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St. Petersburg council candidate owes back taxes to IRS

ST. PETERSBURG — Charlie Gerdes became the frontrunner in his race for the City Council by collecting endorsements and campaign cash, and winning the August primary by a wide margin.

His platform includes fiscal responsibility, according to his campaign website. "As a current small business owner, I also have the experience of making difficult choices," he says. "Responsible and experienced decision-making is critical to achieving a bright future."

Yet Gerdes has struggled privately to meet financial obligations involving his own economic future. Delinquent taxes, foreclosures and mounting debt have occupied his personal ledger sheet at different times since the 1990s.

Of most immediate concern for Gerdes, who is competing in the Nov. 8 election for District 1, is the 2009 joint return he filed with his wife. In that year, Gerdes didn't pay $22,493 in federal income tax. According to documents filed with the Florida Commission on Ethics, that failure to pay also cost him $1,131 in interest and penalties last year. He's paying about $450 month on an IRS payment plan, he says, and has about $22,000 in delinquent taxes remaining.

A lawyer, Gerdes said he fell behind in 2009 because of the economic downturn. As business slowed and cash became scarce, his law firm, Keane, Reese, Vesely & Gerdes, stopped paying him and other partners on a regular basis, he said. Instead, he'd get paid in lump sums, sometimes as much as a month or 45 days apart, Gerdes said.

His tax return shows his law practice income was $86,254 that year. He didn't have enough money withheld or set aside, however, to pay the taxes. By the end of the year, he was hit with a tax bill of $22,493, which he didn't pay.

"This certainly was not something that I wanted to occur," Gerdes said. "It is something that I have an obligation to pay. ... I've always paid my taxes. It was just a consequence of the circumstances. ... I did the best I could with the cash flow that was going through the law firm."

Being self-employed, Gerdes, 55, is responsible for setting aside money from his income to pay taxes. Typically, the self-employed make estimated tax payments four times a year. Gerdes didn't do that, causing the amount he owed to increase because it included year-end penalties and interest.

"What I needed to do instead was have my office withhold more of my pay," Gerdes said. "Now I understand there are things I could have done to diminish the amount that would have been due."

It's not uncommon for the self-employed to fall behind on taxes, said Gary Matthews and Carol McAtee, two St. Petersburg accountants who separately reviewed Gerdes' financial disclosure at the Times' request.

"A lot of small businesses are in the same boat," Matthews said. "You have to be really disciplined to stay on top of it. Most small businesses can't do it."

Gerdes said the delinquent taxes should not suggest he's unfit to serve on the City Council, a part-time job that pays $38,914.

"It was an unfortunate situation driven by events mostly out of my control," Gerdes said. "We took corrective action. It doesn't say anything about my ability to decide... how to spend taxpayer money."

This wasn't the first time that Gerdes took corrective action on his personal finances.

In 1995, he was sued by Federal National Mortgage Association after he fell five to six months behind on his home mortgage. At the time, he had a severe drinking problem.

"That was one of the events in my life that led me to becoming sober," Gerdes said.

The other happened in August of that year when he backed into a taxi cab after spending hours drinking at a Treasure Island bar. It resulted in a DUI conviction and a 180-day revocation of his driver's license.

"It was embarrassing and foolish," Gerdes said. "I was drunk. It forced me to look at my life."

He's been sober since Nov. 28, 1995, he says, and openly talks about recovering from alcoholism on the campaign trail.

Records show a month after he was sued for foreclosure in 1995, the case was dropped. He said by then he caught up on payments. He was sued twice for foreclosure on his house in 2003, but those cases were dropped within two months each. Both were the result of mix-ups with the mortgage companies that weren't his fault, Gerdes said.

Even as he works to pay his back taxes, Gerdes faces additional debt. Gerdes incurred substantial student loans when, in the 1990s, he left a $90,000 job at Raytheon to attend law school. He graduated St. Thomas University School of Law in Miami Gardens in 1999 with more than $122,000 in student loans. Since then, he accrued interest and finance charges from when he consolidated some loans, Gerdes said, and now owes $137,500. He and his wife, a teacher, list their household income at about $140,000.

As with his taxes, Gerdes said he intends to pay that debt off when some large cases are resolved at his law firm. That plan has been delayed by the economy, however.

"Our law firm's revenues have definitely been impacted by the downturn," he said. He and his firm handle mostly commercial litigation and business disputes.

His opponent, Bob Kersteen, declined to comment.

The unpaid tax "speaks for itself," he said.

Times staff researcher John Martin contributed to this report. Michael Van Sickler can be reached at (727) 893-8037 or mvansickler@sptimes.com

St. Petersburg council candidate owes back taxes to IRS 10/12/11 [Last modified: Wednesday, October 12, 2011 6:23pm]
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