Allen West Not Paying Payroll Taxes on Campaign Workers
The question, however, is if it owes any. A review of campaign finance disclosure documents shows West has spent well over $300,000 since the beginning of 2012 on consulting, staffers, and costs directly associated with his staff. But, while Democratic opponent Patrick Murphy, an accountant by trade with a significantly smaller grassroots campaign, has paid $11,547.41 in payroll taxes associated with campaign workers since January 1, West has paid exactly zero.
So -- is it possible to run one of the largest campaigns in the country, to raise almost $10 million for reelection at events from West Palm Beach to Los Angeles, without having a single employee?
It appears West is paying his campaign workers -- all of them -- as independent contractors or consultants, which would get him off the hook for paying those taxes and push the burden onto his workers. But the Internal Revenue Service has a very strict delineation between who is an employee and who is a contractor: If a person is giving you supplies, setting your hours, and overseeing your daily work, that person is an employer.
If a person is paid by the job ("fix my roof, here's your fee, hire your own people, and get your own supplies"), that's a contractor. If a person is paid a salary ("answer phones in my office from 9 to 5 and help me get elected"), that's usually an employee -- which, it would appear, is the case with at least several of West's workers, which, according to Fort Lauderdale accountant John Folson, would mean he's opened himself up to potential claims down the road for back taxes, fees, and penalties.
"It has to do with control," Folson said. "In a nutshell, an independent contractor is someone who you tell, 'All I care about is the finished product, and that's all I care about. I don't care what time you come into work, I don't care what you wear, I don't care how you achieve the end product.'"
But, it seems, at least several of those campaign workers would violate that detached system in which West would theoretically say, "Here's what I need. Get it done. See you in a month."
Take Timothy Edson, for example. He became West's campaign manager back in February, which would seem to be enough to show he's an employee -- he's quite obviously working at West's direction, and his expenses are West's expenses, and West reimbursed him $6,249.08 for relocation, temporary housing, and mileage.
There's more, however: Since his arrival, Edson has been paid $8,000 a month, every month, in line items described as "Administrative/Salary/Overhead: Salary." Salary equals employee, every time.
"They could have some explaining to do if they call it salary. Then the indication is that he's an employee," Folson said. "Obviously, if he is the campaign manager, the question becomes is he autonomous or is he taking direction from Allen West?"
Folson said "the only way it would be [allowable] is if he had very limited interaction with the congressperson's office and they basically hired him to go out and organize a campaign."
He continued, "But if he's reporting to them and letting them know what's going on and he's taking direction from them, then he's definitely an employee."
A potential way around it, however, is to work as a consultant -- essentially presenting yourself as a business providing a service. But that requires... being a business.
That appears to be what West finance director Catherine Faulkner is doing: She left her post as executive director of the Broward Republican Party in 2009 to serve as West's finance director in the 2010 elections. After West got into office, however, she didn't leave: She received a $5,000 payment in both February and March of 2011 that was classified as "salary" and another payment for "cell phone and catering" in April 2011. She then disappeared from documents.
April 2011, however, also happens to be the time Faulkner registered "Out Loud Strategies Inc." -- which immediately appeared on West's expense reports. He's paid Out Loud Strategies $255,000 since last April -- and Faulkner has appeared in campaign emails as "finance director" ever since.
The Federal Election Commission documents that contain West's payroll data were released on Sunday; on Monday, West sent his "weekly wrap-up" to supporters in which he criticized the 16th Amendment, which gave the federal government the power to levy taxes based on income, as a "progressive" invention of Woodrow Wilson. (It was actually passed by Congress and ratified under President William Howard Taft -- a Republican.)
He criticized the new taxes in the health-care law, saying, "In fact the entire tax code is now being used to further social policy... It is merely a means by which to redistribute wealth in America." He also called for the institution of a flat tax, which he has said could be a "bridging mechanism" to the shutdown of the IRS and the repeal of the 16th Amendment.
The bottom line is that West feels it abhorrent that the United States taxes Americans based on income. And it looks like he'll do whatever he can to avoid paying them.