EVIDENCE OF EVADING INCOME TAX ON PERSONAL USE OF CITY-OWNED VEHICLES

One of our readers raised a good point in response to the previous article.  He noted that compensation can be reported on forms other than a 1099, including a W-2.  True, which is why we crafted our freedom of information request to the City of Grand Rapids to cover all documents reporting compensation to Mayor Logie for personal use of city-owned vehicles.  Below is the text of that request.

January 25, 2002

Mr. G. Douglas Walton
Office of FOIA Coordinator
Grand Rapids City Hall
300 Monroe Avenue, N.W.
Grand Rapids, Michigan 49503

Re: Freedom of Information Act request

Dear Mr. Walton:

I request a copy of the following public records pertaining to John H. Logie’s use of the vehicle taxpayers have provided him during his tenure as Mayor of Grand Rapids:

1. All records or evidence deemed adequate and sufficient by the City to support Logie’s claimed business use of that vehicle;
2. All records the City requires Logie to retain detailing his use of that vehicle;
3. All reports or summaries Logie provided to the City recording his use of that vehicle;
4. All worksheets, audits, or reports that record the taxable value of Logie’s personal use of that vehicle;
5. All 1099’s, W-2’s, or other forms on which the City reported income to Logie for his personal use of that vehicle.  [Emphasis added.]

I make this request under Michigan’s Freedom of Information Act, Public Act 442 of 1976.  I do not wish to inspect these records first, so please send copies to our post office box.

For purposes of determining the applicability of any fees, you should know that we are not seeking information for a commercial use.  We are a non-profit organization chartered to monitor recipients of public benefits for conflicts of interest and to report our findings of such to the public.  We are willing to pay fees for this request up to a maximum of $25.  If you estimate that the fees will exceed this limit, please inform me first.

Sincerely,
Wm Q. Tingley III
Executive Director

In response, the City Attorney's office certified that no such records existed and so denied our request.  As it happened, this FOIA request was a follow-up to a narrower request that the City Attorney had denied a few weeks earlier.  In that request we had specifically asked for Logie's mileage diaries recording his business use of the city-owned vehicle he had been given.  At the time Logie had claimed that he needed personal possession of a city-owned vehicle because of the many miles he had to drive on city business.  However, to not be taxed on business use of the vehicle, he had to keep track of the business miles he put on it.  That is normally done with a mileage diary.  So we asked for Logie's diaries, and the City Attorney's office said they didn't exist.

To ensure that this wasn't a matter of the diaries being in Logie's actual possession as opposed to truly non-existent, we appealed the denial to the Grand Rapids City Commission on that basis.  However, the City Commission, which Logie headed at the time, stonewalled our appeal and refused to acknowledge it.  That was fishy.  For these reasons and others, including recent information about continuing abuse of city-owned vehicles, we know that personal use of city-owned vehicles has not been reported to the IRS as compensation.  The knowing failure to report income on a federal tax return is tax evasion.  It is a serious matter that the taxpayers should not tolerate, and city officials have had at least five years' notice of this problem now.

Comments

[Ryan]

So you're telling me that the City of Grand Rapids doesn't - or didn't when the request was made - provide its employees with W-2's?

I just find that hard to believe.

-Ryan

[Ryan]

Oh, I should add, "hard to believe" doesn't mean I don't believe you.

I do.

It just means I think there's another explanation - as of yet unknown. They had to have given Logie a W-2.

[The Executive Director]

Hi, Ryan.

Once again, I do not doubt that Logie received a W-2 from the City of Grand Rapids for the salary he received as mayor. What the City of Grand Rapids did not have on record is a W-2 that also reported any compensation he received for personal use of a city-owned vehicle. That is the record that does not exist. Therefore, when the City Attorney's office certified that a W-2 of that nature, or any other tax record reporting such compensation, does not exist, we know that Logie received income (in the form of his personal use of city-owned vehicle) that the City of Grand Rapids did not report to the IRS.

Regards, Bill

[Ryan]

Well, until I see a W-2 I wouldn't jump to conclusions about what was or wasn't on it.

[The Executive Director]

Ryan,

We KNOW what wasn't on Logie's W-2's. If his W-2's had included the compensation he received in form of his personal use of a city-owned vehicle, then the city would have had to disclose those records to us under FOIA. Because his W-2's didn't, the City Attorney's office had to certify that was the case, which is what it did (by means of a formal statement required under FOIA that the records identified in Request #5 don't exist). Therefore, we didn't need to see Logie's W-2's. We received an official statement that they did not report that compensation. So whatever else may be on those W-2's, we KNOW that they don't include the value of his personal use of city-owned vehicles.

Regards, Bill

[Ryan]

Okay...

Guess it just strikes me that they wouldn't do something so basic. And in such violation of IRS rules.

Just shows how naive I am when it comes to dealing with government officials...

There's just a part of me that thinks they're yanking your chain. But, that probably stems from me not fathoming why they wouldn't do the proper thing - especially when it's probably a small (realitvely speaking) amount we're talking about.

Thanks for taking the time to 'splain it.

-Ryan

[The Executive Director]

You're welcome, Ryan.

You are not wrong to be suspicious of the city government when it comes to good-faith compliance with FOIA requests. Twice we have had to sue the city government for refusing to publicly disclose records. In one case the government accused us of defrauding it in the requests we had made! In the other case one of the city attorneys had the documents destroyed to prevent turning them over to the court. Needless to say, city officials can be very arrogant when comes to frustrating FOIA requests.

However, I have seen them act that way only to keep embarrassing documents under wraps. Never to deny the existence of documents that would be desirable to produce (such as Logie's income records).

Regards, Bill

[larry]

If the city does not have records-how could they provide an amout for a w2?

[larry]

Please strike my last post.