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Agnew denied tax refund for bribes he returned

By TED APPEL

SACRAMENTO, Calif. -- A tax appeals board has ruled that former Vice President Spiro Agnew is not entitled to a California income tax break for the $142,5000 he paid to Maryland as restitution for bribes he took while governor of that state.

In denying Agnew's request for a $24,197 tax refund Thursday, the state Board of Equalization wrote, 'It would hardly be equitable for the taxpayers of California essentially to foot the bill for part of (Agnew's) liability to the taxpayers of Maryland for bribes received while he was a resident and elected official of that state.'

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Agnew and his wife, Elinor, who live in the affluent Palm Springs suburb of Rancho Mirage, contended California auditors unjustly taxed them on the $142,500 he repaid in 1982 as restitution for accepting bribes from road construction companies while governor of Maryland from 1967-69.

Agnew had paid the $24,197 tax under protest after the Franchise Tax Board disallowed the deduction in a 1986 audit of his 1982 state income taxes. He appealed the decision to the Board of Equalization, where it automatically became a public matter.

Neither Agnew nor his attorney attended the brief hearing.

'I find it very hard to be sympathetic to someone who had to pay over $140,000 back to the state of Maryland as part of restitution for bribes taken, but now wants California to allow him a deduction for that paycheck just because he is now a California resident,' board member Conway Collis said moments before the panel voted 5-0 to reject Agnew's appeal.

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'If we allow this deduction and give Mr. Agnew the refund, we are in effect asking other California taxpayers to subsidize Mr. Agnew's wrongdoing,' Collis said.

Agnew, now 70, resigned as vice president in a cloud of bribery charges on Oct. 10, 1973, just 10 months before President Richard Nixon stepped down during the unrelated Watergate scandal.

As part of an agreement with federal prosecutors, Agnew left office and pleaded no contest to felony charges that he avoided paying taxes on bribes given to him by road engineers for government contracts.

Agnew later was ordered to pay the federal government and Maryland additional taxes, penalties and interest totaling $162,105, according to documents filed with the Board of Equalization.

Maryland taxpayers filed a civil suit against Agnew in 1976 to recover the bribe money for the state. Five years later, a Maryland circuit judge ordered Agnew to repay $248,735 to the state for the bribes plus interest.

Agnew, who had moved to California, paid the judgment in 1982 and deducted $142,500 -- the amount he paid in restitution for the bribes - from his 1982 California income tax return.

An auditor spotted the deduction four years later, disallowed it and ruled Agnew should pay $24,197 in back taxes and interest.

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Agnew's lawyer, T. Rogers Harrison, wrote a letter to the Board of Equalization stating that Agnew was entitled to the deduction because the law allows individuals to deduct money paid to satisfy a court order.

Harrison also argued it was 'patently unfair' to tax Agnew on money he was not allowed to keep.

But lawyers for the California Franchise Tax Board contended Agnew should instead deduct the restitution from earlier Maryland income tax returns.

Agnew 'was not subject to the California personal income tax when he received the alleged bribes, and in fact did not treat the payments as California taxable income,' wrote Franchise Tax Board lawyer Lazaro Bobiles.

If Agnew was allowed to deduct the restitution payment, 'The taxpayers of California would in effect be called upon to partially subsidize (Agnew's) return of public monies to the taxpayers of Maryland,' Bobiles wrote in a legal brief.

Under Maryland's statute of limitations, Agnew no longer can revise his income tax returns there.

In Washington, John F. Banzhaf, the lawyer who handled the lawsuit on behalf of the Maryland taxpayers against Agnew, applauded the decision and scoffed at the former vice president's pursuit of a tax deduction.

'If you consider all of the money Agnew made by investing the bribe money before he was forced to disgorge it, he made out like a bandit,' said Banzhaf, a law professor at George Washington University.

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