IRS Records May Tarnish Candidate Jarvis’ Success Story : Politics: Former nurse who parlayed a business idea into millions had liens of more than $60,000 filed against her.

To hear congressional candidate Judy Jarvis tell it, hers is an American success story: a nurse who parlayed an idea for a nurses registry and a $5,000 loan into a $1-million-a-year business, sold it a decade later to a Fortune 500 company and now hopes to apply in Washington the principles she learned along the way.

It is a story that Republican Jarvis proudly trumpets in her 49th District campaign, one she holds up as a defining contrast between herself and Democrat Lynn Schenk, whom she describes as a “career lawyer-bureaucrat.”

It is a story with political cachet in a year of anti-incumbent fervor when many voters are yearning for a return to citizen-legislators.

It is also, however, only part of the story.

Local and federal records show that liens totaling more than $60,000 were filed against Jarvis’ former company, the California Nurses Bureau Inc., for delinquent income tax payments during the early 1980s. According to IRS records, $41,350.19 is still owed--a claim that Jarvis and her accountant dispute, arguing that the debt was paid and that the lien should have been removed.

Combined with other records showing that Jarvis has loaned her campaign $45,000, nearly a third of it via credit card borrowing that will have to be repaid at 19.8% interest, the tax question could diminish the political value she has so far derived from her small-business background.

Jarvis, though, said she doubts that voters will question her own fiscal responsibility or credibility on national economic issues because of incidents she called “not unlike the day-to-day money problems that a lot of people experience.”

“I’ve had a lot of hard knocks and lots of ups and downs, like so many other people in business,” Jarvis said. “I don’t think people hold that against you. If anything, this gives me greater knowledge and an ability to address the problems of being in business once I’m in Congress.”

The tax problem, Jarvis explained, stemmed from a former accountant’s errors and failure “to file in a timely manner” at various points throughout 1982-83.

“He was just sloppy and got in over his head--there was nothing deliberate about it,” Jarvis said. “I was livid when I found out, just furious. But, even if someone working under me makes a mistake, it’s still my business, and I’m responsible. So we went to the IRS and worked out a system to pay it back, and took care of it. It’s been done for a long time.”

Last month, when Jarvis asked the IRS to determine whether the matter had, indeed, been settled, she received a written response stating that there was “no debit balance” relating to her former company. That two-page letter, she argues, is proof that “nothing’s owed and this is a closed case.”

But IRS records and documents in the San Diego County recorder’s office show that two liens totaling $41,350.19, originally filed in 1985, were refiled in 1991 and have not yet been paid.

“As a matter of public record, there still is $41,000-plus owed on the liens,” IRS spokeswoman Jindy Barnard said. “There’s no record of that being released.”

Jarvis, though, insists that the IRS records are inaccurate, suggesting that duplications of the amounts owed--the actual total, she says, was in the mid-$40,000 range--or the agency’s failure to properly register her tax penalty payments account for the mix-up.

Bolstering her case, Jarvis has canceled checks totaling nearly $47,000 that she argues paid the IRS debt in full. Moreover, in 1985, several years after the penalties were initially assessed, she received a tax refund, “something that wouldn’t have happened if I still owed anything.”

“Sometimes with the IRS, the right hand doesn’t know what the left is doing, and I think that’s what happened here,” said Bill Davies, the accountant hired by Jarvis to help remedy the problems left behind by his predecessor. “I’m certain nothing’s owed.”

Even if the delinquent taxes and penalties have been paid, however, the episode could take some of the gloss from a story that Jarvis has used as the cornerstone of her political biography.

Throughout her race, Jarvis, a registered nurse from Tierrasanta, has proudly told campaign audiences about how, starting in 1977, she built her idea for a company she describes as a “Kelly Girl operation for nurses” into a corporation that, at its peak, employed about 125 nurses and had gross annual sales exceeding $1 million.

Jarvis’ company, which dealt exclusively with critical-care nurses, essentially operated as a middle man between the nurses and hospitals in arranging temporary work schedules, giving the nurses added flexibility and helping hospitals staff unpopular overnight and weekend shifts.

“You don’t run a million-dollar-a-year business without picking up some skills that would be useful in public office,” Jarvis said, citing her business background in part to offset her lack of previous political experience.

Her ownership of the nurses registry, Jarvis says, is part of a “broad life experience” that is “much more diverse” than that of Schenk, whom she characterizes as “a lawyer who’s been in the political arena forever.” Two minor-party candidates will also appear on the Nov. 3 ballot.

Jarvis sold the company to the Kidde Corp. in 1987, staying on for two years as an executive with the nurse registry, which was renamed CNBJ Inc.

Kidde, a New Jersey-based corporation that sold numerous consumer and industrial products, was later acquired by a British firm in a $1.6-billion deal.

Her firm’s acquisition by Kidde, Jarvis argues, provides further evidence of her contention that the IRS and county records are erroneous in showing an outstanding lien. Knowledge about the IRS, she added, does the same.

“A Fortune 500 company doesn’t buy another company that has liens on it,” Jarvis said. “Plus, if you owed the IRS $41,000 for nearly 10 years, you’d better believe they’d come knocking at the door before now.”

Wanting to resolve the issue once and for all, Jarvis has asked her accountant to again raise it with the IRS, hoping to obtain confirmation that the “false” lien has been lifted.

“It’s not a crime to have a problem with the IRS when you’re in business,” she said. “It’s unfortunately one of the problems that people in business often have. Believe me, no one in Congress would understand that better than I do.”