September 27, 2012 01:07 AM UTC

Inside The Brian Watson Tax Lien Cases

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• by: Colorado Pols

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.