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May 26, 2004 - 11:30 AM

Tax Dodge

by Carmen Balber
As students and local governments are forced to tighten their belts to help the state weather a financial crisis, Arnold Watch would expect Governor Schwarzenegger to be doing his part to move the state toward fiscal stability. Instead, it appears that the Gov is using accounting schemes and convoluted committee organizations to avoid paying taxes on his political war chest and skirt required campaign disclosures.

FTCR sent a complaint letter yesterday to the IRS, asking it to investigate the activities of Arnold's "California Recovery Team" (CRT) and revoke its tax-exempt status.

"It appears that CRT has adopted Section 501(c)(4) tax-exempt status merely as a tax shelter for its primarily partisan activities. By exploiting such tax-exempt status, CRT may retain large sums of money in support of Governor Schwarzenegger and earn tax-free interest income that would otherwise be taxable if it were a political organization. Furthermore, CRT also will be able to avoid publicly disclosing the source of its contributors, some of whom may have contributed up to $500,000 to obtain access to the Governor at one of his fundraising dinners," according to FTCR's complaint.

"Governor Schwarzenegger has so closely aligned his personal political success with the success of CRT's efforts, that one is hard pressed to distinguish between support for CRT and support for Governor Schwarzenegger himself," concludes the complaint. "We believe CRT demonstrates the characteristics of a political organization and should be treated accordingly."

Read the complaint.

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