Wagstaff paid off $189K tax debt to IRS as he campaigned for Westchester DA

As civil rights attorney William O. Wagstaff III circulated nominating petitions in March to run for Westchester County district attorney, he reached deep into his bank account to settle a longstanding debt to the IRS.

The Mount Vernon Democrat who wants to be Westchester’s top prosecutor paid the U.S. Treasury $189,112 to cover unpaid taxes and interest over six years — from 2015 to 2020. His biggest arrears came in 2020 when he failed to pay $112,712, according to a federal tax lien filed in 2022 with the Westchester County clerk.

Wagstaff paid his tax bill on March 20, said County Clerk Tim Idoni.

Wagstaff last week was cleared of allegations that he committed fraud while witnessing signatures on his petitions. He then declined comment on the federal lien outside the courtroom.

He told Tax Watch he was “insulted” by the question.

His spokesman, James Christopher, said that Wagstaff ran up the bill with the IRS over six years. He said that it can take several years to resolve civil rights cases, and that Wagstaff had to front the costs of bringing cases to trial or settlement. Those cases are typically taken on contingency, which means the attorney receives up to 33% of the damage award.

More: Wagstaff beats challenge to petitions, set for Democratic primary for Westchester DA

Complicating matters for Wagstaff was his work under contract with the city of Mount Vernon as a special prosecutor on police disciplinary hearings. That came during a time when the city’s former comptroller, Deborah Reynolds, failed to pay invoices in a timely fashion for an array of city services.

Christopher said cash flow can be rough for civil rights attorneys as well as those who work for Mount Vernon.

“He got stuck having to wait for the payments he was expecting," he said.

Waiting on civil rights case

Interest penalties compounded while Wagstaff awaited resolution of a case he brought on behalf of the estate of Brandon Rodriguez, who died by suicide in solitary confinement in New York City’s notorious Riker’s Island jail in 2021. That case settled for $2.3 million on Jan. 3, with Wagstaff’s share of the award $759,000.

Eleven weeks later, he paid the IRS.

“William was able to pay the lien because he had recently settled cases that he had been working on for years,” Carpenter said.

Payment plans for so-called “underpayments” to the IRS come at a price, as interest rates rise and fall with the market. Christopher said Wagstaff set up his IRS payment plan in 2017. Interest rates, which were 4% that year, dipped to 3% in 2020 but rose to 6% in 2022.

The payment plan allowed him to pay his office staff and support his family, with the back taxes accumulating on his hourly work for the city of Mount Vernon and other clients.  Wagstaff, who maintains an apartment in Mount Vernon, lives in Elmsford with his expectant wife, and her two children.

While he awaited a settlement or verdict on his civil rights cases, Wagstaff had other bills to pay that took precedence over his federal taxes.

“In the interim, it is the income that he makes from hourly work that sustains the practice, pays the attorneys who work for him, and allows him to provide for his family,” Carpenter said.

Starting his campaign for Westchester DA

It also gave Wagstaff the cash he needed to launch his political campaign. Campaign finance records show that Wagstaff loaned his campaign $52,699 in several cash infusions from Oct. 13, 2023 to Jan. 1, 2024.

In the June 25 Democratic primary, Wagstaff will face former Westchester County Court Judge Susan Cacace and former Westchester County prosecutor Adeel Mirza.

Yonkers Democratic Committee Chair Tom Meier, who supports Cacace, said he was troubled to learn of Wagstaff’s tax delinquency.

More: Wagstaff joins Westchester DA race; a look at who else is in the field of Democrats in 2024

“Here’s a guy who made a ton of money from Mount Vernon, and he didn’t pay his taxes,” he said. “I want a district attorney who is on the right side of the law, not someone who is straddling the line.”

Revelations about his longstanding tax arrears surfaced in last week’s trial in state Supreme Court over allegations that Wagstaff had committed fraud by certifying that he’d witnessed the signatures of four supporters at a Mount Vernon birthday party.

Justice Paul Marx dismissed the case, finding credible the testimony by those supporters who said that they signed his petition under the candidate’s watchful eye.

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David McKay Wilson writes about tax issues and government accountability. Follow him on Twitter @davidmckay415 or email him at dwilson3@lohud.com.

This article originally appeared on Rockland/Westchester Journal News: Westchester NY DA candidate IRS tax debt paid after campaign launch