CREW FILES IRS COMPLAINT AGAINST REP. GARY MILLER

17 Aug 2006 // Washington, DC - Citizens for Responsibility and Ethics in Washington (CREW) today filed an Internal Revenue Services (IRS) complaint against Rep. Gary Miller (R-CA) for failure to report or pay capital gains taxes on several real estate transactions.

The complaint alleges that Rep. Miller violated federal law by fraudulently invoking an IRS provision, IRC § 1033, on the sale of his properties. This provision allows for a taxpayer, at his or her option, up to two years to reinvest any capital gains realized from a forced sale in replacement property that is similar or related to the converted property. According to press reports, Rep. Miller invoked the provision three times for properties he was in fact not forced to sell.

In 2002, Rep. Miller sold 165 acres to the city of Monrovia, California, making a profit of approximately $10 million. In 2004, Rep. Miller reinvested the proceeds of the sale in land and building purchases in Fontana, California, and Rancho Cucamonga, California. Rep. Miller again claimed IRC 1033 exemption when he sold some of his Fontana land and building acquisitions in April and June of 2005. He used proceeds from this sale to purchase additional land in Fontana, which he subsequently sold to the city in 2006 for $50,000 more than his original purchase price.

Despite Rep. Miller’s claims of eminent domain, his sale of land in 2002 to the City of Monrovia was not a forced one. Rep. Miller had taken an aggressive, public campaign to sell his property to the city for several years prior to the sale. He was videotaped at a February 2000 City Council meeting repeatedly asking the city to purchase his property.

According to a story in the Los Angeles Times, the City of Monrovia purchased Rep. Miller’s property in 2002 pursuant to a state statute that prohibited the use of eminent domain proceedings. A May 2002 letter from the Monrovia City Manager confirmed that all property owners were “willing sellers.” On Aug. 1, 2002, Rep. Miller confirmed that the Monrovia sale was not a forced condemnation in an amendment to his escrow instructions for the transaction.

Rep. Miller’s sales of land and buildings to the city of Fontana in April and June of 2005 also were not forced upon him. A March 22, 2005 letter from City Manager Kenneth Hunt stated that the “redevelopment plan for this project area does not currently authorize the use of eminent domain.” In addition, both Clark Alsop, the attorney representing Fontana in the transaction, and Ray Bragg, the Fontana redevelopment director, have stated publicly that the city did not even threaten the use of eminent domain in the land acquisition.

Based on these facts, it appears that Rep. Miller has engaged in three counts of tax evasion.

“The odds of government seizing your property once are similar to the odds of being struck by lightning. Essentially, Rep. Miller is claiming he was struck by lightning three times. Not likely,” Melanie Sloan, executive director of CREW said today. “By first claiming that he was forced to sell his properties, and then failing to report and pay the necessary capital gains taxes, he flagrantly violated the laws that govern everyone, including Congressmen. The IRS should immediately investigate Rep. Miller and his egregious activities.”

The IRS complaint, and all other exhibits, are available at www.citizensforethics.org.

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Citizens for Responsibility and Ethics in Washington (CREW) is a non-profit, legal watchdog group dedicated to holding public officials accountable for their actions. For more information, please visit www.citizensforethics.org or contact Naomi Seligman Steiner at 202.408.5565/press@citizensforethics.org.