Apr 29, 2008 9:29 pm US/Central
AP: Franken To Pay $70K In Back Taxes In 17 States
ST. PAUL (AP) ―
Senate candidate Al Franken, dogged by accusations that he failed to file tax returns in California, said Tuesday he will pay about $70,000 in back income taxes in 17 states where he earned income going back to 2003.
The Minnesota Democrat told The Associated Press that he and wife Franni "paid taxes on every cent of income we ever had." He said that during the years in question, he followed the advice of his accountant and paid his entire income tax bill to the city and state where he lived at the time. That was New York, N.Y., from 2003-05 and Minnesota in 2006.
Most of the income was from speeches and other paid appearances.
"What happened is our accountant made a mistake, and all of these are repercussions of that same mistake," said Franken. "His mistake was not understanding the law, the obligation to pay these state taxes."
Franken said he takes ultimate responsibility for the errors.
Franken has been preparing for a tough fight against incumbent Sen. Norm Coleman, R-Minn., but his campaign has been sidetracked in recent weeks by bookkeeping errors related to his private corporation, Alan Franken Inc. The campaign said last month it would pay a $25,000 fine to the state of New York for failure to carry workers' compensation insurance there.
The state Republican Party has used Franken's problems as a vehicle to raise questions about his candidacy. Party chairman Ron Carey pounced on Franken's admission, saying his business problems "must have a full, and complete public airing."
"This man is not fit to be a United States senator," Carey said at a Capitol news conference.
In a conference call with reporters, Coleman called Franken's admission troubling.
"Paying taxes is an obligation that I think Minnesotans expect to be adhered to, and that Minnesotans do," Coleman said.
Franken's private corporation was established as a clearinghouse to receive royalty checks from his TV and movie roles, payments for speeches and other income. Earlier this month, Republicans discovered and publicized that Alan Franken Inc. was in forfeiture in the state of California; it turned out to be because the corporation didn't file corporate income tax returns there from 2003 to 2007.
Franken said his accountant, Allen Chanzis, mistakenly thought he filed the proper paperwork in 2003 to dissolve the corporation in California because, Franken said, he planned to be doing less business in California. Franken said after consulting with California tax officials, he's now paid the state $4,745 in accrued filing fees, interest and penalties related to the corporate structure, and filed the missing returns.
Once the problems started coming forward, Franken said, "we went into action. We hired an accountant in New York to oversee our books, we hired one in Minnesota to oversee it. We worked all weekend. There was a lot of material to go through."
Franken said he hired Chanzis as his accountant in 1991 on the basis of a recommendation. He said he and his wife handed their financial records over to Chanzis every year and "never had any reason to believe he was making mistakes because we'd never had things like this happen." He said his finances did grow more complicated when he branched out from his "Saturday Night Live" gig and started writing books and making speeches around the country.
Chanzis, whose office is in New York City, did not immediately return a message left Tuesday night on his work phone.
Franken's communications director, Andy Barr, said in no case did any of the 17 states attempt to contact Franken or his accountant seeking unpaid personal income taxes. The amounts Franken is paying back range from more than $20,000 to the state of California, to amounts well under $1,000 to numerous states.
In all, the campaign said, Franken between 2003 and 2007 paid a total of $917,344 in state and local income taxes to New York state, New York City and Minnesota; once corrected, they said, he should have paid a total of $921,495 to those entities plus the 17 other states.
Franken said once the payments to the states are settled, he would seek retroactive credit from his states of residence since a significant portion of the money he paid to those entities was supposed to go instead to the 17 other states.
Carey, the Republican chairman, said Franken's admission only raised more questions about his finances.
"He's going to have to answer this question all the way through November," Carey said.
Barr, Franken's spokesman, said Republicans were overreaching in their attacks.
"People are going to look at the way the Republicans have been handling this situation and see a party willing to be wrong a thousand times just to connect on one thing," Barr said.
Franken said he's releasing the information to be transparent about his mistakes. He said he "would like to get back to talking about the lives of the people of Minnesota and the issues this campaign is about."
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
