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Is Connecticut Writing Off Big-Time Tax Delinquents?

Taxpayer Laws Prevent The Public From Knowing Whether Delinquents Are Paid Up Or 'Uncollectable'

By Greg Hladky

5:04 PM EST, December 11, 2013

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Connecticut officials routinely publish an annual list of this state's top tax dodgers. And for several years, the name of a high-flying developer and controversial buddy of our felonious ex-Gov. John G. Rowland appeared regularly at or near the top of that list.

Former New Haven businessman Robert V. Matthews was cited in 2010 as owing the state $1.6 million in back taxes. Today, his name is no longer on the state's roster of top tax-delinquents, but Connecticut tax officials aren't saying why.

They insist state law prevents them from revealing whether Matthews paid up, or negotiated a settlement, or if his debt was simply written off as "uncollectable."

Over the past three years, Connecticut's Department of Revenue Services has given up on trying to collect more than $213.7 million in old tax debts. State Tax Commissioner Kevin Sullivan says he's forbidden by statute from explaining exactly whose tax debts have been written off or why.

The thick veil of secrecy cast by state laws over anything to do with taxpayer information apparently means the public has no way of knowing whether tax debts are being crossed off for legitimate reasons, or if some sort of political or personal favors were at play.

"I think it's a legitimate question," says state Rep. Patricia Widlitz, co-chair of the legislature's Finance Committee. That's the panel with jurisdiction over all things related to state taxes.

Widlitz says the issue of confidentiality for tax dodgers and tax-debt write-offs "is something… we may take a look at in the next legislative session." She says it may be particularly relevant now when lawmakers "are focusing on transparency in government."

There are lots of rules for how state officials deal with tax debts. The trouble is those rules are applied behind tightly closed doors.

In general, Sullivan says, most of those hundreds of millions of dollars in unpaid taxes have been sitting on the books for years.

Reasons for the state to write off those debts can include how long the money has been owed; the death of the tax debtor; the fact that a business has gone under and no longer has any assets; or that the tax dodger has simply moved out of state.

Matthews, for example, is now living in Florida. (Efforts to contact Matthews for comment on this story were unsuccessful.)

Over the past couple of years, Matthews and his wife, Mia, have been in the news down there for hosting celebrities like Jim Belushi during posh fundraising events at their "Palm Beach Island home." Matthews and his companies have also been the target of multi-million-dollar foreclosure actions and lawsuits in Florida, as he was in Connecticut several years ago.

Sullivan would clearly like to explain what happened to Matthews' Connecticut tax debt. "I would if I could," he says almost wistfully.

"You know me," adds Sullivan, a former legislative leader renowned for his love of publicity. "I'm seldom at a loss for wishing to talk to the media."

Sullivan was a top Democratic leader in the state Senate when Matthews and his friendship with then-Gov. Rowland became a major part of the legislature's historic impeachment investigation.

Matthews had gotten something close to $30 million in state-subsidized loans, contracts and other benefits during Rowland's tenure. He was also involved in a complicated deal that resulted in his using a "straw man" to buy a Washington, D.C., condo (at an inflated price) owned by Rowland.

The straw man in that little caper, an antiques dealer named Wayne Pratt, was convicted on a federal tax charge. After Rowland resigned and went to prison for his corruption crimes, Matthews ended up paying a $2,000 state ethics fine for all the gifts he'd given his governor buddy.

It certainly wouldn't have been tough for state tax agents to locate Matthews even after he left Connecticut. He and Pratt became involved in a bizarre scheme to buy an original copy of the Bill of Rights that Union soldiers looted in North Carolina during the Civil War.

Pratt, with Matthews as a partner, bought the document from a family that had held it in secrecy for 134 years. Pratt, who died in 2007, ended up losing the Bill of Rights in an FBI sting operation and the document was eventually returned to North Carolina state officials in 2005.

Matthews didn't want to give up and actually filed a federal lawsuit in an unsuccessful attempt to get some the $100,000 investment he allegedly made in Bill of Rights deal.

His penchant for controversy wasn't the reason Matthews was included on that tax-debtor listing.

Sullivan says Matthews' name was included because the amount he owed made him one of Connecticut's top tax dodgers, and because state law specifically authorizes the publication of the names and amounts owed by state tax debtors. The same law stops the release of any information dealing with why a name is removed, Sullivan says.

"I cannot tell you how it was paid off, when he paid it, or if it was written off," says Sullivan.

"I can't say whether it makes sense or not," he adds. "I don't make those rules anymore."

Sullivan says that any tax debts that his agency decides to write off as uncollectable are at some point subject to review by both the state Treasurer's Office and the state Comptroller.

Apparently, neither of those offices are allowed to reveal any questions they may have about a particular tax write-off, nor can they release any other taxpayer information.

Sullivan declined to comment on whether or not the legislature should change the law to allow the release of more information about how tax debts are handled. "This is just a huge area of sensitivity."

Sullivan is worried that revealing too much about tax dodgers could backfire.

"We don't want to create a situation where it's a disincentive for people to settle [their tax debts]," he adds. Some tax debtors might shy away from a negotiated settlement if they knew the details would become public.

Widlitz, a Democrat from Guilford, says she thinks lawmakers need to take a close look at how tax debts and debt write-offs are handled.

"I think it would be reasonable to get more information on how that system works," Widlitz says.

 

ghladky@ctnow.com

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