Paulding County lawmaker faces $36K federal tax lien
By JIM WALLS
July 28, 2011 — State Rep. Paulette Rakestraw Braddock owes more than $36,000 in federal taxes, interest and penalties, the IRS says. But the debt will not affect her standing as a Georgia legislator.
State law and legislative rules call for an investigation and possible discipline for lawmakers who’ve not paid an undisputed state tax claim. No such procedure exists for non-payment of federal taxes.
The freshman lawmaker from Paulding County said the debt for payroll taxes was incurred by Atlanta Marketing Solutions Inc., her failed direct-mail marketing firm, and not as a personal tax obligation.
“I’ve always paid my taxes,” she said.
But since the business is defunct, she said, she couldn’t negotiate a settlement with the IRS until the debt was rolled over to become her personal liability.
“If the company goes south, and a lot of them have in this bad economic downturn, then the business owner is still liable for those taxes,” she said.
The IRS lien for $36,343 was recorded June 17 by the clerk of Paulding County Superior Court. The paperwork shows the IRS assessed the penalty in November 2008 for payroll taxes due for portions of 2006 and 2007.
Braddock estimated about two-thirds of the debt consists of interest and penalties.
“We employed people for 25 years and paid the payroll taxes until the business had a downturn,” she said. “As the business picked up, we started to pay it back down.”
But the company fell behind on tax payments again during another economic downswing, she said.
“What I could have done is lay people off, but I chose to keep people employed, risking my own savings and capital to allow people to keep their jobs first before laying anyone off — so now I continue to be liable for the exorbitant taxes and penalties that result from economic problems. This is one reason that I am so passionate about helping Georgia with Economic Development and creating a business climate for businesses to thrive. I talk to a lot of business owners all over the nation that are barely hanging on or have gone under and it is tragic for our country.“I have navigated my company through a few economic downturns over the years and many changes in our industry … and having the industry downturn on top of the dramatic economic downturn caused me to make these tough decisions. I hope to help other businesses before it’s too late and more jobs are lost.”
Under a 2009 state law, the House and Senate ethics committees are notified of legislators who haven’t paid state income taxes. The Georgia Constitution also bars from elected office anyone
“who is a defaulter for any federal, state, county, municipal, or school system taxes required of such officeholder or candidate if such person has been finally adjudicated by a court of competent jurisdiction to owe those taxes, but such ineligibility may be removed at any time by full payment thereof, or by making payments to the tax authority pursuant to a payment plan, or under such other conditions as the General Assembly may provide by general law … “
That constitutional provision requires a final court judgment confirming the tax obligation, however, and has never been enforced.