Tea Party figures found failing to pay taxes

Updated: April 10, 2011, 7:54 AM

WASHINGTON -- James Ostrowski and Leonard A. Roberto, central figures in competing factions of Buffalo's low-tax tea party movement, both have a history of failing to pay federal income taxes, Erie County records show.

Liens totaling $52,459.83 have been filed against Ostrowski's Buffalo home for unpaid federal taxes dating back to 2001, the county records show.

Roberto settled five liens against his properties in Depew and Alden about two years ago after a long battle with the Internal Revenue Service that, he said, cost him upward of $150,000.

The Buffalo News checked the tax records of six of Western New York's most prominent tea party figures after a source provided information indicating that Ostrowski, founder of the Free Buffalo and Free New York anti-tax movements, had tax troubles.

That review found that Ostrowski and Roberto stood out as the only local tea party leaders with a history of tax delinquency.

Asked about their tax problems, Ostrowski and Roberto offered radically different explanations.

Ostrowski, a lawyer who does a substantial amount of work for poor clients, said annual income swings left him struggling to pay his taxes.

But Roberto said that, for several years, he didn't withhold federal tax income for his employees as a matter of principle. Last year, Roberto, an Alden small-business owner, got 39 percent of the vote as the Republican candidate against Rep. Brian Higgins, D-Buffalo.

Of course, Ostrowski and Roberto are not alone in getting behind on their taxes. For years, the IRS tax compliance rate has hovered at about 85 percent -- meaning about 15 percent of tax revenue goes uncollected.

Much of that uncollected money no doubt is owed by people like Ostrowski, who described himself as a small businessman who just couldn't keep up with his tax bills.

"We're overtaxed," said Ostrowski, a longtime libertarian activist. "Many people can no longer afford to pay their taxes."

Ostrowski shares his small-government philosophy on a blog called Political Class Dismissed, which he describes as "the war room of the tea party movement." He calls himself a "working-class lawyer" who spends an unusual amount of time defending clients who cannot afford legal representation.

"Small business is, by its nature, unpredictable," and the ups and downs of his business prompted his tax problems, he said.

Ostrowski's tax issues are nothing new. The IRS filed a $15,818.51 lien against his home in 2001, followed by a lien for $11,493.35 in 2007. Two more -- for $1,705.55 and $16,607.44 -- were filed on his property in 2009. Another, for $6,834.98, was filed in February.

"I've told the IRS I expect to pay back everything I've owed," Ostrowski said.

County records also show that the state issued four tax warrants against Ostrowski for state taxes totaling $8,624.64 from 1998 to 2006. Ostrowski has settled those bills.

"I just made a large payment recently. My finances are picking up."

Ostrowski, who has done paid legal work for businessman Jack Davis, the independent candidate in the race for the vacant congressional seat in the 26th District, charged that the leaking of his tax troubles was politically motivated.

The Buffalo News promised anonymity to the source who called attention to Ostrowski's tax liens.

But he charged that establishment Republicans who back Assemblywoman Jane Corwin, R-Clarence, the party's candidate for the seat, were retaliating against him for supporting Davis.

Entrenched political interests "do this whenever I'm getting traction," he said. "This is typical of the harassment I've been subject to for a number of years."

The Western New York Tea Party Coalition, which is affiliated with Ostrowski, has endorsed Davis, an anti-immigration trade protectionist who lost three congressional races -- one a primary -- as a Democrat.

TEA New York, a Western New York tea party organization, and Russell Thompson, its leading activist, back Corwin -- as does Roberto.

Roberto alleged no political motives when asked about his tax troubles. Instead, he cited a philosophical difference with the IRS.

The IRS says employers must withhold income taxes from their employees' paychecks -- but Roberto doesn't think the agency has the legal authority to do that.

"I was at war with the IRS for 10 years over this," Roberto said.

It all started, Roberto said, when a friend told him he couldn't find the legal authority that gave the IRS the right to require tax withholding.

The tax agency "refused to tell me if I was correct or not" in thinking that he didn't have to withhold taxes for his employees, Roberto said. "The guy from the IRS just said: Just pay it or I'll come after you."

Asked for evidence for his view that employers don't have to collect taxes on behalf of the IRS, Roberto cited two websites, givemeliberty.org and truthattack.org.

Givemeliberty.org provides a link to the "Articles of Freedom," drawn up by a "Continental Congress" that met in November 2009 in St. Charles, Ill. The Articles of Freedom take issue with the 16th Amendment to the Constitution, which authorizes a federal income tax.

"We have a fraudulently ratified 16th Amendment in violation of Article V, a direct, unapportioned tax on labor in violation of the tax clauses of Article I," reads the work of the largely unknown Continental Congress.

That Continental Congress also says "we have a president who apparently is not a natural born citizen," even though Hawaii has verified the authenticity of President Obama's birth certificate. That document can be found online at www.politifact.com, the St. Petersburg Times' Pulitzer-Prize winning fact-checking site.

The truthattack.org site features a "pre-induction physical" for "non-filers" -- those who, for ideological reasons, refuse to file tax returns. The website is run by Tom Cryer, a Louisiana lawyer who, in a case in U.S. Tax Court, is accused of owing the government $1.7 million in taxes and penalties.

Following Cryer's philosophy, Roberto found himself facing $51,109.12 in federal tax liens against his property between 2005 and 2008.

Eventually, Roberto decided to "put the war on hold" and settle with the IRS.

Roberto said the tax disagreement cost him upwards of $150,000. First, he lost out on the money he paid to the employees of his small metal fabricating firm -- the money that the IRS wanted withheld. Then he lost out on the money he had to pay the tax man.

"I paid all the tax again a second time," he said.

Still, Roberto insists that he's philosophically correct.

"No one has shown me where I have the legal obligation" to collect taxes on behalf of his employees, he said.

While such opposition to the federal income tax is a longtime tenet of libertarian philosophy, Ostrowski, for one, advises his ideological soul mates not to withhold their taxes on the basis of beliefs alone.

"I'm not a tax protester," Ostrowski said. "My personal finances are unrelated to any political point of view I've had."

jzremski@buffnews.com

http://www.buffalonews.com/incoming/article389049.ece