2 departments file tax liens against state senator's firm

Senate Revenue and Taxation Committee Chairman Jake Files, R-Fort Smith.
Senate Revenue and Taxation Committee Chairman Jake Files, R-Fort Smith.

Two state agencies have tax liens for more than $3,800 against a company owned by Senate Revenue and Taxation Committee Chairman Jake Files, R-Fort Smith.

The state Department of Finance and Administration filed a lien on Sept. 2 in Sebastian County against Foster, Files & Harris LLC of Fort Smith for $1,368.91 over withholding wage taxes. The state Department of Workforce Services filed a lien against the firm for $2,440.80 over delinquent contributions on Oct. 13 in Sebastian County, according to county records.

Files said Friday afternoon he didn't know there was a $1,368.91 Finance and Administration lien filed against Foster, Files & Harris LLC. He said he's the sole owner of the firm, which provides payroll services for one of his construction companies, FFH Construction.

"I just didn't know there was a lien out there. I'm going to call DF&A Monday and see what's going on," Files said.

Jake Bleed, a spokesman for the finance department, said the department is in the process of releasing its lien. A lien can be released if the taxpayer pays the amount owed or if the taxpayer shows that the department made a mistake and the taxpayer doesn't owe anything, he explained.

Bleed declined to specify why the lien is in the process of being released. "Taxpayer protection limits the amount of information we can give on these things," he said.

Files said he thought the $2,440.80 lien filed by the state Department of Workforce Services against Foster, Files & Harris "was taken care of."

"I'll have to check into it and see what happened," he said.

Steve Guntharp, the assistant director of the Department of Workforce Services' new hire registry, said Friday afternoon that he's referred a question to the department's attorneys about whether Foster, Files & Harris LLC has paid back the department.

The state Department of Workforce Services also filed liens against Foster, Files & Harris LLC for $1,591.76 in delinquent contributions in June 2010, $1,266.42 in delinquent contributions in November 2010 and $3,114 in delinquent contributions in October 2011, according to the Sebastian County Circuit Court's records. All three liens were subsequently released by Workforce Services.

Earlier this week, lobbyist Bruce Hawkins and Files said the lobbying firm founded by Hawkins lent $30,000 on April 20 to Files, who repaid the loan last week.

Hawkins' lobbying firm -- DBH Management Consultants -- disclosed the loan made to Files in an amendment to the firm's second-quarter lobbying report and its third-quarter lobbying report filed Oct. 15 with the secretary of state's office.

Arkansas Code Annotated 21-8-604 requires lobbyists to disclose such loans on their lobbyist activity reports.

They are required to make a "detailed statement of any money loaned or promised or line of credit established to a public servant or to anyone on behalf of the public servant in excess of twenty-five dollars ($25.00) per individual. Money loaned or a line of credit established that is issued in the ordinary course of business by a financial institution or a person who regularly and customarily extends credit shall not be required to be disclosed."

Files, a real estate developer and contractor, said Wednesday that at the end of this year's regular session, J3 Partners, another construction company he owns, needed a loan. He received several suggestions of people to call, including Hawkins.

Files said Friday that it was financially challenging not to work for three months during this year's regular session, but he declined to elaborate on why J3 Partners needed the loan.

J3 Partners owes $183.39 in corporate franchise taxes that were due on May 1, said Chris Powell, a spokesman for the secretary of state's office. However, Files said late Friday afternoon that bill "has been paid."

Files has served in the state Senate since 2011 and been chairman of the Senate Revenue and Taxation Committee since 2013. He was in the state House of Representatives from 1999-2003.

Hawkins founded his lobbying firm in 1995, according to its website. Hawkins served as a Democrat in the state House from 1983-95.

Asked whether the Legislature should enact a law to bar lobbyists from loaning money to state elected officials, including lawmakers, Senate President Pro Tempore Jonathan Dismang, R-Searcy, said Friday that "to be honest, I thought it was prohibited already."

Dismang said he generally favors banning lobbyists from making loans to state elected officials.

House Speaker Jeremy Gillam, R-Judsonia, said he wants to give more thought to enacting such a state law. "As a practice, it is probably not prudent for legislators in engage in that," he said.

On the issue, Sen. Jon Woods, R-Springdale, said: "I would support a law that prohibits it. It sounds like I would be OK with it."

Rep. Warwick Sabin, D-Little Rock, said the Legislature should enact a law barring state elected officials from accepting loans from lobbyists.

"At the very least, it creates the appearance of impropriety and a quid pro quo relationship between a lobbyist and a legislator. At the worst, in the event that a loan cannot be paid back, it would become a gift that is illegal under the current statute," he said.

Sabin and Woods sponsored what's now Amendment 94 to the Arkansas Constitution that bars state elected officials from accepting certain gifts from lobbyists, extended the period that lawmakers may serve in the Legislature, and created a citizens commission that increased the salaries of state elected officials earlier this year.

Republican Gov. Asa Hutchinson "believes it is a bad practice for legislators to be taking loans from lobbyists," said Hutchinson spokesman J.D. Davis.

Information for this article was contributed by David Hughes of the Arkansas Democrat-Gazette.

Metro on 10/24/2015

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