Monday, November 2, 2009

Dellums Fails to Pay at Least $239,000 in Taxes

by Robert Gammon
Mon, Nov 2, 2009 at 4:56 PM

Oakland Mayor Ron Dellums and his wife Cynthia Dellums owe at least $239,000 in back income taxes, according to the U.S. Internal Revenue Service. Sources say the couple's serious financial troubles could rule out a reelection bid next year and force him to return to his once-lucrative Washington D.C. lobbying practice.

The IRS says the Dellumses failed to pay enough personal income taxes in 2005, 2006, and 2007. On October 14, the IRS placed an official lien against all of the couple's personal property for failure to pay adequate taxes in each of those years, according to records filed with the Alameda County Recorder's Office. Typically such liens remain in place until the back taxes are paid off.

In a statement made through his spokesman Paul Rose, Dellums disputed that he and his wife owe as much money as the IRS contends, although he acknowledged that they have not paid as much taxes as they should have. "There are previous disagreements with the IRS, regarding the amount owed," Dellums said. "The issue is being addressed and the matter will be resolved in short order."

Jesse Weller, a spokesman for the Bay Area office of the IRS, declined to comment on the Dellumses' case, citing the agency's rules on taxpayer confidentiality. But a knowledgeable source says Dellums and his wife have faced financial difficulties ever since they moved back to Oakland and he took over as mayor. "Their financial issues have weighed heavily on his mind from Day One," the source said. "There's no question."

The mayor's federal income tax delinquency doesn't speak well for his ability to steward public resources in a city facing severe financial challenges. It also raises serious doubts about his ability to make good decisions. And being a tax delinquent violates his civic duty as both a public official and a citizen. "Public officials are supposed to be leaders for the rest of us," noted Oakland good-government activist Charlie Pine, a frequent critic of the mayor.

Revelations about the mayor's failure to pay taxes also could sink his chances of winning reelection - if he still harbors any plans of running again.

But that looks highly unlikely because he and his wife apparently don't earn enough from his official Oakland salary of about $184,000 a year to sustain the lifestyle with which they have become accustomed. For example, the couple rent a stately four-bedroom, three-bath home on Skyline Boulevard in the Oakland hills that appears to be out of their price range. The Dellumses don't have to reveal how much rent they pay each month, but according to public records, their home is rather large. It's 3,204 square feet and sits on 9,667-square-foot lot. According to Zillow.com, it's valued at $924,500, and was likely worth much more than that before the housing crash.

The Dellumses also are well-known for their expensive tastes. The mayor dresses in exquisitely tailored suits and his official mayoral calendar reveals that they eat out rather often, usually in upscale eateries. In addition, Cynthia Dellums has held no paid positions since he became mayor, sources said. Instead, she acts as his unpaid advisor and is a fixture at City Hall.

Dellums took an unpaid leave of absence from his D.C lobbying firm, Dellums and Associates, when he became mayor. Oakland's City Charter requires that the mayor have no outside jobs while in office. A source said the couple took a big financial hit when they came to Oakland, because he was making much more money as a lobbyist.

But that doesn't square with the IRS lien and other public records. The Dellumses appear to have gotten into serious financial trouble at least a year before he became mayor and while he was still a lobbyist. In 2005, the couple, who file jointly, failed to pay $124,199 in federal income taxes, according to the lien. In addition, federal lobbying records culled by the nonpartisan Center for Responsive Politics, reveal that Dellums' lobbying firm, Dellums and Associates, only reported $90,000 in lobbying income that year. As a result, it's unclear exactly how the Dellumses had so much tax trouble on so little income. (Although Dellums also likely gets a Congressional pension in excess of $100,000 annually, it's not clear exactly how much he receives because he does not have to report it on his official statements of economic interests filed with the city.) In short, it appears that Dellums' lobbying firm wasn't doing well and he was in serious tax trouble long before he took his mayoral oath.

The IRS lien states that the Dellumses failed to pay $66,554 in taxes in 2006, which was also before he became mayor in January 2007. Lobbying records, however, show his lobbying firm did much better that year - earning $240,000 in income. But that's still substantially lower than the $370,000 the firm reported making in 2004. The IRS also maintains that the Dellumses failed to pay $48,247 in personal income taxes in 2007 - his first year as mayor.

Regardless of when the Dellumses tax problems began, they likely have known about them for several years. The IRS routinely sends repeated notices to tax delinquents, demanding payment, before placing liens on their personal property.

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