A new attack ad portrays U.S. Sen. Bill Nelson as scamming his employees and the federal government by avoiding payroll taxes.

The ad, released by Republican challenger Gov. Rick Scott, claims, "(Bill) Nelson doesn’t pay payroll taxes for his employees. He doesn’t even provide them with health benefits. It’s stealing money from Medicare and Social Security."

Several PolitiFact readers emailed us ([email protected]) to ask if the ad was accurate, so we decided to fact-check it.

Back to the source

The ad includes a headline that says, "Bill Nelson’s campaign avoiding taxes, health care costs on campaign staff." So we ruled out that Nelson’s official Senate staff were the employees the ad was talking about.

The headline is from the Washington Free Beacon, a conservative news organization, which published an article July 13 stating that Nelson had not hired any full-time employees on his Senate campaign.

Federal campaigns are required to disclose their spending information to the Federal Election Commission, which regulates campaign finances. When the story was published, the Nelson campaign had not disclosed any "disbursements" labeled as payroll. Likewise, there were no insurance payments for workers listed in FEC filings between January 2017 and June 2018.

When we dug in deeper, we found that the Nelson campaign didn’t have any full-time staff to pay taxes on. In the first half of the year, the Nelson campaign was using paid consultants.

"This isn’t unusual, as most political campaigns rely heavily on consultants, especially early on in the cycle," said Nelson spokeswoman Carlie Waibel.

Employers do not need to pay the payroll tax on consultants. They also do not need to provide health benefits.

Paul Herrnson, professor of political science at the University of Connecticut, said hiring consultants is relatively common, especially for incumbent politicians. Incumbents may work with consultants — often people and firms they’ve worked with on previous campaigns or during their time in office — to help raise money, conduct polls, and organize early campaign efforts. Staff for a campaign are hired to manage day-to-day activities and voter mobilization closer to the election.

We checked the FEC filings to see if other campaigns relied heavily on consultants. We focused on nearly a dozen similar races— battleground states with an incumbent running for re-election. Based on the FEC filings for these campaigns, all 11 incumbents had hired staff (and paid payroll taxes) by June, when the last filing was due. Nelson’s tactics, while legal, do seem to be uncommon. (Some Democrats have criticized Nelson’s campaign as understaffed and overmatched.)

The Nelson campaign hired some full-time employees in early July, according to Waibel, but these changes have not been reported to the FEC yet. The next filing is due on Aug. 16, and Nelson will have to begin paying payroll taxes on these new employees.

As for health insurance, Waibel said, "Nelson for Senate staff are compensated to ensure they have access to health care. Health care costs are considered when establishing staffer's salaries."

The ad is somewhat outdated, but it does align with the most recent data available online.

"Stealing money from Medicare and Social Security"

The ad also claims that Nelson is "stealing money from Medicare and Social Security" by not paying payroll taxes. The payroll tax is one of the major financiers for Medicare and Social Security.

But a company that pays consultants is not "stealing" from Medicare or Social Security.

Here’s how it works: When a company pays a full-time employee, they set aside 7.65 percent of the employee’s check to go toward Medicare and Social Security. The employer will match that, so effectively 15.3 percent of the employee’s salary is paid to Social Security and Medicare.

For consultants, things get a little more complicated. Consultants, like other contract workers, generally have to pay the full 15.3 percent themselves to Medicare and Social Security. If the consultant employed his or her own full-time employees, the employees would pay half and their employer (the consultant) would pay half.

The same amount of money will go to Medicare and Social Security, regardless of whether the Nelson campaign pays it or the consultants do. This may be a cost-cutting measure for the campaign, but it certainly isn’t "stealing," as the ad claims.

Our ruling

Scott released an ad which claimed, "Nelson doesn’t pay payroll taxes for his employees. He doesn’t even provide them with health benefits. It’s stealing money from Medicare and Social Security."

Nelson relied on consultants for the early parts of his campaign. Because he did not have employees, he did not have to pay payroll taxes or provide health insurance.

In July, Nelson hired employees, though they will not report that change to the FEC until mid-August. The campaign still does not provide healthcare to their employees but says that salaries are adjusted so staff will have access to care.

Nelson does not have to pay payroll taxes on consultants. Instead, the consultants pay the payroll taxes. This is a common set-up for contract work. No money is being lost or stolen from the national funds.

We rate this statement Mostly False.