City Councilwoman LaToya Cantrell, considered one of the main contenders in the crowded New Orleans mayoral race, and her husband failed to pay about $28,000 in federal income taxes in recent years, The Lens has learned.
The Internal Revenue Service placed a lien on her Broadmoor home in 2014 for the debt, according to a filing with the clerk of Orleans Parish Civil District Court.
It stated that Cantrell and her husband, attorney Jason Cantrell, owed $27,564.99 in taxes, interest and penalties for 2010, 2011 and 2012.
In an interview, LaToya Cantrell did not dispute that she and her husband had underpaid the IRS. However, she said, the IRS should have received it after she refinanced her house in 2013, before the agency placed the lien on her house.
Cantrell blamed the outstanding debt on a bank error by her mortgage lender, First NBC Bank.
She said she expects the IRS to issue a letter soon indicating the debt has been satisfied. She would not say whether the debt has been paid.
“We’re waiting for that release from the IRS,” she said.
New Orleans’ mayor oversees a $600 million general-fund budget, which relies on a variety of taxes collected from local businesses and property owners. The city sometimes must file liens on properties for unpaid taxes or fines.
A property lien is a claim on a piece of property for an unpaid debt.
State election code disqualifies most candidates for office — including mayor — if they have not filed state or federal tax returns, or asked for an extension, for the previous five years.
Cantrell said she and her husband did file federal returns, and paid income taxes, for the years in question.
But, she said, the IRS informed the couple they hadn’t paid enough. The Cantrells initially disputed that, but ultimately settled on the figure that appears in the lien.
In 2013, Cantrell said, she and her husband refinanced their home in part to pay off the tax debt and repair damage related to Hurricane Katrina. Parish records confirm the couple obtained a mortgage from First NBC Bank that year for $210,000.
Under the terms of that mortgage, Cantrell said, she and her husband paid money into an escrow account, part of which was to be used for the tax debt.
However, the bank did not send the money to the IRS, Cantrell said. So in 2014, the IRS placed the lien on the property.
“All the time we were paying our mortgage at the refinanced amount,” Cantrell said.
The issue is close to being resolved by Whitney Bank, Cantrell said. Whitney took over First NBC’s accounts after it failed.
“The money is there, and Whitney is processing it. I feel very confident” that the matter will be resolved soon, Cantrell said.
Cantrell said she is seeking a letter from Whitney Bank Regional President Gary Lorio confirming her description of what happened.
There does not appear to be any problem with Cantrell’s payment of Louisiana income taxes. In response to a public records request, the state Department of Revenue told The Lens it has Cantrell’s tax returns for 2012 through 2015.
It doesn’t have a return for 2016, but Cantrell indicated on an ethics disclosure form that she has filed for extensions on her state and federal returns for that year. An official with the Department of Revenue said state privacy law prevents the agency from confirming that.
Another frontrunner, former Civil District Court Judge Michael Bagneris, has not filed a Louisiana income tax return for 2016, according to the Department of Revenue. Devin Johnson, a campaign spokesman for Bagneris, said he asked for an extension.
But Bagneris’ most recent ethics disclosure, filed this month, does not show that. Bagneris checked a box saying he had filed his tax returns for the “previous year.” Because the form covers 2016, Bagneris understood that to refer to 2015, Johnson said.
During Bagneris’ 2014 run for New Orleans mayor, The Lens reported he had run up more than $100,000 in back taxes from 1984 to 1990, which he had paid off. He told The Lens the debt arose from financial difficulties related to his daughter’s medical bills.
A search of court filings didn’t turn up any recent liens for Bagneris.
The Louisiana Department of Revenue said former Municipal Court Judge Desiree Charbonnet, who appears at this early stage to be Cantrell’s chief rival, has filed state tax returns for 2012 through 2016.
The Lens did not find any federal tax liens against Charbonnet.