Eric Adams Says Accountant’s ‘Incorrect Decision’ Spawned Faulty Tax Filings
Mayoral nominee admits he failed to tell the IRS he lived in the Bed-Stuy townhouse he claims as a residence — a move that may have enabled him to take bigger deductions. His campaign says he’ll refile his returns, again.
Eric Adams on Monday said “an incorrect decision” by his accountant led the Democratic mayoral nominee to submit tax filings reporting he doesn’t live in the Brooklyn townhouse where he claims residence.
THE CITY first flagged the contradiction Sunday, after reviewing amended tax returns Adams resubmitted to the Internal Revenue Service in May. Reporters had previously revealed the candidate’s filings — covering 2017, 2018 and 2019 — were incomplete, prompting the new paperwork.
Adams, who serves as Brooklyn borough president, did not make those amended documents public until after securing the Democratic nomination on June 22.
Responding to questions posed at a news conference in Brooklyn where he proposed converting hotels to housing for the homeless, Adams pointed to the stress and devastation that his accountant, Clarence Harley, experienced in losing his own home.
“He came to me when he reached the point of his homelessness, and he stated: ‘I’m under a lot of pressure, I’m going through some difficult times, and I understand you have to fire me,’” Adams said when asked about the filings.
Adams said that firing the man when he was facing homelessness would have been hypocritical, so he kept him on as his accountant even while Harley was living in a homeless shelter.
“And because of that, it may have caused him to make some bad decisions,” said Adams.
“I understand that, I have to live with it, it was my responsibility and I take blame for my responsibility and we’ll rectify that,” he added. “But I was not going to throw him away when he was down on his luck.”
Another Do-Over Planned
Adams will be resubmitting the tax filings to the IRS a second time to indicate he was living in the Lafayette Avenue townhouse during the three years in question, by detailing “personal use” on a form used to claim landlord deductions, a spokesperson said.
The mayoral frontrunner has been adamant that he lived in the ground floor Bedford-Stuyvesant apartment during the years in question, after POLITICO NY reported Adams’ ownership of a co-op apartment in Fort Lee, N.J., and inconsistencies in his address records.
Adams had famously bunked in his office at Brooklyn Borough Hall for months at the start of the pandemic in early 2020.
In May, also following questions from POLITICO NY, Adams filed amended tax returns to newly report $36,000 per year in rental income that he had disclosed to the city Conflicts of Interest Board in his annual filings as an elected official, but not to the IRS.
The Adams campaign said at the time that because the politician’s landlord expenses had exceeded the rental income in each of those years, Harley hadn’t believed that it was necessary to report the income and losses in the federal tax filings.
Adams had spoken previously of his accountant Harley’s homelessness — but not the events that led to his having no place of residence.
As THE CITY reported this week, Harley was fired from his job as a managing agent for a Harlem co-op apartment building board in 2017, following allegations of embezzlement that are detailed in court filings. He was also evicted from a unit there, where the board president said Harley had been living rent-free.
Adams did not remark on those revelations. His campaign had told THE CITY: “We will let Mr. Harley speak for himself.”
Harley did not respond to a text message Monday seeking comment, and a woman who answered the cell phone listed for him said “no” and hung up when a reporter asked to speak to him.
The tax returns Harley prepared show significant write-offs on the multi-family home, where Adams says he rents out three units and lives in one, on the ground floor.
At his news conference, Adams pointed to the improper reporting of personal use days at the property as an example of a bad decision that Harley had made, saying he should have reported “one” instead of “zero.”
His campaign didn’t respond to a request for clarification on why Adams contended that just one personal use day should have been reported.
Not reporting personal use of a rental property on tax returns could allow a landlord to write off more expenses and reduce tax bills.
THE CITY also reported Sunday that Adams hadn’t responded to a notice the Department of Buildings taped to his front door on Aug. 5 seeking entry into the Lafayette Avenue property after a 311 complaint of an illegal apartment conversion.
On Monday, Adams said he hadn’t seen the six-week-old “LS-4” notice instructing him to call the DOB immediately to schedule an inspection.
Asked to explain how could have missed the message, Adams pointed to two issues: what he called a longstanding problem of mail and notices going missing from outside his home, and the potential of an address mix-up with the house next door
“We’ve talked to the mail person about it in the area,” said Adams.
“We have a history of people removing notices, people taking mail out of the box — there’s been an ongoing history,” he added. “So yes, I’m going to reach out to the Department of Buildings and resolve the issue, whatever it is.”
As of Friday, buildings department officials hadn’t been contacted by Adams to schedule an inspection, a spokesperson told THE CITY.
The DOB makes two attempts to access properties when complaints are made, the spokesperson said, but the second visit hasn’t yet been scheduled. DOB staffers couldn’t access the property the first time after knocking and ringing the bell.
In addition to the Fort Lee co-op he owns with his partner, Adams still had an ownership stake as recently as June in a co-op unit in Prospect Heights that he had said he relinquished years earlier.
Earlier that month, with just weeks until the mayoral primary, Adams invited reporters to his Lafayette Avenue home to demonstrate that he lived in the ground-floor apartment unit there. He blamed the presence of youthful sneakers and non-vegan items in the fridge on his adult son, whom, he said, sometimes crashed there.