RALEIGH, N.C. (WNCN) — Few issues tend to sway voters quite like taxes: Who has to pay them, who doesn’t — and how high they are.
CBS 17 is fact-checking a campaign ad that accuses Republican North Carolina Senate candidate Mark Cavaliero of failing to pay hundreds of thousands of dollars in taxes for his computer security business.
Cavaliero, a Republican who is a former colonel in the Marine Corps Reserve and founder and former CEO of a tech company, is running against Democratic incumbent state Sen. Sydney Batch in District 17 race — covering Holly Springs, Fuquay-Varina, Willow Springs and other areas of southern Wake County.
THE CLAIM: A television ad says Cavaliero “got caught not paying his company’s taxes and owed close to a staggering $300,000.” A mailer repeats that theme, saying Cavaliero “likes to talk taxes” but “he doesn’t pay his own.”
THE FACTS: Cavaliero says the overriding claims in the ads are misleading and lack significant context.
The TV ad was placed by the Friends of Sydney Batch. The mailer was from Majority Rising NC, a Cary-based PAC that supports progressive causes.
The crux of the issue: He said the computer security company he founded was late paying its payroll taxes in 2010 and 2011.
“I took personal responsibility: We did pay the tax, we worked out a deal with the IRS,” Cavaliero said. “I didn’t get ‘caught’ doing anything.”
Benjamin Woods, a spokesman for the Batch campaign, said that “while Cavaliero may think neglecting his obligations is an acceptable business practice, North Carolina tax payers and employers, like Senator Batch, pay their taxes on time, without making excuses.”
Majority Rising did not respond to a request for comment.
Cavaliero said his firm expanded to employ a total of 44 people before the Great Recession in the late 2000s. It was named Sytec Business Solutions but was renamed Carolinas IT roughly a decade ago. Sam Estridge was his business partner.
By the early 2010s, the economic downturn began to trickle down to his business, he said.
“Some of our clients started slow-paying us and not paying us, and so cash was very tight,” he said. “And so as a result of the new employees, we had higher payroll taxes, and so we ended up not having enough to pay those payroll taxes on time.”
Cavaliero said he discussed the situation with the Internal Revenue Service.
“We said, ‘Hey, look, we’ve got a choice here — we can either run this company into bankruptcy, we can lay off a bunch of people … or we can work out a payment plan,’” Cavaliero said. “And the IRS said, ‘Hey, OK, we’ll work out a payment plan with you.’”
Those taxes were paid off within two years with interest, Cavaliero said. CBS 17 News obtained a copy of the release of the federal tax lien dated Aug. 7, 2013, after a balance of $158,819.55 was paid.
Cavaliero sold the business to Logically in 2019.
He also pointed out a key distinction: While video in the ad shows a Schedule C (Form 1040) for a profit or loss from business, the taxes paid late were actually payroll taxes and not taxes on the company’s profits.
“At that point, we weren’t making any profits,” Cavaliero said.