Rep. Charles Rangel, the powerful head of the congressional committee that writes the country’s tax laws, blamed his own ignorance – and not being able to speak Spanish – for failing to report $75,000 in rental income from his Caribbean holiday home.
“We do make errors even though we consider ourselves experts,” Rangel, a 19-term Democratic representative from Harlem, said today at a Capitol Hill press conference to discuss his dream getaway at the Punta Cana Yacht Club in the Dominican Republic.
“I sincerely regret and take personal responsibility for these errors,” said Rangel, who now has three matters before the House Ethics Committee.
The public apology was the first time Rangel took responsibility for the gaffe. Earlier, he blamed his wife and his accountant, and said it all didn’t matter because he hasn’t stayed at the villa on a regular basis.
Today, he said he never spent more than four days in a row there.
The dapper Dem estimated he owed $10,700 in back taxes for 2004, 2005, and 2006 on rent he collected from the beachfront property that goes for $1,100 a night. His team of lawyers and accountants is working on 2007 and may go back to filings from the past 20 years, he said.
He will likely owe interest on the back taxes as well as penalties in the 25 percent range on the unpaid amount, tax attorneys say.
But, Rangel defied calls by House Republicans for him to step down as chairman of the Ways and Means Committee.
“I really don’t believe that making mistakes means you have to give up your career,” he said, although he admitted that as chairman he should be held to a higher standard.
He blamed the managers at the resort for not sending him annual financial statements, and when they did so, for sending them in Spanish.
“Well, there always been a question in my wife’s mind,” Rangel said of his wife, Alma, who he said handles the finances.
“I belittled the importance of the fact that I wasn’t getting reports.”
He added that he reached out to officials at the resort for more information to no avail.
“Every time I thought I was getting somewhere, they’d start speaking Spanish,” he said of his Dominican business partners.
Each year, the resort would credit rental income from the villa to pay off his mortgage on the property. Rangel said he incorrectly thought that he’d have no IRS liabilities because the resort was already paying Dominican Republic taxes.
So, that money, Rangel said, was never reported as income on his annual tax filings – a relatively simple matter of filling out a line on his 1040 form.
Those excuses, especially the Spanish difficulties, didn’t pass the smell test with tax lawyers.
“This is tax preparation 101. You don’t get to ignore stuff because it’s in Spanish,” said Bryan Skarlatos, a tax attorney with Kostelanetz & Fink, which is not connected to the case.
“It’s hard to say if this was purely an oversight. He was aware it was generating rental income and aware of the tax benefits related to the property by limiting the number of days he spent there,” Skarlatos added.
Rangel insisted he never spent more than nine days a year at the villa. If he had stayed more than 14 days in a year, he could lose some tax breaks because the property wouldn’t be considered an investment.
Fellow members of Congress also enjoyed the villa, Rangel said.
“[They] spent their honeymoon there; Republicans have gone there for holidays,” he said, but declined to name them.
Rangel further blamed a distant relationship with accountant for the tax mishap.
“Quite frankly, the first time I talked in detail about this with my accountant is through my lawyer,” he said.
Rangel had asked the House Ethics Committee to see if his tax fiasco violates congressional rules.