IRS Investigating a 537 Consulting-Related, Tax-Violations Complaint Against Annette Taddeo
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The Internal Revenue Service is processing a complaint against Annette Taddeo, gubernatorial candidate Charlie Crist's running mate, for alleged violations of tax law involving employees, including failure to pay tax and failure to withhold tax, while she was chairwoman of the Miami-Dade Democratic Executive Committee.
The federal agency has had the complaint, filed on an "Information Referral" Form 3949 A, since October 2013.
"Reading information given on the form, it looks like the charge is that Ms. Taddeo approved setting up 537 Consulting LLC, a kind of shell company to hide that the DEC has been paying employees as independent contractors for a long time," said Fredericka McClain, a retired University of Central Florida accounting professor.
As soon as DEC Executive Director Juan Cuba registered the company, the complainant writes, Taddeo gave it a contract to take over payroll "'as a solution' to concerns that the party might be in violation of certain IRS rules."
The payroll contract never went out for bid.
According to the complaint filed in October 2013, "The intent, as stated in (the) Steering Committee meeting was to relieve the Party from liability and the LLC (from) assuming it."
"I reviewed the proposed and accepted budget," writes the complainant. "When I asked about benefits for the workers, I was told that the organization could not afford to pay benefits, including Social Security, etc. I strongly objected for several weeks, months, but was ignored.
"In the second quarter of (2013), in response to my continuing objections, (537 Consulting) LLC was formed and the organization contracted with said LLC to handle payment of compensation to workers. ... If campaign reports for the fist quarter 2013 are reviewed, it is obvious that workers were paid a flat fee and there is no indication that any withholding or other taxes/benefits were paid."
The complainant bases the DEC's wrong classification of workers as independent contractors on an IRS publication, "Employer's Tax Guide," for use in 2013:
"If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal tax forms, including information returns, on a basis consistent with your treatment of the worker.
"You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any period beginning after 1977."
The complainant claims Taddeo did not follow these rules.
Nor were the DEC's books and financial records kept in the DEC office or anywhere that the membership or even the Steering Committee could view them. They might have been in treasurer Arthur Costa's possession, which would have been acceptable under the bylaws, but Costa, an employee of BB&T Bank in Miami, was unavailable late in the day Thursday when Sunshine State News attempted to call him.
Though the DEC's bylaws state that the Steering Committee is supposed to "vet" all contracts, wrote the complainant, members were told that "as long as Chair Annette Taddeo-Goldstein and the legal counsel Joseph Geller and Mr. (Juan) Cuba, president of 537 Consulting LLC, were in agreement with the terms, there was no need for the Steering Committee to review it."
The South Florida office of the IRS would not acknowledge where agents were in their investigation, if the investigation would be complete before November, or if the complainant would be informed of the outcome.
The complainant, who spoke to Sunshine State News on the condition of anonymity, promised, "I will reveal my name in due course. I have said I will testify in court if needed, and I am prepared to do that. This is all just wrong."
In the meantime, what expenditures besides payroll are run through 537 Consulting LLC, or if the company functions as Victory Strategies did for the Republican Party five years ago, remain a mystery.
Reach Nancy Smith at email@example.com or at 228-282-2423.