Feds claim Norfolk councilman owes $246,000 in unpaid taxes

Editor's note: Because of a source error, a story ("Feds: Councilman owes $246,000 in tax case") on the front page Thursday reported that Norfolk City Councilman Paul Riddick is $1,908 behind on his real estate taxes. Treasurer Thomas W. Moss Jr. says Riddick is current on the real estate taxes. Riddick owes $4,810 in delinquent business taxes, according to a spokesman for Commissioner of Revenue Sharon McDonald.

NORFOLK

The federal government is seeking to foreclose on City Councilman Paul R. Riddick's funeral home business because he failed to pay more than $200,000 in employment taxes over the past 14 years, according to a court filing.

The U.S. Attorney's Office filed a claim against Riddick in U.S. District Court seeking payment of $246,000 in back taxes and penalties. The claim, filed Friday, was made public late Tuesday.

Riddick said Wednesday that he has not been served with the lawsuit, but that "I knew this day was coming."

He said he owes back taxes, though he disputes the figures in the federal suit.

"I know that I owe some back taxes, but I know it's nowhere near $240,000," he said. "I would say it's more like $120,000, with penalties and interest."

Riddick said he has been hurt by the economic downturn and changes in the funeral home business. He said more people are choosing less-expensive cremations over more-costly funerals.

Riddick owns Riddick Funeral Service at 1215-1225 Norview Ave. in Norfolk. His family has been in the business since 1937 and moved the funeral home to its current location in the mid-1980s.

"It's a tough economy, and people don't have as much money as they once did," Riddick said. "People are using other alternatives. On top of that, when someone comes to you and they don't have any money, I can't hold them hostage because my business isn't doing well. I have to deal with them with compassion even if they don't have money. I've never turned anyone away."

Riddick said he hopes to negotiate a payment plan with the Internal Revenue Service and vowed that his funeral home will not close.

The U.S. Attorney's Office, which is handling the matter for the IRS, declined to comment beyond what's in the court filing. No hearing date has been set.

The lawsuit says that between 2002 and 2011, Riddick failed to pay about $196,000 in income, Social Security and Medicare taxes; it also says that between 1998 and 2009, he failed to pay about $27,000 in unemployment taxes from his business. The IRS also tacked on $23,000 in penalties and says he will owe interest on top of that.

The lawsuit also states that Riddick transferred ownership of the property to a limited liability company in 2005 "for the purpose of evading" taxes. As a result, the transfer should be considered fraudulent, the suit says.

Riddick has a history of tax problems and remains delinquent on some city taxes as well, officials said.

According to Charles Hartig, spokesman for Commissioner of Revenue Sharon McDonald, Riddick owes $4,810 in back city taxes: $4,423 in business personal property taxes and $387 in taxes for a car he bought for his business. The IRS has been filing federal tax liens against Riddick with the state since 2002.

In 1994, Riddick paid off $34,000 in delinquent real estate taxes shortly before he was re-elected.

In 1998, he was sued on criminal charges for failure to pay back taxes by the state. He reached a settlement with state officials that included paying $5,755.

Riddick maintains he is current on his city real estate taxes but said he's slightly behind on some state withholding taxes.

Riddick has been an outspoken, at times fiery, member of City Council. He has been critical of the police, city administration and, at times, other council members.

About 15 years ago, he was convicted of misdemeanor assault for tossing a pound of sliced ham at a store clerk.

He consistently gets re-elected to the council.

After serving on the city School Board, Riddick was elected to the council in 1992, representing Ward 4, which includes some of the city's poorest neighborhoods.

He has been re-elected five times.

He said the federal lawsuit will not affect his performance on the City Council.

"You're always going to have citizens say, 'If he can't keep his business straight, how can he keep the city's business straight?' " Riddick said. "But this has nothing to do with City Council. It won't affect my efforts on council any, and it won't sidetrack me.

"It's just something I'm going to have to work out."

Tim McGlone, 757-446-2343, tim.mcglone@pilotonline.com

Harry Minium, 757-446-2371, harry.minium@pilotonline.com