Abel Maldonado’s mounting tax troubles

May 31, 2012

Central Coast  Republican congressional candidate Abel Maldonado and his family business are embroiled in a legal battle with the IRS over more than $4 million in taxes the IRS says they owe partially because of allegedly claiming personal purchases as business expenses. [LATimes]

In April, the former  Lieutenant Governor said he was severing ties with the family farm he owns a third of in Santa Maria after court records showed he and his wife owed the government $470,000 in unpaid taxes.

In addition, The Times reviewed court records and discovered the IRS says the Maldonado family business, Agro-Jal, also underpaid its taxes $3.6 million between 2006 and 2008. The Maldonados are currently in settlement discussions with the IRS.

“This dispute involves a lot of very complex accounting issues that other small businesses are attempting to navigate on a daily basis…. I want this resolved, and the second we get a bill that correctly defines our tax liability, it will be paid,” Maldonado said in a statement on Wednesday.

While the bulk of the multimillion-dollar dispute stems from complex accounting methods and questions about how to deduct the cost of a cooling facility and crates and boxes used to ship produce, the IRS also contends the Maldonados used the business to pay for items such as thousands of dollars in renovations to Able Maldonado’s home and a possible fundraiser for his campaign for state Senate, where he served before becoming lieutenant governor.

At the time, Maldonado listed himself as Agro-Jal’s controller/auditor on his state-required financial filings, The Times said.

The IRS has challenged deductions by Agro-Jal that appear to show no apparent benefit for the business. They included $20,000 worth of memberships at the Santa Maria golf club, work on a residence at a resort community near Palm Springs, and the cost of two horses on the farm.

The IRS also claims about a dozen pickup trucks were driven for personal use by company officers including Maldonado’s father, mother, and sister.

In July 2010, the Maldonado family challenged the IRS claiming that Agro-Jal’s deductions were legal and that the IRS had vastly inflated its tax bill.