A previously unreported tax dispute involving one of Oregon's richest citizens sheds light on some wealth-protection strategies that aren't necessarily available to the average working stiff or Occupy protester (see "9 Things the Rich Don't Want You to Know About Taxes," WW, April 13, 2011).
The case involves Robert B. Pamplin Jr., the 70-year-old, Georgia-born heir to a textile fortune. Pamplin owns the Portland Tribune, Columbia Empire Farms, Ross Island Sand & Gravel Co. and, until a few years ago, much of Ross Island itself.
In June, the Internal Revenue Service mailed a "notice of deficiency" to Pamplin and his wife, Marilyn, at their $3.4 million home in Lake Oswego. The IRS notice claimed the Pamplins still owed $41,000 on their 2008 personal income taxes, as a result of improperly claimed expenses. The Pamplins have contested the IRS claim in U.S. Tax Court in Washington, D.C.
Court documents show the IRS disallowed the $50,000 cost of "two promotional events" at the Pamplin Family Winery in Dundee as an "ordinary and necessary" business expense. (Business expenses are deductible, personal expenses are not.) The events consisted of a "sit-down dinner and Broadway-style entertainment offered for approximately 80 guests," filings show, during which "Pamplin offered tours of his museum of historic art and artifactsâ located on the winery grounds.
Another deduction, for $30,000, related to "two rodeo events" in Madras in April and May 2008, which Pamplin claimed promoted his farming and ranching operations and were âsignificant to the local farming and ranching community.â
Certainly, the $41,000 in dispute is big money for most people. IRS data for 2008, published this summer, show that two-thirds of Oregon tax filers claimed gross incomes of $50,000 or less. But the contested sum is peanuts for the Pamplins, amounting to less than 0.5 percent of their $7.7 million gross income that year.
The Pamplins' federal tax liability totaled $1.6 million on $4.6 million in taxable income, court documents show. That year, the Pamplins deducted $573,000 in taxes already paid—an indication of what they contributed in state and local income taxes, as well as personal property and real estate taxes.
Pamplin did not respond to a message left at his office. His tax attorney, Amy L. Silliman, emailed WW the following statement:
"Dr. Pamplin was forced to file a petition in the U.S. Tax Court because he was unable to get a response from the Internal Revenue Service regarding a pending audit of business expense issues," Silliman writes. "The petition served its purpose, some of his claims were immediately acknowledged as legitimate, and the matter is being settled. We expect the Tax Court case to be dismissed soon."
A response to the Pamplins' petition, filed Sept. 22 by the IRS, shows some willingness to compromise, restating the tax "deficiency" as $31,800.
The Pamplins collected $27,600 in Social Security benefits in 2008, but have not claimed any federal farm subsidies since 2003. In addition to the wineries, farms and ranches, Pamplin controls two tax-exempt foundations and a Christian bookstore chain. The tax court filings also show that Pamplin, an "author of many years standing" with 13 books to his name, sold no books in 2008.