Hall’s tax troubles, again

This isn’t new news, but it’s getting a lot more play now.

Ben Hall

Ben Hall

Top mayoral challenger Ben Hall agreed to pay the IRS more than $680,000 in back taxes and penalties earlier this year, court documents show.

On Jan. 16, less than a week before Hall made his first campaign expenditures as a mayoral candidate, the challenger and his wife signed a document in U.S. Tax Court agreeing to pay $520,782 in back taxes and about $160,350 in penalties to cover four years of deficiencies, from 2005 through 2008.

The amount was a little more than half of the $1.28 million the IRS claimed the Halls owed when it issued a formal “notice of deficiency” in June 2011.

Over the four years in question, the couple’s combined taxable income was reported as $1.71 million; the IRS alleged the correct figure for that same period was $5.45 million.

Hall said he did at least as much as any reasonable taxpayer would do, hiring an outside accounting firm to handle his returns and employing a qualified bookkeeper in his law office. At tax time, he said, the accounting firm gathered the bookkeeper’s data, crunched the numbers and told him what to pay.


Taxpayers receiving a notice of deficiency from the IRS have 90 days to protest the amount in U.S. Tax Court, which Hall did. He disputed all or part of $2.3 million of the IRS’ $3.75 million in adjustments to his income, saying the government was trying to tax him twice on some bank deposits and that he was entitled to some deductions they had denied, among other claims. The IRS, in a court filing, rejected Hall’s denials, and the case was set for trial last January. Two days after the trial had been slated to start, the parties signed the settlement agreement.

Of the $160,350 in penalties the Halls agreed to pay, about $103,800 stemmed from a law that docks taxpayers for not taking sufficient care in preparing their returns, said South Texas College of Law Associate Dean Bruce McGovern, one of two tax law experts who reviewed the court documents for the Houston Chronicle. The penalty can be assessed for negligence on the part of the taxpayer, or for “substantially” understating the tax liability. The latter is easier to prove, McGovern said, adding the understatements of tax liability alleged by the IRS in Hall’s case meet the “substantial” standard under the federal tax code.

In Hall’s case, McGovern said, the penalty was levied at 20 percent of the tax owed, the most common level. The remainder of the penalties were for filing the returns late, he said.

News about the IRS case first came to light back in August. The details seem to be a little different in the later version, but my eyes crossed before I could work through it all. What is clear is that Hall has also had issues with his property taxes. Whatever you think of the one or the other, the fact that there’s two of these examples doesn’t look good. The Parker campaign has understandably jumped all over this – I saw their attack ad last night while watching “Castle” – and I’m sure we’ll be hearing a lot more about it over the next four weeks or so. Look, having tax problems isn’t a disqualification for office. Lots of people have had them – mistakes happen, nobody’s perfect, you get the idea. One could even build a narrative around one’s tax troubles, as a story of redemption and overcoming adversity and so on. That’s not the story Hall has been telling, of course. He’ll have to come up with something else to work around this. PDiddie has more.

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