Before she was elected, she owed the IRS six figures. Then she ran up more debt

State Sen. Daphne Campbell, D-North Miami Beach, has thousands of dollars in debt that she did not include on her financial disclosure statements.
State Sen. Daphne Campbell, D-North Miami Beach, has thousands of dollars in debt that she did not include on her financial disclosure statements. rkoltun@elnuevoherald.com

Facing a challenge from a wealthy opponent dumping hundreds of thousands of his own dollars into a campaign to unseat her, Miami state Sen. Daphne Campbell has been open about discussing her humble lifestyle: It’s a part of her campaign.

But Campbell, a Democrat who is running for re-election this month, hasn’t always been forthcoming when it comes to disclosing her debts to the state, which for a public official could be against the law.

During her entire eight-year tenure in Tallahassee, Campbell has been in debt to the federal government, at one point to the tune of six figures. She has also failed to pay outstanding bills to the state of Florida, Miami-Dade County, and several private lenders and contractors. Records indicate that over the years, Campbell might have failed to disclose over $300,000 in debts and other financial liabilities, in apparent violation of Article II of the Florida Constitution.

Some of the largest debts are to the U.S. government. According to the Internal Revenue Service, Campbell failed to pay taxes on income generated over seven years — in periods between 2000 to 2002, and again between 2004 and 2007 — and, in the end, was on the hook for a total of $179,243.89 in taxes, fines, and interest.

When she didn’t even up, the IRS filed nine liens against Campbell in three separate public notices, one filed in 2008 and the other two in 2012, converting all of her assets into collateral for that debt.

“I don’t have no tax liens,” Campbell told Herald reporters in 2012, during her first term as a state representative. But she did have liens. And six years, two re-elections, and one election to a new Senate seat later, she still does. It’s unclear how much, if any, of the IRS debt she has actually paid.

The only certainty: The senator from Florida Senate District 38 still owes the federal government back taxes.

“It’s not all paid,” her lawyer, James Jean Francois, told the Herald on behalf of Campbell, before stating that Campbell declined further comment. “It’s confidential, and it’s being handled with the IRS.”

Three notices of Federal Tax Liens filed by the IRS against Daphne Campbell in 2008 and 2012.

While Campbell is not required to itemize tax debt on financial forms filed as a candidate, the debt should be factored into her net worth, a figure required of all candidates, according to the instructions on the form, which is filed and signed under oath. An accidental omission can be corrected with an amendment — which is typically how such issues are handled — but an intentional failure to make the proper disclosures can result in a candidate’s removal from the ballot by recommendation of the Florida Commission on Ethics, according to state law.

Her only opponent, Democrat Jason Pizzo, has filed an ethics complaint.

Despite the instructions, it appears Campbell, who lists herself as her own campaign treasurer, does not always — if ever — factor the IRS debts into her declared net worth. Her 2018 disclosure for example, shows her home valued at $471,529. Additional assets include $28,400 for household goods and personal effects, $10,500 for vacant land in Suwanee County, and $2,642 in a checking account for a total of $513,071 in assets. Under liabilities, she lists only an $83,175 Wells Fargo home mortgage and a balance of $13,254 remaining on a car loan. She lists her net worth at $416,642 — the total of the listed assets minus the listed liabilities, not a penny more or less.

According to the instructions on the disclosure form, simply subtracting the reported liabilities from reported assets “will not result in an accurate net worth in most cases.” Because, according to the form, total liabilities should include non-itemized liabilities, too, like “those under $1,000, credit card and retail installment accounts, and taxes owed.”

“Lien or no lien, you should be disclosing [tax debt] but unfortunately not everybody does what they are supposed to,” said David Garvin, a board-certified tax expert and attorney who has practiced for 30 years in Miami-Dade County.

A comparison of her listed net worth to the balance of itemized liabilities vs. assets on financial-disclosure documents filed by Campbell in 2010, 2016, and 2018 suggest that at least for those years she calculated her net worth the way the form says not to — simply by adding together her listed assets and subtracting her itemized liabilities. But in 2012 and 2014, the balance of itemized liabilities vs. assets is lower than her declared net worth, indicating she accounted for thousands in non-itemized assets. That decision makes it impossible to know if she had also factored in any tax debt in those years.

But IRS debts weren’t the only debts she apparently did not disclose.

These days, money is tight for Campbell, who is recently divorced and pulls in a $29,697 salary from the state of Florida and little else. Campbell has stated that her family’s financial woes have compounded since their flagship home-healthcare business closed after it lost its government contract in 2006 amid investigations into patient abuse.

In her campaign, Campbell has highlighted her modest lifestyle and contrasted it with that of her opponent, Pizzo, who listed his net worth at $9.7 million. In a digital ad posted on social media, Campbell shows images of Pizzo’s $2.8 million home, located on a canal off Maule Lake, next to a pink $231,000 house in North Miami Beach where owner Sonia Remy Casimir says Campbell lives with her.

Campbell says the home she listed on her disclosure form, which is outside her district, is a domicile for her children.

On that property, Campbell didn’t make her mortgage payments between Nov. 1, 2016, and June 12, 2017, according to a complaint filed by Wells Fargo in Miami-Dade Civil Court. The bank moved to foreclose on the property last year. The 2017 foreclosure revealed four additional undisclosed mortgages issued to Campbell, as well as other outstanding debts.

“They want to get clean title. They want to foreclose not just the person, but they also want to wipe out any other claim against the property. So they will list all other creditors” on the complaint, Garvin explained. Wells Fargo is “going to list everybody that possibly has an interest in the property.”

Among those interests listed on the June 2017 Wells Fargo foreclosure on Campbell’s home property:

U.S. tax liens, filed for a total of $20,229.52 in unpaid income tax on Sept. 4, 2008

U.S. tax liens, filed for a total of $115,400.78 in unpaid income tax on March 20, 2012

U.S. tax lien, filed for $43,613.59 in unpaid income tax on June 29, 2012

Household Finance Corp. III: Mortgage (amount unknown)

Coral Gables Bail Bonds: Mortgage from June 30, 2011, outstanding $15,000

Regal Investment Corp.: Mortgage from April 1, 2014, for $50,000

International Fidelity Insurance: Mortgage from April 27, 2016, to secure a $75,000 bail bond

Miami-Dade County: Notice of lien/code enforcement violation for $10,590.16

Florida Department of Revenue: Warrant from Nov. 30, 2010 (amount unknown)

Miami-Dade County, Regal Investment Corp., and Coral Gables Bail Bonds confirmed to the court that Campbell still owed that money. Their 2017 confirmation of her debt indicates at least the mortgages from Regal Investment and Coral Gables Bail Bonds should have been itemized on Campbell’s financial disclosures between at least 2012 and 2016. Neither appears. There are no records of any of the other debts being satisfied either, suggesting each should have been acknowledged on at least one of the five disclosure forms she filed as a candidate.

In 2018, Campbell settled with Wells Fargo and the foreclosure action was voluntarily dismissed. She got to keep her home. However, that didn’t end her financial woes. Around the same time, MPR Construction Inc. filed a lien against the home for unpaid bills related to renovations totaling $41,000. County records do not indicate that any of the liens has been resolved or the debts satisfied.

The window for the IRS to collect what Campbell owes is also quickly closing. By federal statute, the IRS has 10 years to collect from the moment it officially declares the debt, known as the “date of assessment.” Without mitigating factors, once the 10 years are up, the IRS can no longer collect.

At this point, Campbell has two outstanding liens: One lien for $21,846.87 is set to expire on Oct. 8, 2018; the final, in the amount of $43,613.59, will expire in 2022. The rest have already expired.

“If the lien expires, that obligation disappears and it may not have been paid,” Garvin said.

Garvin said if Campbell had paid in full prior to the expiration date, there would probably be a release of lien filed with the county clerk. No such records exist in Miami-Dade for Campbell’s IRS liens.

“Most of the time you can assume it remains outstanding if you don’t see a release of lien,” said Garvin. “Because most taxpayers make full payments and they request a release of lien.”

Public records also indicate the IRS hasn’t made a move on Campbell’s home or other assets to satisfy the debts before they expire. That could be for any number of reasons, says Jorge Rodriguez, who practices tax law in Miami and New York.

“It’s likely a combination that the amounts [of debts] were relatively not large from the IRS perspective, and that there were other creditors at play and other lien-holders,” Rodriguez said. Campbell could also have cut a payment plan deal with the IRS that would prolong the 10-year period.

Garvin suggested a different explanation: temporary uncollectable status.

“Temporary uncollectable status is a category that a taxpayer reaches when his living expenses that are permitted by the IRS to keep you out of poverty are equal to or greater than the amount of money that the taxpayer is making at that particular moment of time,” Garvin explained.

If an IRS lien expires while someone is uncollectable, they become “permanently uncollected,” Garvin said.

Without extenuating circumstances, if the liens expire and Campbell hasn’t paid the full debt, she is effectively off the hook for the rest, Rodriguez said.

Miami Herald staff writer Jay Weaver contributed to this report.