The New Yorker

What perhaps should also be remembered with respect to Columbia University SIPA Professor Dinkins' pre-Columbia University-affiliated life is that, according to a June 30, 1989 article in the New York Times:

“…New details have emerged about David N. Dinkins's failure to file Federal, state and New York City tax returns for 1969 through 1972, an issue that occasionally dogs his otherwise smooth mayoral campaign.

“Mr. Dinkins, the Manhattan Borough President, admitted his failure to file in a dramatic public appearance when he withdrew from consideration as deputy mayor in December 1973. But until now he has not provided a detailed account. To examine the issue, The New York Times received permission from Mr. Dinkins to review tax records in his possession and in government files for the four years.

“The inquiry showed that Mr. Dinkins owed more money in back taxes than he acknowledged in 1973, having failed to pay any taxes for the four years on his earnings from his largest source of income, his private law practice. It also found that a series of false statements was submitted to the government on his behalf, prompting an investigation by state tax authorities.

“The records show that Mr. Dinkins and his wife, Joyce, with whom he filed joint returns, ended up owing the Federal, state and city governments $28,645, an amount larger than previously reported, including $20,411 in back taxes and $8,234 in interest and penalities. In 1973 he said he had paid $15,000 in back taxes plus an undisclosed amount in interest and penalties.

“Mr. Dinkins has often noted that he had money withheld from his salary as an official at the Board of Elections during the four years, a point of emphasis that seems to suggest that the governments received most of the money, and that only a bookkeeping reckoning was needed.

“But the records disclosed that the withheld sums amounted to about $11,450, only about a third of the taxes he owed. The bulk of his income came from a private legal practice, on which he paid no taxes until the day he filed his tax returns in 1973.

“Mr. Dinkins was asked about the issue by reporters when he announced his decision to run for mayor. He now finds himself fielding questions about it from editorial boards and community groups. Mayor Edward I. Koch suggested last December (in jest, he now says) that all candidates for mayor release 20 years of tax returns.

“Other candidates have mentioned Mr. Dinkins's tax problem in private meetings with district leaders and other politicians but have not made it a public issue.

“Mr. Dinkins has frequently said that his failure to file was a simple case of negligence on the part of a public servant preoccupied with other people's business. The question of tax evasion was never raised, he said.
But the Times inquiry disclosed that on at least five occasions false or misleading information was submitted to the Federal and state governments on Mr. Dinkins's behalf. The inaccurate statements obscured the fact that Mr. Dinkins had not filed a tax return in preceding years or paid his taxes in full, and they made it easier for him to obtain temporary extensions of filing deadlines.

“The filings led to a lengthy investigation by the special investigations bureau of the New York State Department of Taxation and Finance. But the state decided that criminal charges were not warranted, after Mr. Dinkins, in a sworn statement, said that the false information was prepared by clerks in his accountant's office, and that he knew nothing about them.

“Mr. Dinkins's tax problems became public in 1973, as his career in government and politics was about to take off. At the time, he was a 46-year-old lawyer in private practice who had just ended a term as president of the New York City Board of Elections. He had previously served a single term in the New York State Assembly.

“Following intensive political maneuvering, he was about to be named New York City's first black deputy mayor. Black political and business figures had successfully lobbied the Mayor-elect, Abraham D. Beame, not only to select Mr. Dinkins but also to give him substantial authority in the new administration.

“Then, just a few days before the inauguration, his voice breaking and tears filling his eyes, Mr. Dinkins withdrew his name from consideration, after he told city investigators conducting a routine background check that the taxes had gone unpaid.

“`'I did not seek to evade payment of taxes, but I neglected,’' he said at the time. `'It was one of those things I was always going to take care of, but sometimes I did not have all the funds available, or I did not have all the documents or other material I needed.’'

“More than 15 years later Mr. Dinkins is himself a Democratic candidate for mayor. And despite years of public service, including his current term as Borough President, he still faces questions about that difficult period so long ago.

“Shouldn't an experienced lawyer, he is sometimes asked, know that he must file tax returns and pay his taxes on time? Is a candidate who cannot manage his personal finances capable of managing a $26 billion city budget?

“In an interview, a tone of exasperation entering his voice, Mr. Dinkins said that in all his campaigns since 1973, questions about his taxes have been raised by his opponents, especially in the campaigns' closing days.

''`If Mayor Koch's campaign is going to hammer away at the negatives such as I have, there is a very fertile field on his side of the ledger,’'' he said.`'I think I can far more satisfactorily explain my negatives than he can his.’'

“He said polling shows that the tax issue will not hurt him among most voters, who are more interested in other issues, like drugs, crime and the homeless.

`'I paid a very heavy penalty,’' he said. 'I gave up what would have been a very high position. For those voters who believe that disqualifies you, I can't change their minds. But there are an awful lot of people who do not feel that way.’'

"Asked today to explain why he did not file, he gives an answer similar to one he gave 16 years ago:`People say, “Why didn't you file?” `Well, I was procrastinating and negligent while I was busy taking care of other people's business.’

“As for criminal liability - willfully failing to file tax returns is a misdemeanor - he said: `There never, ever was even the remotest question of tax evasion. It was so seen by all of the governments involved, and it is a fact.’'

“Over the years Mr. Dinkins has explained that he always intended to file his tax returns on time. To support this position, he has pointed out that each year, he had filed and received at least two, and sometimes three, extensions of the filing deadline.

“In spite of his good intentions, he said, each year`''a variety of things happened’' to get in the way, and the extensions expired. He changed law firms, moved offices, lost records and became caught up in civic and political work.

“But a review of the 10 extension-request forms that Mr. Dinkins filed shows that five contained incorrect information. Three forms indicated that he had filed a tax return in the previous year, when he had not. Two forms gave a highly inaccurate estimate of how much tax he owed for the year.

“Jules Ritholz, Mr. Dinkins's tax lawyer, said he was hired in 1974 to represent Mr. Dinkins in connection in what amounted to a wide-ranging state investigation. He said auditors went through Mr. Dinkins's bank statements and specifically raised the possibility of criminal prosecution.

“`'They said,”Bring in all his bank deposits,” and I did,’ Mr. Ritholz said. `They were looking for concealed income, and there wasn't any. They went through his expenditures’'

“Computer summaries of the return provided by the Internal Revenue Service show that the Federal Government received Mr. Dinkins's tax returns for the four years on Jan. 4, 1974, along with a payment of $22,108. The following February and March, Mr. Dinkins made additional payments totalling $1,381, but eventually he received a refund of $561 and a credit for $16.15 for interest that was applied to his bill.
“His payments to the I.R.S. covered $16,229 in overdue taxes, $1,904 in interest, $3,438 in delinquency penalties for filing late returns, $928 as a penalty for failure to pay taxes on time and $446 for failing to make quarterly estimated payments on his taxes.

“Asked where he obtained the money to pay the back taxes, he said, `From relatives.’

“There is no indication that the Federal Government ever investigated Mr. Dinkins in connection with the late filings. Mr. Ritholz said that in a 1975 letter, the I.R.S. informed Mr. Dinkins that no investigation of the late taxes was pending. Mr. Dinkins, who was under consideration for another city job, and was appointed city clerk later that year, had requested the letter.

“Joanne Luciani, a spokeswoman for the I.R.S., said paper records from the period have long since been destroyed. She said it appeared that the usual penalties had been assessed for three of the years in question.

“For one year, 1969, she said, it appeared that Mr. Dinkins should have been required to pay a 25 percent delinquency penalty, totaling about $400. But she said the failure to impose the penalty for that year may have been due to a clerical error.

“Mr. Dinkins made $5,700 in payments to the state and city governments when he filed his tax returns. Of this, $4,182 was in late tax payments and $1,518 in penalties and interests. State computer records indicate only that Mr. Dinkins paid his taxes in full for the four earlier years and do not break down the penalties imposed.

“But the state took an intense interest in the extension forms submitted on Mr. Dinkins's behalf. One standard form, provided by Mr. Ritholz, asked whether the taxpayer had filed his taxes on time in each of the previous three years, a question aimed at detecting delinquent tax filers.

On the three occasions when the form was used to request extensions for 1970 and 1971, the `Yes’ box was checked, indicating that prior tax returns had been filed, even though Mr. Dinkins had not filed his 1969 tax return. When the question was asked on a form submitted in 1972, the box was left blank.

“Another extension-request form submitted twice, in 1971 and 1972, misstated the amount of taxes Mr. Dinkins owed. The form required the taxpayer to estimate his tax liability and pay all taxes due.
“In both years, the forms listed the total tax liability at $3,000, just about the same amount that had already been withheld from salaries earned by Mr. Dinkins and his wife, suggesting that all taxes had been paid.

“But the forms did not take into account any earnings from Mr. Dinkins's law practice, which was by far the family's largest source of income. His tax liability for each year eventually totaled more than $8,000 rather than $3,000.

“Mr. Ritholtz said that in an effort to avert a criminal case, he submitted a legal brief to state tax officials, arguing that the facts in Mr. Dinkins's case did not demonstrate that he `willfully’ failed to file on time and did not meet standards imposed on the courts for the prosecution of delinquent tax filers.

“In June 1975, after many months of investigation, Joseph A. F. Valenti, then the state's executive deputy tax commissioner, wrote a letter to Mr. Ritholz saying he had reviewed the `information available’ and `on the basis of such review have reached the conclusion that consideration of criminal prosecution is not warranted.’ The following September, Mr. Dinkins was sworn in as city clerk by Mayor Beame.

“Mr. Valenti, who is now a lawyer in private practice, said in an interview that he had no recollection of the letter and in any event could not discuss it.

“The only surviving record located by state tax officials is an index card showing that the tax returns had been forwarded to the state's special investigations bureau, which was subsequently disbanded in January 1975. A notation on the card indicates that the investigation unit returned the tax forms to the Tax Department's headquarters in Albany in February 1977.

“Although Mr. Valenti's note said that a civil audit would be conducted, someone had written `no audit’ at the bottom of the index card. State tax officials said the meaning of the notation was not clear.

“In sworn affidavits submitted to the state tax department in 1974, Mr. Dinkins said that the false extension-request forms were prepared in his accountant's office, and that he knew nothing about them. Mr. Dinkins's signature does not appear on copies of forms provided by his lawyer.

“He said in the affidavits that the forms were filled out by clerical employees in his accountant's office`'without the awareness of myself or of any supervisory personnel’

“`I have been asked about certain check marks indicating the answers to questions on these requests for extensions,’ he said in the affidavits.`'I state categorically that I had no knowledge of these questions or the answers until the matter was called to my attention shortly before the preparation of this affidavit.’

“The certified public accountant who signed Mr. Dinkins's extension-request forms and tax returns, Oliver K. Simmons, died several years ago. James Tatum, who was identified by Mr. Dinkins as his regular accountant at Mr. Simmons's firm, said in a recent interview that he did not prepare or sign any of the forms and did not recall the matter.

“In his affidavits, Mr. Dinkins attributed his tax problems to the `pattern of irregularity in my life’ and said they must be viewed `against the background of the changes which took place in my life.’

“He noted that early in 1970, when he would have been preparing his 1969 tax returns, he was working every day and night, running school-board elections for the Board of Elections and coordinating a petition drive for Representative Charles B. Rangel.

“A few months later, his law firm, Dyett, Alexander & Dinkins, dissolved. After working on his own, he became a partner in another firm, Paterson, Michael & Dinkins, in 1971. He said that as he moved to the new office, he lost some of the documents needed to prepare his taxes.

“To buttress his position that he never intended to evade taxes, Mr. Dinkins frequently cites the fact that the law partnerships regularly filed reports with the Government detailing the income earned by each partner.

“But some of the extension-request forms filed at the time say Mr. Dinkins's returns could not be filed because the `client has still been unable to obtain complete information on partnership income.’

“Judge Fritz W. Alexander 2d, Mr. Dinkins's former law partner, who now serves on the New York State Court of Appeals, said, that to the best of his recollection, partnership tax returns were always filed on time. Asked what would have prevented Mr. Dinkins from filing a timely tax return, he said, `David is the only one who can answer that question.’

“In his 1974 affidavits, Mr. Dinkins described his growing anxiety as he learned he was about to be appointed deputy mayor in 1973. He said that he was rushing to catch up on his back taxes when he received a routine written questionnaire from the city's Department of Investigation asking about his tax filings.

“`It was my intention to prepare and file them before submitting the questionnaire,’ he said. `Before preparation had been completed, and before the questionnaire was submitted, I was routinely called in for fingerprinting and was orally asked about my tax returns, and I truthfully answered they had not yet been filed.’

“Nicholas Scoppetta, who was then the Commissioner of Investigation and whose staff had questioned Mr. Dinkins, said in an interview that the questioning was routine, and that his investigators knew nothing about Mr. Dinkins's tax problem until he volunteered it…”