Arnold Schwartzenegger IRS Lein: Schwartzenegger Gerald Walpin Connection?

Back in June I asked why Inspector General Gerald Walpin launched an investigation into former NBA star and current Sacramento, California Mayor, Kevin Johnson. The answer to that question is that Schwarzenegger asked the feds to look into Johnson's non-profit St. Hope Academy, and Walpin got the assignment. Walpin's investigation showed that both Kevin Johnson and AmeriCorp had misused millions in federal funds - and worse, that Johnson was charged with inappropriate behavior by teenagers. The Governor's action was prompted by a report from the Sacramento County Child Protective Services. President Obama has a particular fondness for AmeriCorp and Kevin Johnson. Subsequently, after Walpin submitted his report to Congress, he was fired from his Inspector General position in an unprecedented move by the White House.

Arnold Schwarzenegger

This week, we learned that the IRS filed a federal tax lien against all of Governor Schwarzenegger's properties last May. Could this be payback for Schwarzenegger's involvement in what has turned out to be another enormously embarrassing scandal for this administration? The odd thing about this, is supposedly, Schwarzenegger had received no notices that anything was amiss with this tax filings.

This report says:

...a copy of a lien document that says it is from the county recorder's office. That document shows that Schwarzenegger owes $39,047.20 from 2004 and $40,016.80 from 2005. The document also lists a section of the IRS code that suggests the debt may be penalties for a failure to report certain business transactions.

The Governor's office says:

No one, including the IRS, has notified the governor of any issues whatsoever with his taxes," McLear said. "We are contacting the IRS to determine if the document in question, which appears to be a penalty for missing info and not for unpaid taxes, is legitimate and if there is any discrepancy to resolve."

A few hours later, Schwarzenegger's office said they had talked to the IRS and there was a "mix-up."

The issue is completely unrelated to the payment of taxes," Schwarzenegger spokesman Aaron McLear said in a statement. "The matter will be resolved and the lien expunged without any penalty assessed upon the governor."

An IRS spokesman said whatever document was filed on the Governor would have to speak for itself - the IRS "does not comment on individual cases."

According to a code on the lien -- 6721 -- there were problems with so-called "information returns" submitted by the governor. Businesses and individuals are required to file such returns, including W-2s and 1099s, to document any payments made to employees or vendors over a calendar year.

Jeffrey Kahn, a Bay Area tax attorney consulted by the Mercury News, said liens filed under that code often involve insufficient reporting of payroll taxes, which are withheld from employees' paychecks to fund Social Security, MediCare and unemployment insurance.

Libertarian Advocate is also questioning IRS motives.

Related and Background:

Who is Sacramento Mayor Kevin Johnson?