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Nevada Democrat Struggles to Explain Incurring $185,000 in Unpaid Income Taxes

Attorney General Candidate Blames Employer for Failing to Withhold Enough to Cover Taxes

Sen. Aaron Ford / @AaronDFordNV Twitter
July 30, 2018

Aaron Ford, the Democratic nominee for Nevada attorney general, is struggling to explain how he incurred over $185,000 in unpaid taxes to the Internal Revenue Service.

Ford, who serves as the majority leader of the Nevada senate, had three different liens filed against him by the IRS for failing to pay over $185,000 in income taxes between 2010 and 2013, according to financial disclosures filed with the Nevada secretary of state.

The first lien was issued by the IRS against Ford in October 2013 after it was determined he failed to pay over $85,000 in taxes for income garnered between 2010 and 2011. A subsequent lien was filed in April 2014 indicating Ford owed more than $42,000 in unpaid income taxes for 2012. In December 2014, the IRS filed a third and final lien against Ford for failing to pay over $58,000 in taxes for 2013.

Ford cited the liens on official financial disclosure forms he was required by law to submit to the Nevada secretary of state's office in 2014 and 2015. The debts were not cited in Ford's 2016 financial disclosure as the liens were released that year.

When the news first broke Ford's campaign manager, Peggy Yang, told the Las Vegas Review-Journal the candidate had "faced some financial difficulties" as a result of the recession and that those "difficulties" were further complicated upon being promoted to partner at his law firm.

"After the recession hit, like a lot of families, the Fords faced some financial difficulties, and after becoming [a] partner at his firm, not enough taxes were withheld from Aaron's paycheck, which is why he ended up owing more," Yang said.

Ford's campaign drew some rebuke for its initial statement, especially for attributing the unpaid income taxes to a promotion. The campaign attempted to clarify the situation by issuing a second statement, which elaborated that financial and personal problems encumbered by Ford's family during the recession were to blame for the $185,000 debt.

"The recession hit every Nevada family hard, and Aaron's was no exception," Ford's campaign stated. "Like many families, Aaron's had to take a pay cut. And then, one of his sons started college, and later, another was hospitalized. Ford's family fought through the recession, and though, they paid taxes every year, not enough was taken out of his paycheck."

The candidate's professional résumé, however, shows his personal income, at least relative to the rest of his family, was likely to have increased between the years in question. Ford's LinkedIn profile indicates he served as an associate at Snell & Wilmer, a firm with over 400 attorneys in 11 offices across the globe, between 2007 and 2010 before being promoted to partner, a position he held from 2011 to 2015.

The salary for an entry-level associate at Snell & Wilmer's Las Vegas office, according to the firm's website, is $115,000, well above Nevada's median household income of $53,094. A partner at the firm on average earns between $247,110 at the low-end, and $324,921 on the high end, according to data compiled by paysa.com.

It is likely that Ford was compensated at a higher rate than average at Snell & Wilmer, given he came to the firm with two advanced degrees, a masters and a Ph.D. from Ohio State University, on top of his law degree, and had nearly five years of prior experience, having worked for the international law firms of Weil, Gotshal & Manges, LLP; and Bracewell and Giuliani, LLP, in Texas.

Furthermore, during the same time period that Ford was undergoing "financial difficulties," he is listed as having purchased a new home in Las Vegas for the sum of $468,138.

The Ford campaign did not return requests for comment on this story.

The candidate left Snell & Wilmer at the end of 2015 to join the personal injury law firm of Eglet Prince, which is headed by Robert Eglet, a former president of the Nevada Trial Lawyers Association and Ford campaign donor.

Shortly after joining Eglet Prince and only months before his elevation to majority leader of the Nevada senate, the tax liens were discharged after sufficient compensation had been received.

The IRS did not return requests for comment as to whether Ford's debts were paid in a full or a compromise sum had been struck with the agency.

It also remains unclear if the debts were truly acquired because of a clerical error on behalf of Snell & Wilmer, as Ford attests, or resulted because of personal financial mismanagement.

A source familiar with how Snell & Wilmer compensates its partners told the Washington Free Beacon the candidate's attempt to lay the responsibility solely at the feet of the law firm was misleading. 

For tax purposes, most law firms serve as "pass-through" entities, where the total revenue generated by the firm is perceived as the income of the firm's partners. Under this structure, all profits are divided up and paid out to each of the partners once operating expenses have been met. Since a firm's partners don't have a set salary, their income is not subject to tax withholding, and each partner is responsible for reporting their individual income and ensuring correct taxes are paid to the local, state, and federal jurisdictions that apply.

Snell & Wilmer reportedly utilizes this method of compensation for its partners, according to the source.

"All partners usually received a monthly draw, with no withholding," the source said. "Every quarter they would be responsible for paying the various state and federal taxes owed. It is likely that before Ford was promoted he would have had his taxes withheld, although that certainly would not have been the case afterward." 

The source added it was unlikely Ford, given his professional experience, would be unaware of how the system operated.

"To the extent that he's trying to blame it on the firm, it doesn't make sense," the source said. "Partners would generally be responsible for their own financial responsibilities. It's always worked like that and everyone was aware." 

Wilmer & Snell's head office in Phoenix did not return requests for comment on this story.

The complications surrounding Ford's finances have drawn questions about his competence to lead Nevada's largest law enforcement agency. John Vick, the campaign manager for Wes Duncan, the GOP attorney general nominee, expressed to the Free Beacon the pervading sentiment among Nevada Republicans: "Aaron Ford's very recent failure to pay his taxes, year after year, begs the question: If Aaron Ford can't manage his own finances, how does he expect to manage 20 plus budget accounts and a $100 million budget?"