March 16, 2013 at 1:00 am

Records show Detroit's emergency manager has tax liens on Maryland home

Orr says he didn't know about them, promises immediate action

State records show Kevyn D. Orr, who was appointed emergency manager last week, had two outstanding liens on his $1 million home in Chevy Chase, Md. Orr said he was embarrassed by the debts and wrote a check Saturday to satisfy them. (John T. Greilick / The Detroit News)

Detroit — The man charged with fixing Detroit's faltering finances has been hit with four liens in four years from the state of Maryland for unpaid taxes, records show.

State records show Kevyn D. Orr, who was appointed emergency manager on Thursday, has two outstanding liens on his $1 million home in Chevy Chase, Md., for $16,000 in unemployment taxes in 2010 and 2011. Two other liens of more than $16,000 in unemployment and income taxes were satisfied in 2010 and 2011, records show.

Orr said he didn't know anything about the liens when shown records of them Friday morning by The Detroit News.

"I don't know what they are," Orr said, as his new boss, Gov. Rick Snyder, sat next to him in The News' offices. "That's surprising to me, to be honest."

Late afternoon, a spokeswoman for Snyder — who appointed Orr to the $275,000 per year post Thursday — said Orr spent the day researching the issue and would pay "in full ASAP." The Washington, D.C., bankruptcy attorney blamed the problems on an outside accountant hired to file his tax returns, said Sara Wurfel, a Snyder spokeswoman.

"There was apparently an oversight related to a childcare provider unemployment insurance payment," Wurfel wrote in an email. "Immediately upon learning of the potential issue just today, he took action at once to look into and resolve with the state of Maryland."

She said Snyder's office wasn't aware of the liens until The News asked about them.

"It did not come up in any of the vetting," Wurfel said.

Critics of the emergency manager said the liens are troubling, since Orr is tasked with improving tax collections. The Detroit News reported last month that only 53 percent of homeowners paid property taxes last year, leaving $246.5 million uncollected for Detroit and other governments. City records estimate that, in 2011, Detroit collected $32 million less in income taxes than it was owed.

"It's quite interesting that he feels he could manage the city of Detroit and he's having trouble managing his own affairs," said the Rev. Charles E. Williams II, president of the National Action Network of Michigan that is fighting the appointment.

"This proves the point that people aren't perfect and democracy isn't perfect. But our community is sticking with democracy and will continue to fight this."

Another opponent of the emergency manager, state Rep. Fred Durhal, D-Detroit, said tax problems aren't a big deal if Orr pays up.

"As long as he takes care of it, it's not an issue. I just hope he doesn't forget to collect our taxes," said Durhal, a candidate for mayor.

Maryland is aggressive about placing liens on property during tax disputes, said Glen Frost, a Columbia, Md., tax attorney.

The liens place claims on property that have to be satisfied before the property can be sold, he said, adding that in rare instances governments can foreclose on egregious cases.

Records show Maryland has hit Orr with a lien per year from 2009-12.

A lien for $7,022 in unemployment taxes for the 2008 tax year was entered on July 17, 2009, and satisfied on Aug. 20, 2010. Another for $9,409 in income taxes for the 2008 tax year against Orr and his wife, Dr. Donna Neale, was entered on Aug. 11, 2010, and satisfied on Oct. 3, 2011.

Two other liens over unemployment taxes — $6,985 for the 2010 tax year and $9,201 for the 2010-11 tax years — are outstanding, said Frost, who reviewed the records.

Frost and another Maryland tax attorney, Jeffrey Katz, disagreed on whether it's common for subjects of liens to not know about them. Frost said Maryland typically sends separate warning and notification letters about liens. Katz said many who are hit with them don't know liens were placed until they try to renew driver's licenses and learn about them.

Katz and Frost agreed that Maryland is zealous about tax collection and its use of liens.

Katz said the state once sent him two certified letters demanding payment for $9.47 in unemployment taxes for a temporary staffer who worked two days moving boxes.

jkurth@detroitnews.com

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