More Tax Problems for Maldonado?

The California Democratic Party — through attorneys — has requested that the Fair Political Practices Commission (FPPC) “immediately commence an enforcement action” against former lieutenant governor Abel Maldonado in connection with reports that Maldonado’s family business held a party in his honor the same day as a political fundraiser for the then-state-senator.

McClatchy Newspapers reported earlier this month that Maldonado — who is engaged in a tough battle to unseat 14-year incumbent Representative Lois Capps — had a 2007 fundraiser for his State Senate reelection campaign, the same day as the farm had it deducted in tax returns with the IRS.

Campaign records show Maldonado received 27 contributions totaling $35,500 on the date in question. If the event was a political fundraiser, costs associated with it could not have been deducted from the tax report. IRS officials, in documents, said they asked the farm — Agro-Jal — to identify the party attendees and “the nature of the business that was conducted.”

“The taxpayer provided me with a list of initials representing the name of the guest and their occupation,” wrote an IRS official. “The information does not satisfy the substantiation requirements.” The tax deduction was not allowed, and the IRS also took note of Maldonado’s standing as a state senator. “This party could have just as easily pertained to his political career rather than any business of the taxpayer,” the official wrote.

An attorney, writing a letter on behalf of the Democratic Party to FPPC officials, seized on this. “If this is a violation of tax law, as the IRS believes it to be, then it follows that it is a violation of the State’s campaign finance law,” attorney Thomas A. Willis stated.

Though the letter notes the statute of limitations would run on the event held on December 5, 2007, there is little doubt the announcement — certainly not good news for Maldonado — was timed to drop less than a week before Election Day, as his taxes once again seep to the forefront of the discussion. Maldonado is currently disputing with the IRS what could total up to $4.2 million in tax deductions reported by the family’s farming business in which Maldonado had one-third interest.

Among the issues the IRS has with the farm’s tax returns are deductions for golf club memberships and horses on the farm. “It has been well established that the corporation had deducted expenditures on a number of occasions in 2006 and 2007 that had nothing to do with the corporation’s business,” wrote IRS officials in one of their forms.

Maldonado spokesman Kurt Bardella addressed the request in a statement. “The complaint filed by the Chairman of the California Democratic Party is a purely political and desperate stunt attempting to exploit an issue less than a week away from the election that the campaign addressed weeks ago,” he said. “Lois Capps knows she can’t run on a 14-year record of failure, so instead, she’s using her political allies to launch personal attacks against Abel Maldonado in the desperate hope that the Central Coast won’t notice she has no plan to create jobs, grow the economy, and lower the national debt.”

It’s been an issue Maldonado hasn’t been able to kick this entire election season, as Capps has kept his problems with the IRS in the spotlight throughout, though she has had her own tax issues. It came out in August that Capps didn’t report $41,480 in taxable income from 2001-2006, until she filed amended returns sometime earlier this year. That issue came to light after Capps released her tax returns for every year she’s been in office on her campaign website.

“Because Mr. Maldonado refuses to release his tax returns as he promised and refuses to report his campaign contributions or expenses as required by law, we must refer him to the FPPC for a full investigation,” said state party chair John Burton in a statement. “Central Coast voters must surely understand that if Mr. Maldonado were to go to Congress, he would be serving under a legal cloud.”

Because of redistricting, Capps is facing her toughest reelection challenge in a decade. With a boost from super PACs and outside money, Maldonado has attacked her liberal voting record. Indeed, she does vote with her party the vast majority of the time. But while he has said he wants to change the partisan politics that have gridlocked Washington and wouldn’t be beholden to “party bosses,” Maldonado has associated himself with some of those people — namely Speaker of the House John Boehner and Representative Pete Sessions, chair of the National Republican Congressional Committee — who have each been in town for a couple fundraisers.