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Accountant Haley's shop's taxes late

On the campaign trail, S.C. GOP gubernatorial candidate Nikki Haley frequently cites her experience as the accountant for her family's clothing store, saying she oversaw its growth to a multimillion-dollar operation, and the state needs such skills.

But records obtained by The Associated Press show the family company has been penalized three times since 2003 for not paying taxes. In each case, the taxes were at least 19 months past due.

Two of the tax liens were for failing to pay corporate income taxes and one was for not turning over taxes withheld from employee checks. The company paid nearly $4,000 to remove them, with 43 percent covering penalties and interest. Credit records on the business show it frequently pays operating bills more than a month late, compared to an industry average of 10 days late.

In response, Haley's campaign said Thursday she is running in part because she wants to cut red tape and taxes that are too burdensome. Her campaign declined to discuss the specifics of the liens.

"As a family, we saw how hard it was to make a dollar and how easy it was for government to take it," Haley said in a statement. "I'm committed to making government friendlier to the people and businesses it serves."

A key part of Haley's economic plan is to eliminate corporate income taxes, an idea the legislature rejected earlier this year.

"The reason why I know I'm the right person to go into this next position is because I'm an accountant, who knows what it means to stretch a dollar," Haley, a state House member, has said, citing her experience as being the family's bookkeeper since the age of 13.

Last month, a review of Haley's personal income taxes since 2004 showed she has repeatedly paid fines for failing to pay them on time, including twice filing more than 14 months late.

Research by The Associated Press turned up a fourth lien on her family's business from 2005, with a total of $601 resolved less than a month later, but a note says "filed in error." The state Revenue Department could not explain what that meant.

Tax experts say a state tax lien is filed only after a long, back-and-forth process between the government and the business. They also say the withholding penalty is more serious, since it involves the company taking money from employees but not sending it to the government.

The withholding tax lien against the clothing store accounted for $326 of the $3,928 paid to resolve the three liens.

"The government really frowns on withholding not being paid because that's the employee's money," said Marilyn Landis of the National Small Business Association. However, she says, it's the more common offense for ill-equipped small businesses.

For that reason, the association and CPAs say they strongly encourage small businesses to contract out their payroll services.

The campaign of Haley's opponent, Democrat Vincent Sheheen, says characterizing the taking of employees' money as red tape is a fundamental misunderstanding of the law.

"Every time she touches a balance sheet, she leaves behind a trail of tax liens and penalties. If Rep. Haley really is an accountant, she is as incompetent as her mentor is at job recruitment," Sheheen spokesman Trav Robertson said, referring to Gov. Mark Sanford and the state's struggles with record-high unemployment.

Business finances have become an issue in the race for both candidates.

Haley has made government transparency the feature of her campaign. She says that includes requiring legislators to disclose all of their income to avoid conflicts of interest. Tax records she allowed reporters to review in June showed she was paid more than $40,000 from an engineering firm, which it said was for generating business leads. She did not report that link on ethics forms. She has repeatedly said the law didn't require her to, but she believes it should.

Sheheen, a lawyer and state senator, has handled 90 workers' compensation cases since 2006. He last handled a case before the Workers' Compensation Commission last October, according to records from the state agency.

Haley characterizes Sheheen as a rich trial lawyer and has incorrectly accused him of making $400,000 a year off the state. But state records show he made roughly $38,000 on his law firm's workers compensation clients in 2008 and 2009 combined, The State newspaper of Columbia reported earlier this week.

Sheheen says he follows state ethics rules.