MODESTO -- Campaign accusations about tax liens apparently caught Rep. Jeff Denham by surprise Monday evening, and he spent much of Tuesday sorting things out.
Bottom line: Denham insists that he has paid all his taxes, but apparently his younger brother was late paying some federal taxes and a former business partner may have left an unpaid debt a decade ago.
The tax questions emerged Monday during a lively debate between 10th Congressional District candidates Democrat Jose Hernandez and Republican Denham.
Denham has been criticizing Hernandez for months about a $10,813 tax lien the IRS imposed on him in 2010. Hernandez paid that debt in 2011, shortly before declaring his run for Congress.
Hernandez launched his tax lien charges against Denham for the first time Monday night. Hernandez's campaign staff provided The Bee with documents showing two 2003 tax liens imposed on businesses linked to Denham.
One was a $31,982 IRS lien on Bin Doctor LLC, and the other was a $1,061 Monterey County tax collector lien on 1 Planet Recycling.
Denham's staff initially insisted that Bin Doctor LLC is owned by Thomas Denham, Jeff's brother, and that the congressman had nothing to do with it.
Hernandez's staff countered that contention Tuesday. It noted that several Modesto Bee stories in 2002 and 2003 identified Denham as owning or being a partner in three companies: "Denham Plastics, The Bin Doctor, One Planet Recycling."
Denham provided personal and business background information to The Bee in about January 2002 as he began his campaign for state Senate, an election he won that November. The newspaper routinely asks candidates to fill out questionnaires, which typically have them identify their businesses or where they work.
Denham said Tuesday that Bin Doctor LLC always has been owned solely by his brother, but the congressman acknowledged that about 11 years ago, he had started a different company with a similar name, Bin Dr. Denham said Bin Dr. was based in his Salinas garage, and it sanitized the plastic containers used by agriculture. The congressman said his brother, Thomas, ran Bin Dr. there for about six months.
According to Denham, he transferred ownership of that company to his brother for $100 in about 2002, but he didn't know the exact date. He said his brother then moved the operation to a warehouse and formed a new company called Bin Doctor LLC. "The one business was shut down, and the other was started up," Denham said.
IRS documents provided by Hernandez show a tax lien was filed against Bin Doctor LLC in spring 2003, citing an unpaid assessment of $25,833 for the tax period ending June 30, 2001, and $6,149 for the tax period ending Dec. 31, 2001. IRS documents provided by Thomas Denham's attorney show the debt was paid off and the lien was released in 2003.
Questions remain about the 1 Planet Recycling tax lien and what it was for.
"I have no idea. We're looking into this, too," Jeff Denham said. He owned that short-lived Salinas company with another man who managed it. "I had a challenging partner who was willing to leave the state and a lot of bills behind."
Denham said he struggled to pay off all that company's debts and didn't know any remained.
Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or (209) 578-2196.
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