Company Disputes Josh Welle's Explanation Of Unpaid Taxes

RUMSON, NJ — Last week Josh Welle, who is seeking to represent New Jersey's fourth congressional district in Congress, received some media attention after it was brought to light that he owed approximately $130,000 in unpaid taxes to the state of Delaware for his now-defunct software company.

When asked by Patch, the Welle campaign released a statement last Thursday that blamed the failure to pay the taxes on the company's business agent, Delaware-based Harvard Business Services. However, Patch contacted the owners of that company and what the firm's vice president said on Monday is very different than what Welle's campaign manager said last week.

Welle is a Democrat hoping to unseat Republican Chris Smith. Welle formed the software company Severn Pacific in 2015 and based it in Delaware; it is now no longer business, having shut down in 2017. He was its CEO.

“The issue was due to an error in filing paperwork," said Welle's campaign manager Kim Maier last week. "Welle’s business ceased operations in the summer of 2017. The company’s external business agent failed to file the paperwork for the state ... Because state documents were not properly filed, the company accumulated fees in 2018, as if it were operational."

However, Michael Bell, the vice president of Harvard Business Services, said it was Severn Pacific that ignored multiple notices his company sent them, reminding them to pay their 2017 taxes.

Bell's company was employed as Sevren's business agent in 2016 and 2017; on March 3, 2017 his company was given a new mailing address for Sevren Pacific.

"As we do with all of our clients when their annual fees are due, we sent notices via email and mail to renew their Delaware Registered Agent service and annual Delaware Franchise Tax," said Bell on Monday. "We send notices six months in advance of the due date to give our clients ample time to make payment arrangements. However, Harvard never received any request by phone, mail or email to file the 2017 annual Delaware Franchise Tax on the company’s behalf."

"Unfortunately, the client did not respond to our notices," Bell continued. "And the company did not pay the 2017 annual Delaware Franchise Tax. Therefore the state of Delaware assessed a late penalty and interest."

As of last Tuesday, Oct. 2, Severn Pacific still owed the state of Delaware $130,424.14, Delaware tax records showed.

Bell said that his company then resigned as Severn's business agent because Severn also failed to pay them their annual Delaware Registered Agent fee, a small fee of $50, Bell said.

"Harvard Business Services, Inc. resigned as the Delaware Registered Agent on September 9, 2018," Bell continued. "On October 2, 2018 Harvard Business Services, Inc. was contacted by phone about the status of the entity, to which we informed the client that we resigned as the Registered Agent and provided options. The client requested Harvard to file a Change of Agent back to Harvard Business Services, Inc. within the state of Delaware’s 30-day grace period to rename us as the Delaware Registered Agent. In order to do this the company had to pay the past due 2017 annual Delaware Franchise Tax."

Last Tuesday, Oct. 2 is the day Welle's unpaid taxes were first reported by the media, first reported by MoreMonmouthMusings, a conservative news blog that openly supports Welle's opponent, Smith. Several other media outlets then picked the story up, among them New Jersey Globe and Patch.

By last Thursday, Oct. 4, when Patch checked tax records, Severn's taxes were listed as zero due to the state of Delaware.

"At the same time the client requested we file a subsequent Certificate of Dissolution to formally dissolve the entity here in the state of Delaware, thereby also requiring the client to pay the current 2018 Delaware Franchise Tax per the state of Delaware. The Certificate of Dissolution was approved by the state of Delaware on October 4, 2018 and this client no longer owes anything to the state of Delaware nor to Harvard Business Services, Inc.," said Bell.

Bell also thanked this Patch reporter for contacting him. Patch asked the Welle campaign for a comment, and after I published this article today, a spokeswoman for the Welle campaign got back to me.

"Severn Pacific Inc. ceased operations in the summer of 2017," said Welle spokeswoman Aubrey Fink. "Thereafter, it conducted administrative efforts for disillusionment. There was poor communication and limited coordination in the process between Harvard (Business Services) and the company. The online report revealed back taxes of $1,200 and falsely accused the business of owing $130,000 in liabilities. That accusation is categorically untrue and a partisan attack on a small-business owner trying to navigate red tape. The balance of the taxes was paid immediately."

Welle bought a home in Rumson before he decided to run for Congress in New Jersey's 4th district. The fourth congressional district covers nearly all of Monmouth County, including towns such as Holmdel, part of Middletown, Colts Neck, Rumson, Manalapan, Freehold, Red Bank and Wall Township. The fourth district also reaches into Jackson and Lakewood in Ocean County and Hamilton and Robbinsville in Mercer County.

The election will be Nov. 6.

Past Patch reporting: Josh Welle Under Fire For Owing Back Taxes

Photo credit: Photo of Josh Welle and his wife, Angela, at a campaign event in August of this year. Carly Baldwin/Patch