Congressional candidate Abel Maldonado raised thousands of dollars for a state re-election bid during a party that his family’s business later falsely claimed as a business expense on its tax returns, according to records.
The tax infraction stemming from a 2007 event is the latest in a months-long sparring over tax controversies involving the two contenders for California’s 24th Congressional District. Challenger Maldonado, a Republican, faces longtime incumbent Rep. Lois Capps, D-Santa Barbara, in the highly contested Nov. 6 race.
Capps has been accused of failing to report rental income from a staffer living in her residence, and Maldonado’s family farming business is still in a tax dispute with the Internal Revenue Service over millions of dollars in deductions.
IRS records also show that Maldonado’s family company, Agro-Jal Farming Enterprises Inc., tried to write off the $3,686.03 catering fee of a party held Dec. 5, 2007.
The IRS denied that write-off because the party, which was hosted at the Shell Beach residence of Maldonado’s father, Frank, may have been a political fundraiser that didn’t qualify as a business expense.
According to California campaign finance records, Maldonado raised $35,000 at the 2007 party.
When Maldonado was asked to provide documentation with the names of each of the guests and their business relationships with taxpayers, Maldonado provided only a list of guest initials and their occupations.
“This party could have just as easily pertained to his political career rather than any business of the taxpayer,” according to IRS documents. “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.”
Maldonado, who most recently served as the state’s lieutenant governor, said in a statement that his family is complying fully with the IRS.
“It’s no secret that my family’s farming business is in the middle of a dispute, but I want to make one thing perfectly clear,” Maldonado said. “Despite what is being said on dishonest TV ads, the IRS isn’t suing me, I’m suing the IRS. This dispute is currently being litigated, and the only thing I am going to say is that when this matter is resolved — and no one wants it resolved quicker than I do — I will abide by the findings. If that means I need to pay additional taxes, then I will just as I’ve always done. If there are forms that I have to file with state agencies, I will be happy to comply. It’s that simple.”
— Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.
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