Saturday, September 20, 2008

Rangel Pays Taxman; Blames GOP For Ongoing Coverage

photo via the NY PostLet's see. Rep. Charles Rangel (D-NY) doesn't pay taxes on rental income from his Punta Cana villa for years. He doesn't report income from the sale of homes and rental income from other properties. He doesn't report imputed income from the use of a House parking lot spot where he kept a car for years even though rules indicate that the spot is not to be used for long term storage.

And it's somehow the fault of others that he's in this mess?
A House ethics committee plans to investigate, and Republicans have called for the 19-term congressman to be removed from his powerful position as chairman of the tax-writing Ways and Means Committee. After private meetings with House Democratic leaders earlier this week, Rangel was able to keep the post.

"Last July, the Republican Party declared guerrilla war against Democrats and since then has made every effort to smear me and members of my party," Rangel wrote in the letter.

"My record in the Ways and Means Committee and 38 years in Congress is unassailable, so they've pried into my private life and used insinuation and half-truths to write stories that sell papers," Rangel wrote.
Sorry Charlie. You broke the law. You evaded paying taxes owed for years by failing to report income and then you want people to think that because you've paid the taxes due on the Punta Cana villa income that you're all square? You think that because you've paid the tax doesn't mean that the penalties and interest owed for the failure to report that income isn't going to be demanded?

Any other taxpayer finding themselves in a position similar to that of Rangel would find multiple notices of deficiency and demands for audits of all tax records going back years because of multiple inconsistencies. The IRS and New York State Department of Taxation and Finance would be seeking interest and penalties on all unreported income for the years in question, which can often equal or exceed the tax obligation in the first place (which is why you're supposed to pay the tax in the first place - because the penalties are quite harsh).

New York Tax Law provides the penalties, which include 5% per month up to 25%, with a minimum of $100 or 100% of the tax due, whichever is less. Throw in negligence penalties, plus interest, and you're talking a nice tidy sum. It gets even worse if fraud is found. There's a further penalty for incorrectly calculating the tax, which is equal to 10% of the difference between the amount claimed, and the amount owed.

And that's just on the Punta Cana villa rental income for New York State. We haven't even gotten to the other tax deficiencies or what the IRS imposes for penalties and interest.

Throw in what the IRS penalties are, and as I wrote last night, the checks submitted thus far to the NYS Department of Tax and Finance and IRS are a drop in the bucket. He's hoping that the amounts show a good faith effort to pay tax and stave off further tax investigations and auditing of his records, which is more than likely to reveal tax evasion stretching back years (if the evidence of his unreported sales of homes, rental income, imputed income are any indication).

Jammie also weighs in, and notes that it was none other than the New York Times which began raising questions about Rangel's improprieties. The Times began asking questions about Rangel's use of multiple rent stabilized apartments.

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