Statehouse candidate Watson denies owing $279K in taxes

Posted on: 1:29 pm, September 25, 2012, by , updated on: 10:41pm, September 25, 2012

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DENVER — The Republican candidate looking to unseat a Democratic state representative, in a race that could determine which party controls the statehouse, denies  owing nearly $280,000 in unpaid property taxes.

That candidate, Brian Watson, tells FOX31 Denver that IRS records showing tax liens against his businesses are either wrong or outdated.

“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.”

Watson, a businessman who is running to unseat Rep. Daniel Kagan, D-Denver, has Republicans excited about their chances to win a Denver district that was re-drawn in their favor during reapportionment earlier this year — and the House GOP’s chances of maintaining a one-seat majority in the statehouse may depend on it.

An outside political action committee supporting Kagan, the Colorado Accountable Government Alliance, is now highlighting Watson’s unpaid property taxes in a new mailer.

Kagan himself told FOX31 Denver he has had nothing to do with the mailer and hasn’t been raising the issue when he talks with constituents.

Three of the liens, for a total of $147,506, are on Aspen Moving and Storage, which Watson explains in a 2010 letter to investors, “suffered approximately a 70 percent decline in income between 2008 and 2009.”

In the letter to his investors, Watson blames the economic downturn and “mismanagement” of the facility for the business’s woes and promises to “pay the full principle of that [$350,000] loan when and as I’m able to do so.

“In retrospect, the purchase of this company [sic] is an investment that I wish I had not made,” he writes. “That being said, AMS signed a loan with the real estate entity, and I agreed to be personally liable for that debt at the time of the acquisition.”

Watson tells FOX31 Denver that he paid off that loan in full in June 2011.

“I sold another property and paid off that loan,” Watson said.

Documents obtained by FOX31 Denver reveal that Watson also owes a total of $5,309 for two liens filed by the County of Los Angeles on a company called NCPAC; and $19,993 for two liens on another business, Peak Party Rentals.

Watson told FOX31 that the liens filed against NCPAC, a company he incorporated when he bought up several vacant properties from Benjamin Moore paints, were filed “in error” by the county after Watson had sold the assets on which the taxes are due.

“We believe it’s a mistake by the Los Angeles County assessor,” Watson said.

The situation with Peak Party Rentals is more complicated.

According to Watson, the person he entrusted to manage the company switched payroll companies on his own and stopped paying payroll taxes.

“When we found out we owed all those payroll taxes, we fired the manager and, working with our accountant, we’ve gotten the IRS to lower the amount they were seeking in back taxes,” Watson said.

“My wife and I decided to pay the full amount of $106,000 in back payroll taxes at extreme expense to ourselves and our company, even though we were not personally responsible,” Watson told FOX31. “Now, I’m appealing it to the IRS.”

A letter from Kenneth Jackson, Watson’s CPA, corroborates that explanation.

“Mr. Watson does not owe the Internal Revenue Servic any amount whatsoever in unpaid taxes,” Jackson writes in the letter, which is posted on Watson’s campaign website.

But those supporting Kagan don’t buy all the explanations.

“As someone who’s looking to be paid with taxpayer dollars, he should be paying his own taxes,” said Joanne Kron, the executive director of ProgessNow Action, a liberal group that supports Kagan. “Law-abiding citizens across Colorado are paying their taxes and doing their part.”

Despite the debts, Watson’s company, Northstar Commercial Partners, made a political contribution, a $500 donation to the Colorado Republican Party on April 27, 2012, which FOX31 Denver found by doing a simple search on the Secretary of State’s TRACER website.

“That is an extremely serious issue and shows his intentions, being out for himself and his own personal gain,” Kron said. “Donating to the party when you’re a candidate for office, prioritizing that over his debts, definitely shows where his priorities lie.”

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.

“I think the contrast bodes well for Watson to represent that district because he actually knows the struggles his constituents are going through.”

“The Speaker’s accusations ring hollow, as usual,” said House Minority Leader Mark Ferrandino, D-Denver, who noted that Kagan saved his parents’ textile company and managed it for 10 years.

“His parents’ company in England was failing, he went back and rescued it.”