, Newburyport, MA

September 28, 2012

Controversy brews over tax returns

By Jesse Roman
Staff writer

---- — Tax returns are the latest flap in the bruising campaign between Rep. John Tierney and Richard Tisei in the 6th Congressional District race.

Both sides released their returns to The Salem News and other news outlets this week, then quickly led attacks on the other for the contents — or lack thereof.

Tisei’s returns reveal that the Republican did not pay federal income taxes in 2006 and 2008 because of reported losses from the real estate firm he owns with his business and life partner, Bernard Starr.

Tierney’s camp quickly pounced on the news.

“Mr. Tisei’s first round of tax returns show that he did not pay a dime in federal income taxes for two years, all while he was drawing a salary, courtesy of Massachusetts taxpayers,” said Tierney spokesman Grant Herring. “Middle-class families struggling to make ends meet do not understand how Mr. Tisei could ridicule half of the country for not paying taxes, when he does not pay any himself.”

Herring was referring to a November 2011 interview on NECN where Tisei said the tax code should be reformed because half of the country doesn’t pay taxes.

The Tierney camp also claimed that Tisei is “a millionaire,” pointing to a 2011 financial closure form that suggests he has assets totaling more than $2 million.

The six years of tax returns that Tisei provided to The Salem News, however, indicate that he is a modest earner.

Tisei claimed a net income of minus $10 in 2006, stemming from $73,600 in business losses. His adjusted gross income after a health care deduction in 2006 was minus $5,024.

Tisei did worse in 2008, racking up $98,000 in business losses and reporting an adjusted gross income of minus $11,688.

In the years Tisei reported positive income, he averaged gross adjusted income of nearly $105,000 and paid an annual tax of nearly $16,000.

While the Tierney campaign attacked Tisei for not paying taxes, Tisei’s camp was ripping the congressman for doing the same.

Tisei and several independent organizations have called into question whether Tierney should have reported as income the $223,000 that his wife, Patrice, received from her brother-in-law, while he was allegedly operating an illegal offshore gambling operation in Antigua. Tierney claimed at a July 3 press conference in Salem that the money did not have to be reported to the IRS or on congressional financial disclosure forms because it was a gift from a relative.

As expected, there is no mention in either IRS tax forms or congressional financial disclosure forms of the $223,000 Patrice received from her brother Robert Eremian over several years, concluding in 2011.

According to her court testimony, Patrice Tierney wrote herself monthly $1,000 checks from a Salem bank account she managed for Eremian, which, she said, he gave her as appreciation for taking care of his personal finances and family left behind in Massachusetts. Patrice also testified that she would cut a $1,000 check to her mother monthly from her brother’s account, and her mother would endorse the check back to Patrice Tierney to deposit into Tierney’s personal account.

Patrice Tierney’s attorney Donald Stern and former U.S. IRS attorney Sean McMahon have publicly stated that the money was a gift from a relative and not taxable. Tax experts quoted in The Boston Globe have contended that it seemed like Tierney was being paid like an employee, which would be taxable income.

“Dishonesty is really disturbing to the voters,” Tisei said in a statement. “The voters don’t ask for perfection, but they do expect openness and honesty from their congressman. John Tierney consistently and arrogantly offers them something very different.”

Tierney’s last six years of tax returns reveal that the congressman and his wife have earned an average of nearly $181,000 per year and paid on average $26,560 per year in taxes from 2006 to 2011.

Most of the congressman’s income comes from his salary, which was $174,000 last year, according to the disclosure website Patrice Tierney also made $8,000 in 2011, according to the congressman’s congressional financial disclosures.

In 2011, the congressman also made just over $13,000 from rental property and about $1,700 in dividends income.