Battle of the Taxes: Congressional Candidates Ruben Gallego, Mary Rose Wilcox on the Attack

Mary Rose Wilcox owes between $50,000 and $100,000 in 2012 taxes to the IRS. It's a debt she listed on her 2014 financial-disclosure statement and one that is getting paid in installments.

And now, it's getting used as political ammunition against her.

Ruben Gallego, who's running against Wilcox for a seat in Arizona's 7th Congressional District, has launched an attack blasting her for the debt -- even though his own record is hardly perfect when it comes to paying Uncle Sam.

He's been late on paying property taxes and isn't paying payroll taxes for campaign workers because he's classifying them as independent contractors instead of employees.

See also: -Wilcox Continues to Slam Opponent Ruben Gallego on His NRA Approval Rating -Poll: Congressional Candidate Ruben Gallego Has 8-Point Lead Over Mary Rose Wilcox -Gallego Responds to Wilcox Campaign's Name-Change Blunder

"If Mary Rose Wilcox wants to represent us in Congress, she should start by paying her own taxes," said Ruben Alonzo, Gallego's campaign manager. "Wilcox owes the IRS more than $50,000 in unpaid taxes and penalties yet thinks she should decide how to spend our tax dollars."

Gallego has started an online petition: "Tell Mary Rose Wilcox To Pay Her Taxes."

Sam Castañeda Holdren, spokesman for the Wilcox campaign, explains that "like many family-owned businesses, Mary Rose Wilcox's restaurant business weathered tough times due to the recession. And they were nearly forced into bankruptcy by [Maricopa County] Sheriff Joe [Arpaio] and [former County Attorney] Andy Thomas' trumped-up charges. Wilcox is paying her taxes to the IRS on schedule."

Wilcox's vocal opposition to Arpaio's anti-immigrant policing policies, racial-profiling raids and roundups in Latino neighborhoods and at local businesses did put her the sheriff and now-disbarred county attorney's cross hairs.

She says Arpaio supporters regularly circled her restaurant in motorcycles, and others protested during lunch hours at El Portal Mexican restaurant. She says the sheriff also stationed vans outside -- all in an effort to cause her family business financial harm. It deterred her customers from dining at the restaurant that was once a hot-spot for local politicos, she says.

She just received a more than $1 million settlement from Maricopa County for the political persecution.

Castañeda Holdren says in his retort to Gallego's tax attack that it's "unfortunate" that "Gallego has decided not to pay Social Security taxes for his campaign employees."

Indeed, Gallego has paid a mere fraction in payroll taxes during his congressional campaign. By designating all but a couple of his campaign staff -- including nearly all of his field workers -- as contractors and paying them "stipends," he avoids having to pay taxes, including those that feed into Social Security and Medicare.

"Given the short-time period and nature of this race, we made the decision to hire mostly independent contractors," says Gallego campaign manager Ruben Alonzo, who is working as a contractor. "We are paying payroll taxes for each full-time employee. And each contractor will receive a 1099 and will pay taxes themselves. Unlike Mary Rose Wilcox, however, I expect our team will actually pay the IRS what they owe."

Castañeda Holdren fires back: "The difference between Ruben Gallego and Mary Rose Wilcox is that Mary Rose is paying her taxes and Ruben Gallego thinks he doesn't have to."

Based on Gallego's most-recent campaign-finance report, it appears that three campaign workers were paid briefly as employees but were then reverted to contractors receiving stipends.

Gallego paid about $1,500 in payroll taxes and has about 24 paid individuals working on his campaign. By comparison, Wilcox has 12 paid staffers and paid more than $17,000 in payroll taxes.

Other congressional candidates, such as Ron Barber and Ann Kirkpatrick, also list paid workers as employees and cover their payroll taxes.

An undated memo from Perkins Coie Political Law Group to all Democratic House candidates aims to give "general guidance" on when campaigns should designate a paid worker as an independent contractor versus an employee.

If the "worker's services into the business operations generally shows that the worker is subject to direction and control," that person is an employee, the memo states.

The memo also outlines various ways to tell if you have an employee on your hands or an independent contractor.

If workers generally are told when and where to work, are given the tools to do that job, are asked to complete various tasks, have a regular payment schedule, don't invest their own money into the job, like for renting office space; don't assume financial risk as part of their jobs, and can be fired or quit without incurring any liability or penalty -- then those are employees.

The opposite is typically true for contractors, who usually should have a "specific contract setting forth the individual's independent contractor status," according to the memo.

The Gallego campaign says it does have contracts with each of its field workers.

"The IRS generally does not favor the use of independent contractors and takes a restrictive view of which individuals qualify as independent contractors as opposed to employees," the Perkins Coie memo states. "Further, employers who misclassify workers as independent contractors may be subject to back taxes, interest, and penalties."

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Monica Alonzo
Contact: Monica Alonzo