A business decision: Appointee: Finances, not tax woes, led to reconsideration

Harold Calloway said his sudden decision last week to decline his appointment as Indiana’s next insurance commissioner boiled down to a reluctance to leave the business he built from scratch.

His change of heart had nothing to do with several state-income-tax warrants filed against him and his wife, Frankye, according to Calloway. All the warrants have been satisfied or paid, according to state records.

Gov. Mitch Daniels announced late last month that he had picked Calloway, 58, to become the next leader of the Indiana Department of Insurance. He would have started March 1, and would have brought with him nearly 20 years of experience in the industry and a crowded resume.

The Evansville resident saw combat with the US army in Vietnam. He worked as a welfare case worker, directed a Head Start program, and ran student financial aid at the University of Southern Indiana before turning to insurance.

Calloway started his insurance career as a State Farm agent in 1985 without a single policy in his portfolio. Today, Calloway estimates his Evansville business has 5,000 to 6,000.

Becoming state insurance commissioner would have meant selling that business back to State Farm. It also would have led to a pay cut. The commissioner’s salary is about $83,000.

Calloway said Jan. 19 that he simply changed his mind about taking those steps.

“Looking at the situation there, financially it’s not feasible for me, and that’s why I’m not going to do it,” he said. “I came to a conclusion with my wife that I was just going to stay with my business here.”

The day before he changed his mind, Calloway told Indianapolis Business Journal he had been stressed out over selling that business.

“That’s been the hardest thing I’ve had to do,” he said.

But he also said Daniels’ sincerity made it too hard for him to say no. He planned to move to Indianapolis and said he had just closed on a condo here.

Daniels spokeswoman Jane Jankowski said last week the governor had no time frame for naming another commissioner.

“Certainly, [Daniels is] disappointed that Mr. Calloway is not going to be taking the position on March 1,” Jankowski said, “but he also understands that there are times that someone cannot make the personal and financial sacrifices that are sometimes necessary to be able to take a role in state government.”

Jim Atterholt started work Jan. 10 as the state’s new chief deputy commissioner and was slated to run the department until March 1.

The commissioner oversees a department that employs about 75 people and operates with a budget of $8.2 million. It handles consumer complaints and enforces laws governing insurance companies and policies.

Atterholt, a former state legislator, served as leader of Daniels’ Department of Insurance transition team.

A check of records filed in Vanderburgh County and with the state Department of Revenue showed the Calloways have had four tax warrants filed against them for failing to pay state income taxes on time.

The warrants, filed from 1996 to 2003, total $5,100 and range in amount from $190 to $2,953. All have been satisfied or paid.

State Department of Insurance records also show two more warrants that have been paid, including one issued in 1998 for $40. No amount was recorded for one issued and paid in 1992, said Dan Tollefson, a financial services staff attorney there.

The state Department of Revenue issues tax warrants when people miss several opportunities to pay their taxes, said department spokeswoman Cathy Henninger. Last year, the department sent out 285,118 warrants.

They can be issued against businesses or people, and they cover individual income, sales or excise taxes. People first receive a notice that their taxes are due. Then they receive a pre-warrant before the warrant is issued.

The warrant is filed with the clerk’s office in the county of the taxpayer’s mailing address. Then it’s turned over to the county sheriff’s office, which has 120 days to collect it.

If the sheriff’s department fails, a collection attorney and then a collection agency take a shot, Henninger said. If all attempts to collect fail, the warrant is recorded as a lien against the taxpayer’s property.

Henninger said individual income tax warrants often occur because an unexpected tax bill catches people off guard. The taxpayers also might have made a mistake on their returns or they might have received a windfall of money and didn’t think about taxes.

The day before Calloway changed his mind about becoming commissioner, IBJ asked him about his warrants after a lengthy conversation about his career and his plans for the department.

He said he thought they involved payroll taxes for his business. He said he switched to a payroll service to make sure the right amount of money was set aside for state taxes.

“I think the bottom line is, taxes weren’t paid, and we found out we needed to pay them, and we went and secured the money and paid,” he said.

Jankowski said Daniels knew about the tax warrants when he picked Calloway.

“The governor was informed of Mr. Calloway’s situation and also informed that these had been satisfied,” she said.

Calloway said his sudden decision had nothing to do with the warrants.

“I didn’t want to give up my insurance agency,” he said.