We've got a U.S. Senate race," Murphy said. "We can't go out there and battle the Republicans or anything else until we get our house in order."

[Last modified June 22, 2005, 01:08:17]