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Saturday, January 31, 2009

20 New York State Leaders Get Away With Not Paying Taxes

20 state leaders pay up tax bills
State legislators paid $52,000 as tax warrant targets

By RICK KARLIN, Capitol bureau,, January 30, 2009

Former gubernatorial aide Charles O'Byrne (pictured at right) isn't the only prominent New Yorker with a history of tax troubles.

Twenty members of the current state Legislature have over the years been hit with state tax warrants, similar to liens, for more than $52,000 in unpaid taxes, interest and penalties, according to state records covering the past two decades obtained under the Freedom of Information law.

Additionally, former lawmakers have owed more than $62,000.

In October, O'Byrne admitted to paying more than $293,000 in state and federal back taxes and interest. He quit his post as Gov. David Paterson's top adviser after his debts came to light.

While all the sitting legislators' tax bills have been settled, payments didn't come before the politicians were listed in state documents as facing tax warrants.

Many lawmakers who received warrants pointed to confusion and mix-ups, often regarding their own employment outside of the state. (Lawmakers in both the state Senate and Assembly earn $79,500 plus extra stipends for special duties such as heading committees; taxes are automatically withheld from those paychecks.)

All of the lawmakers who have received warrants are Democrats, and all but one is from New York City. The lone exception: Sen. Andrea Stewart-Cousins of Yonkers (pictured at right).

"There was a question of what my firm paid me," said Bronx Assemblyman Peter Rivera, who between 1992 and 2007 had to pay back some $20,000.

Rivera,(at left) who operates a private law firm in addition to this work as an assemblyman, said he had also disputed some of what the state claimed he owed, but decided to pay anyway.

"Even though I didn't think I owed some of the money, I paid it," he said.

"What kills you is when you add the interest and penalties," added Marty Connor, (pictured at left) a former Brooklyn senator and former minority leader who was ousted last November in a primary. Connor, who had warrants for more than $19,000 in 2004 and 2005, said he inadvertently underpaid taxes from his legal work over the years - an error that wasn't caught until he hired an accountant.

Also owing money in the past but no longer in office, former Bronx Sen. Efrain Gonzalez (at right) in 1985 owed $43,462. Gonzalez is under federal investigation for allegedly taking money from non-profit agencies; his lawyer refused to comment.

Gonzalez was defeated in a primary last fall by Pedro Espada,(at left) who along with fellow senators Carl Kruger of Brooklyn, Hiram Montserrate of Queens, and Ruben Diaz Jr of the Bronx comprised a group of dissident Democrats who threatened to withhold their support for Democratic Leader Malcolm Smith (pictured below).

Diaz and Espada have also had warrants, with Diaz owing more than $2,000 in 1994. He said he didn't remember the incident, but noted that he wasn't a legislator at the time, working instead as a minister and as a commissioner of New York City's Civilian Complaint Review Board, which investigated police brutality allegations. Espada said his warrant, for $949, was related to a real estate deal.

These warrants are the first step in the state's civil enforcement of tax debts, according to the state Department of Taxation and Finance. They allow the state to attach a lien on someone's property, including automobiles, real estate and other valuables.

"We can go after assets," said Taxation and Finance spokesman Tom Bergin. Additionally, the state can attach wages to get unpaid taxes but the agency doesn't reveal who is being garnisheed.

Having a listed tax warrant "is serious," said Sherry Kraus, a Rochester tax lawyer who serves on the state bar association's tax section.

Kraus, who was speaking as a tax attorney and not on behalf of the bar association, said warrants can be issued for a variety of unpaid taxes ranging from income tax to withholding tax that an employer is supposed to pay on behalf of workers.

At least one observer said the warrants should have a special sting for New Yorkers, who pay some of the nation's highest taxes.

"It doesn't send a good signal to the rest of the state if the people who are actually in charge of enacting tax laws don't follow them to the extent that the state tax agency has to go after them," remarked Steve Ellis, a vice president at Taxpayers for Common Sense, a Washington D.C.-based organization that monitors tax policy. "It certainly makes your average taxpayer ... feel like a chump."

About 9.4 million tax returns are filed each year in New York. An average of 261,543 warrants were issued per year over the past three fiscal years, with an average of 173,543 cases closed.

An average of 2,871 were vacated, or dismissed, Bergin said.

Timothy Geithner, President Barack Obama's nominee for Treasury secretary, was approved Monday by the Senate despite revelations that he had failed to pay more than $34,000 in federal taxes. Geithner eventually paid up - with one payment coming just before Obama tapped him.

Rick Karlin can be reached at 454-5758 or by e-mail at

The taxman cometh

These current legislators have in the past 20 years received state tax warrants. All of the cases have been resolved.

Name Date Amount

Sen. Ruben Diaz 1994 $2,328.73

Sen. Martin Malave Dilan 2004 $467.91

1993 $831.41

Sen. Shirley Huntley 1998 $758

1994 $2516.42

Sen. Velmanette Montgomery 1999 $1779.17

1996 $705.72

1994 $1394.76

Sen. John Sampson 2003 $1734.03

Sen. Andrea Stewart-Cousins 1997 $854.34

Sen. Pedro Espada 2006 $949.51

Assemblyman Michael Benjamin 1995 $572.46

1994 $2061.72

Assemblyman Karim Camara 2008 $570.54

2004 $588.24

Assemblywoman Crystal Peoples 1990 $418.06

1988 $481.65

Assemblyman Adam Clayton Powell IV 1998 $886.06

1996 $988.77

Assemblyman Gary Pretlow 1988 $749.03

Assemblyman Philip Ramos 1999 $1185.17

Assemblyman Jose Rivera 1997 $481.32

Assemblywoman Naomi Rivera 2007 $1588.85

Assemblyman Peter Rivera 2007 $1523.66

2007 $8756.69

1993 $6666.26

1992 $3381.94

Assemblywoman Annette Robinson 1992 $2593.18

1997 $5407.83

Assemblyman William Scarborough 2000 $427.83

Assemblyman Keith Wright 1993 $1837.31

Assemblywoman Inez Barron 2006 $615.13

Total $52,473.65

Source: NYS Dept of Taxation and Finance and Secretary of State

Top Paterson aide Charles O'Byrne did not pay taxes due to 'non-filer syndrome', his lawyers say
DAILY NEWS ALBANY BUREAU, October 22nd 2008, 10:39 PM

ALBANY - Lawyers for top Paterson administration aide Charles O'Byrne claimed Wednesday he failed to pay taxes for five years because he has "non-filer syndrome."

"These are very high-functioning people who otherwise can complete all of the ordinary tasks in their lives," O'Byrne lawyer Richard Kestenbaum insisted.

"But there is something that they can't do, and many times that causes them not to be able to file their tax returns."

Not even Paterson, who has staunchly defended O'Byrne, was buying it.

Asked later in Brooklyn if he believes in "non-filer syndrome," Paterson responded, "No."

"He showed poor judgment," the governor said of his $178,000-a-year secretary.

Still, Paterson said O'Byrne "merits forgiveness" since he doesn't have a history of not filing taxes and was suffering from a "major depressive disorder."

While some news stories in recent years have been written on "late-filing syndrome," many tax experts say they never heard of it.

"Wow," IRS spokesman Kevin McKeon said before offering no comment.

Alex Raskolnikov, a Columbia Law School professor who specializes in tax law, said that while the IRS can take mental illness into account when assessing penalties, he's never heard of "non-filer syndrome."

Rhondalee Dean-Royce, a spokeswoman for the American Psychiatric Association, said no such disorder or syndrome is listed in the Diagnostic and Statistical Manual of Mental Disorders, a standard reference.

Kestenbaum and another O'Byrne lawyer, Henry Berger, released documents Wednesday that said O'Byrne did not file returns for tax years 2001 through 2005.

O'Byrne's federal and state tax liability, including late fees and interest, was about $300,000 - about $100,000 more than previously revealed.

Paterson and his aides have claimed for days that O'Byrne, a former Jesuit priest, had paid off the entire debt, but the records showed O'Byrne cut one last check to the state on Tuesday for $3,641.85.

O'Byrne's lawyers said the check was written because a previous one in the same amount never cleared. They provided no proof.

The Daily News has reported that O'Byrne was able to pay off his debts with help from the Kennedy family, a law school buddy and his two sisters.

O'Byrne's two sisters each gave him between $5,000 and $20,000. Jean Kennedy Smith and Brian Krisberg each loaned him between $60,000 and $100,000.

His lawyers said O'Byrne agreed to repay the loans with interest, though they couldn't say the percentage. They also said there is no payback schedule.

O'Byrne, they said, first alerted Paterson of his fight with depression and his tax problems in 2004 when he was hired for a job in the state Senate. At the time Paterson was minority leader.

Still, he didn't notify the IRS or the state Tax Department until 2006. He filed the bulk of his returns just days before Paterson became lieutenant governor.

Berger said O'Byrne waited until all the needed documents were assembled, which "is quite complicated."

Despite first telling Paterson in 2004 of his tax problems, O'Byrne went another two years without filing.
With Andrew Garib

Gov. Paterson advisor Charles O'Byrne ran up $1,400 in suspect charges
Wednesday, October 22nd 2008, 12:15 AM

ALBANY - Gov. Paterson's embattled top aide racked up $1,400 in questionable state credit card charges in the last two years, mostly for meals at restaurants, records show.

Charles O'Byrne, the powerful $178,500-a-year secretary to the governor, used his state card 11 times at New York City restaurants since early last year, records provided by the state controller's office show.

State employees can't use charge cards, which are for travel, in the city listed as their work station, controller's office spokesman Dennis Tompkins said.

New York City is the official work station for O'Byrne, who last week acknowledged having owed more than $200,000 after not paying his state and federal income taxes between 2001 and 2005.

His New York City meals came out to $935.19, including $180.10 at the Commerce restaurant in the West Village on July 15; $167 at Cookshop on 10th Ave. on July 7; and $133.24 at L'Entrecote on May 4, 2007.

It's unclear if O'Byrne treated any guests. That would be a no-no, even for business purposes.

"It's supposed to be just for yourself," Tompkins said.

O'Byrne used his card for meals in Albany six times, which is allowed, but each time went over his set per diem of $10 for breakfast and $39 for dinner.

In March 2007 he spent $136.48 on an Albany meal. The next month he spent $83.66.

The questionable charges began after Paterson became lieutenant governor in 2007 and O'Byrne was his chief of staff. It continued after he became secretary to the governor when Paterson replaced Eliot Spitzer in March.

Paterson spokeswoman Risa Heller said the expenses have been reimbursed through deductions from other per diems to which O'Byrne was entitled.

She could not provide documentation last night or say when he began repaying the expenses.

Regardless, O'Byrne may have misused the card based on regulations posted on the state controller's Web site, which specify that "only appropriate travel expenses may be charged to the card."

O'Byrne's questionable use of the card stopped on March 16, the day before Paterson was sworn in - a time when Paterson and his inner circle were under media scrutiny.

His New York City charges resumed in July, when he once exceeded his Albany per diem.

O'Byrne is expected to release documents on his tax problems today, which he blamed on depression. He is not expected to release his tax returns.

He claims to have paid off the entire $200,000 he owed in back taxes, penalties and fines through the sale of stocks and loans from family and friends like Jean Kennedy Smith.

Paterson said O'Byrne got no special treatment from the state tax department. He also said his administration will cooperate with a Republican-led probe.
With Glenn Blain


October 24, 2008 --

ALBANY – Gov. Paterson's chief of staff Charles O'Byrne resigned under pressure this afternoon, The Post has learned.

O'Byrne decided to resign a week after The Post first reported that he failed to pay his taxes for five years – a period in which he claimed to have suffered from clinical depression.

O'Byrne's hopes for political survival deteriorated two days ago, when his lawyers revealed his tax debt had actually reached nearly $300,000 – $100,000 more than he originally disclosed – and that he had only paid it off this week.

A suggestion by O'Byrne's attorney that his client suffered from "non-filer syndrome" also brought widespread ridicule and calls for O'Byrne's resignation.

O'Byrne's ouster amounts to the first major shake-up within the Paterson administration, barely seven months after the former lieutenant governor took over in the wake of Eliot Spitzer's resignation.

A former Jesuit priest with close ties to the Kennedy family, O'Byrne, 49, was Paterson's most trusted advisor and confident inside the administration.

He has worked for Paterson for several years in various capacities and the two men were extremely close.

His departure leaves the legally-blind governor with a huge management vacuum as he grapples with a financial crisis that blasted a $1.2 billion hole in the state's budget.

Read How The Post Broke the Story