Campaign finance records bolster IRS case against Maldonado

October 4, 2012

California election finance records show that Republican congressional candidate Abel Maldonado raised $35,000 the same day as a 2007 party held on his behalf, which Maldonado’s family business claimed as a business expense on its federal income tax return [McClatchy].

The party occurred on December 5, 2007 while Maldonado was running for reelection to the state Senate. Though Maldonado’s family business, Agro-Jal Farming Enterprises Inc., wrote off a $3,686.03 catering fee from the party as a business expense, the Internal Revenue Service determined the party did not qualify as a business expense because it may have been a political fundraiser. State campaign finance reports showing 27 different donations totaling $35,000 on the same day seem to strengthen the IRS claim against Maldonado.

Now running for the newly drawn 24^th Congressional District against Democratic incumbent Lois Capps, Maldonado told McClatchy he had no comment on whether or not the 2007 party was a campaign event.

Maldonado previously co-owned Agro-Jal with his father and brother but has distanced himself from the company since an IRS tax dispute arose. The IRS claims Agro-Jal underpaid its taxes by $3.6 million between 2006 and 2008 by writing off expenses that included a bathroom upgrade for Maldonado’s house, maintenance of two horses he owned and upkeep for a vacation condominium. Agro-Jal is currently fighting the IRS assessment in U.S. tax court.

In addition to the business tax dispute, Maldonado is also battling the IRS over a claim that he and his wife underpaid their personal taxes by about $470,000

Further, the California Fair Political Practices Commission could still pursue legal action against Maldonado for failure to report a campaign expenditure. While the four-year statute of limitations for a criminal case expired last year, the five-year opening for a civil case does not expire until December.

The same year as the alleged campaign party tax write off, Maldonado signed a pledge not to vote for any tax increases in California. Two years later, Maldonado voted for a $13 billion dollar tax increase to help close the looming state budget deficit.